Magazine article Editor & Publisher

Tribune Co. Facing Bankruptcy Emergency

Magazine article Editor & Publisher

Tribune Co. Facing Bankruptcy Emergency

Article excerpt

Tribune Co. is "preparing for a possible bankruptcy-protection filing as soon as this week, according to people familiar with the matter, opening a new front of trouble for the newspaper industry," the Wall Street Journal reported late Sunday.

"As Tribune continues discussions with its lenders to rework its debt load, the newspaper-and-television concern in recent days has hired Lazard Ltd. as its financial adviser and a legal counsel for a possible trip through bankruptcy court, according to people familiar with the matter.

"A Tribune spokesman said the company doesn't comment on rumors or speculation. A Lazard spokesman didn't immediately respond to a request for comment.

The appointments underscore the deepening distress for Tribune and other publishers. Newspaper businesses are being battered by dwindling advertising sales and carrying debt loads that are unmanageable in current market conditions. People in the industry expect some papers will need to seek bankruptcy protection or fold in coming months.

"Tribune has been on wobbly footing since last December, when real-estate mogul Sam Zell led a debt-backed deal to take the company private. Tribune so far has stayed ahead of its $12 billion in borrowings with the help of asset sales, but now dwindling profits are tightening the noose. The company's cash flow may not be enough to cover nearly $1 billion in interest payments this year, and Tribune owes a $512 million debt payment in June. …

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