Tribune newspaper group studies bankruptcy option

by Staff, Brand Republic 08-Dec-08, 09:25

NEW YORK - Major US newspaper publisher Tribune is preparing for possible bankruptcy protection this week after calling on investment advisers to weigh its financial options.

Tribune, the privately owned publisher of the Chicago Tribune and Los Angeles Times, has hired investment bank Lazard and law firm Sidley Austin, indicating its cash flow may not be enough to cover the $1bn in interest due this year.

The heavily indebted company went private last year in an $8.2bn leveraged buyout led by real-estate magnate Sam Zell.

It faces a deadline today on $70m of unsecured debt it took before Zell's takeover, with an additional $512m debt payment due in June.

Sources indicate that Tribune has enough cash to draw on existing credit to pay the $70m, but was undecided whether a complete debt restructuring would be a better option.

Dwindling advertising revenue has hit Tribune particularly hard; it lost $121m during the third quarter, forcing the publisher to cut staff and sell some of its assets.

The company also owns the Chicago Cubs baseball team and its stadium, Wrigley Field, which it has been trying to sell off since last year.

It recently sold its New York-based Newsday title to Cablevision Systems, which also announced plans to cut 100 jobs - or 5% of its work force - while raising its newsstand price this week.

In related news, the New York Times Company announced plans to borrow up to $225m against its headquarters building in Manhattan as it grapples with tighter credit and shrinking profits.