CHICAGO, Dec 8, 2008 (AFP) – The Tribune Co., owner of the Los Angeles Times, The Chicago Tribune and other dailies, filed for bankruptcy, in the latest blow to a newspaper industry reeling from a drop in advertising and the rise of online media.
The Chicago-based company said it was forced to seek bankruptcy protection Monday ecause of a sharp drop in revenue and a 13-billion-dollar debt load but has enough cash to sustain operations while it restructures.
It said the Chicago Cubs baseball franchise and its iconic stadium, Wrigley Field, were not included in the Chapter 11 bankruptcy filing, which protects the company from its creditors while it restructures, and the Tribune would continue to try to find a buyer for the team.
The Tribune's eight newspapers, 23 television stations and interactive properties will continue to operate during the reorganization, the company stressed, adding that it "has sufficient cash to do so."
"This restructuring focuses on our debt, not on our operations," said Tribune chairman and chief executive Sam Zell, the Chicago real-estate titan who led the 2007 private equity buyout of the Tribune Co.
"This restructuring will bring the level of our debt in line with current economic realities and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company," he added.
Tribune is the second-largest US newspaper publisher in terms of revenue and the third in terms of circulation.
Besides the Los Angeles Times, which has slashed its editorial staff from 1,200 in 2001 to 660 today, it owns the Chicago Tribune, Baltimore Sun, Orlando Sentinel, Hartford Courant and several other papers.
According to US media reports, its cash flow is not enough to cover one billion dollars in interest payments due this year and a 512-million-dollar debt payment due in June.
The Tribune said that in the year since it went private it has repaid approximately one billion dollars of its senior credit facility and has been "rewriting the business model for its media assets."
"Factors beyond our control have created a perfect storm -- a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt," Zell said.
Like many US newspapers, the Tribune has been grappling with declining circulation, a loss of readership to online media, and a steep drop in print advertising revenue.
Many advertisers have been shifting their dollars to the Web but gains in online advertising revenue have failed to keep pace with losses on the print side.
According to the Audit Bureau of Circulations, circulation for 507 daily US newspapers fell 4.64 percent in the six months to September.
US media company EW Scripps Co., which owns newspapers in 15 US markets and 10 television stations, announced 400 job cuts last month and has put one of its flagship papers, the Rocky Mountain News, up for sale.
Another debt-ridden major newspaper chain, McClatchy Co., has carried out a series of layoffs this year and, according to the New York Times, is seeking to sell one of its flagship newspapers, The Miami Herald.
Gannett Co., the largest US newspaper chain, publishing USA Today and 84 other newspapers, announced 1,000 job cuts in August and is currently laying off another 10 percent of its workforce.
The prestigious New York Times itself has not been immune to the crisis gripping the newspaper industry.
The paper reported Monday that the New York Times Co. plans to borrow up to 225 million dollars against its mid-Manhattan headquarters building to ease a potential cash flow squeeze.
Tribune Co. reported a loss of 124 million dollars in the third quarter, compared with a net profit of 84 million dollars a year earlier.
The company has undertaken a series of moves in a bid to ease its debt burden in addition to seeking a buyer for the Chicago Cubs.
In May, it sold its stake in the New York newspaper Newsday for 650 million dollars and in October it said it had informed the Associated Press it plans to terminate its contract with the US news agency in two years.
The Chicago firm traces its history to 1847 with the birth of the Chicago Tribune. It became a publicly traded company only in 1983.
In 2000, the Tribune bought the Times-Mirror group, including the flagship Los Angeles Times, for 8.3 billion dollars in what was then the largest acquisition ever in the US newspaper industry.