Judge Approves Tribune Co.'s Plan to Exit Bankruptcy

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CHICAGO - DECEMBER 8:  Flags wave in the wind as the Tribune Co., publisher of the Chicago Tribune and Los Angeles Times, sought bankruptcy court protection from creditors outside the Chicago Tribune building December 8, 2008 in Chicago, Illinois. The 161-year-old newspaper and broadcast company was laboring under $12.9 billion in debt, according to today's Chapter 11 filing in U.S. Bankruptcy Court in Wilmington, Delaware.

Several large banks will now own the company after a bankruptcy process that took 3 1/2 years.

A Delaware bankruptcy judge Friday approved a restructuring plan for Tribune Co. to emerge from Chapter 11 bankruptcy.

The decision from U.S. Bankruptcy Judge Kevin Carey came after the Chicago-based company spent four years attempting to resolve the largest bankruptcy in the history of the media industry.

Tribune filed for bankruptcy in 2008, a year after the company -- which owns 23 television stations and many big newspapers -- was purchased by financier Sam Zell in a $13 billion leveraged buyout.

The company's assets have been valued at about $7 billion, and according to the terms of the bankruptcy plan, Tribune would emerge from bankruptcy with all of them. The new owners would be senior lenders, including JPMorgan Chase & Co., Angelo, Gordon & Co. and Oaktree Capital Management, which are swapping debt for equity.

It's widely expected that Tribune's owners will be seeking to divest the newspaper business, which includes the Los Angeles Times, Chicago Tribune and Baltimore Sun.

The new owners also will need to get approval from the FCC to transfer the company's TV and radio licenses. The broadcasting division of the company is the most prized and is valued at about $2.5 billion.

The main opposition to the reorganization plan has come from junior lenders, particularly New York hedge fund Aurelius Capital Management, which argued they were being repaid less and halted Tribune's first attempt to emerge from bankruptcy last year. Bondholders like Aurelius have been told to take less than a $500 million settlement on claims worth three times as much, but they have been pushing to collect damages from the banks involved in Zell's leveraged buyout and could appeal Carey's decision.

It's estimated that Tribune, founded in 1847, spent more than $400 million on lawyers during the three years in bankruptcy. The company also sold the Chicago Cubs and made moves to overhaul its management staff. Tribune reportedly has been considering NBCUniversal CEO Jeff Zucker and Dick Clark Productions CEO Mark Shapiro as possible candidates for its CEO role currently held by former DirecTV CEO Eddy Hartenstein. Tribune last reported revenue of $246 million and net income of $27.3 million.

E-mail: eriq.gardner@thr.com

Twitter: @eriqgardner