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Debt-Saddled Tribune Co. Files for Bankruptcy Protection
The "vast majority" of retirement and pension plans are safe under the restructuring, the company said yesterday, but some may not be, given the number and complexity of the various plans offered during Tribune's 161-year history.
"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," chief executive Zell said in a statement yesterday.
"Unfortunately, at the same time, 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."
Newspapers have been losing average daily circulation since 1987, though advertising revenue remained high. But the rise of the Internet and other options for news, information and reader time have sent readers and advertisers away from newspapers in the past half-decade, crippling them.
Despite the hard times, the most recent newspaper bankruptcy of note may have been that of The Washington Post -- in 1933.
Morton said Tribune is only the most prominent and first of several other newspaper companies to face potentially severe debt problems.
Morton noted that the Pennsylvania-based Journal Register chain of smaller papers recently borrowed about $500 million to buy newspapers "in, of all places, Michigan." The Journal Register is putting properties up for sale and its stock is trading for pennies per share.
Morton also pointed to McClatchy Co., the nation's second-largest newspaper chain, which took on $3.5 billion in new debt and assumed $2 billion in existing debt when it bought the Knight Ridder chain in 2006. Since that purchase, shares of McClatchy have plummeted from $48 per share to close yesterday at $2.46.
And yesterday, the New York Times reported that its parent company will put its new Manhattan skyscraper up as collateral as it seeks $225 million in loans to offset a "cash-flow squeeze."