Troubled media giant Tribune Company, the owner of the Los Angeles Times and other newspapers, is consulting with bankruptcy experts to consider its options in the face of 13 billion dollars in debt and plummeting advertising revenue, the Chicago-based firm said late Sunday.
The move reflects the increasingly dire straits facing US newspapers, as the recession drains advertising revenue at the same time as the internet pulls advertisers and readers away from daily papers, dpa reported.
According to Fortune Magazine, the next paper that could face a similar crisis is the New York Times, which could have difficulty making a 400-million-dollar debt repayment in May. The paper reported Monday that The New York Times Company plans to borrow up to 225 million dollars against its newly completed Manhattan headquarters to ease its credit problems.
Rumours of the Tribune's problems were first confirmed in an article on the website of the Chicago Tribune. "We haven't made any decision," Tribune Co spokesman Gary Weitman said. "We're looking at all of our options."
The Tribune Company, which also owns the Baltimore Sun, 23 TV stations, cable TV superstation WGN and the Chicago Cubs baseball team owes its bank and creditors some 12 billion dollars and has hired investment bank Lazard Ltd for advice on a possible Chapter 11 bankruptcy filing, the Los Angeles Times reported.
The company has a 512 million dollar debt payable in June. But plans to repay that by selling assets such as the Chicago Cubs baseball team have evaporated as the credit crunch makes it difficult for potential buyers to raise the cash.
"Getting a deal done on the Cubs or on a number of other properties is extremely difficult. Other sources of capital and debt have been significantly hampered," an executive told the paper. "Layer on that a business that has been in decline for years and a failing economy, and it's a perfect storm."
The crisis comes just a year after the company was bought by investor Samuel Zell in an 8.2-billion-dollar deal that left the company heavily leveraged.
It has laid off hundreds of employees and combined operations in an attempt to pay its bills, but reported a third-quarter loss of 121.6 million dollars last month.
"We are operating in an exceptionally difficult financial and economic environment," Zell said when reporting the loss. "The newspaper industry continues to see extraordinary declines in ad revenues, and Tribune is no exception."
