Tribune files for bankruptcy protection

Conglomerate trying to deal with $13 bil in debt

A year after Tribune was taken private and the television, sports and newspaper conglomerate proclaimed itself the largest employee-owned media company, it filed for bankruptcy protection.

Tribune said Monday it filed for Chapter 11 to climb out from under pressures brought about by some $13 billion in debt, but that its media operations would continue uninterrupted.

The announcement came the same day another storied newspaper company, the New York Times, said it would borrow as much as $225 million against its headquarters, a 52-story building in the middle of Manhattan. The company owns 58% of the 1.5 million-square-foot tower.

Tribune and the New York Times -- and news outlets nationwide -- are suffering from a recession that has advertisers reining in their spending. Those with large debt to service, like Tribune, are even more strained.

"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," chairman and CEO Sam Zell said.

The company -- which owns such papers as the Los Angeles Times and Chicago Tribune, along with 23 TV stations -- said the bankruptcy does not include the Chicago Cubs or Wrigley Field, the baseball team's home stadium. Those assets are for sale, with Mark Cuban, owner of the NBA's Dallas Mavericks and a host of media assets, reportedly offering the top bid of about $1 billion.

Since Zell took control of Tribune, it has sold off several assets, including a 10% stake in for $135 million and its Newsday newspaper for about $600 million.

Zell and his investment group paid $34 a share for Tribune last December, nearly a 50% premium on the stock's 52-week-low back then. At the time, he promised "to create a fresh, entrepreneurial culture that is fast and nimble, and which rewards innovation."

He also added a host of new board members including Jeffrey Berg, CEO of ICM.

Although a private company, Tribune reports certain financial results for the benefit of bondholders. During its second quarter, the company took a $3.84 billion charge to write down the value of its newspaper brands.

Tribune said it has repaid about $1 billion of its debt since going public last year, and that it owes another $512 million payment in June. But analysts have said that even if the company makes its payments on time, Tribune would violate some lending terms if its debt exceeds nine times its earnings before interest, taxes, depreciation and amortization.