Tribune Co. Files for Bankruptcy

Zell: 'Perfect Storm' was beyond our control

Updated 5:54 PM CST, Mon, Dec 8, 2008

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The rumors are now official: The Tribune Co. has filed for bankruptcy protection because of its high debt.

The financially fragile company has been fighting a tough advertising market and a big debt load since Chicago real estate titan Sam Zell took the company private last year. Monday marked a deadline on a $70 million debt that the company apparently couldn't handle.

Monday's filing, made in bankruptcy court in Delaware, could give Tribune time to raise cash by selling off assets in a tight credit market. It also could put additional pressure on its lenders to ease their targets, possibly in exchange for higher interest rates, as many other newspaper companies already have done.

The company entered court protection with $13 billion in debt and $7.6 billion in assets.

However, the Cubs and Wrigley Field are not part of the Chapter 11 filing, according to a statement from the team.

"The sales process for the team, ballpark and related assets continues and its timetable for completion remains unchanged by today’s announcement by Tribune," the Cubs statement read. "It is business as usual at Wrigley Field as the Cubs continue to prepare for the 2009 season. We remain exclusively focused on our singular goal of securing a World Championship for our fans and the city of Chicago."

Chicago Breaking News, a Tribune Co. Web site, posted a statement from Zell about the bankruptcy filing

"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 in a release. [Read Excerpts of Memo Sent to Tribune Employees]]

Sources familiar with the matter tell the Wall Street Journal that Tribune Co., with television and newspaper interests across the country, hired Lazard Ltd. as a financial adviser.

Tribune Co. was one of several newspaper and television companies to announce layoffs last week due to the struggling economy. In total, the company has downsized hundreds of jobs at its newspapers, including 11 last week in the Chicago Tribune newsroom.

Tribune's biggest unsecured creditors are its lenders, led by JPMorgan Chase Bank and Merrill Lynch Capital Corp. JPMorgan is the administrator of $8.57 billion in senior debt and holder of about $1.05 billion of that. Others include Deutsche Bank AG, New York-based investment management firm Angelo Gordon & Co. LP, hedge fund Highland Capital Management LP and Goldman Sachs Group Inc.

Barclays Capital Inc., which bought key assets from Lehman Brothers Holdings Inc., is also among Tribune's creditors, with about $142.9 million in interest rate swaps.

Media industry players were also listed among the creditors. Warner Bros. Television is owed $23.7 million, Twentieth Television Inc. $8.1 million, Buena Vista Entertainment Inc. $6.2 million and NBC Universal Domestic Television $4.9 million.