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Debt-Ridden Tribune Co. Considers Bankruptcy
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In May, Tribune sold Newsday to Cablevision for $650 million. Last summer, Zell said he was hiring real estate advisers to ascertain the value of the Tribune and L.A. Times buildings. Staff have been cut across the company in an effort to save money.
The L.A. Times, the largest paper in the chain, has drawn steady interest, with suitors including entertainment mogul David Geffen. Prior to the economic crisis, the paper was estimated to be worth as much as $1 billion. But Tribune was reluctant to sell the paper, which still generates substantial profit.
Asset sales, however, may not be enough to save the venerable chain, which grew from the namesake Chicago Tribune -- the Midwest's paper of record since the mid-19th century -- and expanded with the 2000 purchase of the Times Mirror papers, which included the L.A. Times, the Sun and other papers.
Zell, who made his money in commercial real estate, emerged as the only serious bidder when Tribune was forced onto the sales block by a boardroom revolt staged by a group of minority shareholders who wanted to cash out, angered by the company's falling share price since the 2000 merger.
To finance the deal, Zell put up $315 million of his own money and got more than $8 billion in new loans on top of the company's existing $5 billion in debt, a move many analysts questioned at the time.
Zell got Washington help to take over Tribune.
In order to secure $4.2 billion in new debt, Tribune had to prove to creditors that it would be able to retain the revenue-generating ownership of television stations in cities where it owns newspapers -- a violation of Federal Communications Commission rules. The FCC had given Tribune a number of waivers through the years to allow the so-called cross-ownership, but the waivers required periodic renewal.
However, in December 2007, the FCC granted a permanent waiver to Tribune to allow the cross-ownership of its Chicago stations (WGN radio and TV) and two-year waivers for the other stations, clinching the deal for Zell.
