Baltimore Sun parent Tribune Co. filed for voluntary bankruptcy protection under Chapter 11 yesterday, in a bid to restructure crippling debt that the company said became unsustainable in a recession and the worst advertising climate in decades.
The media giant, owner of The Sun and community newspapers that make up the Baltimore Sun Media Group, said it has sufficient cash to keep operating its group of newspapers and television stations, among them the Chicago Tribune and the Los Angeles Times.
Tribune also owns the Chicago Cubs baseball team, which is for sale.
Baltimore Sun Publisher Timothy E. Ryan said in a letter to readers that there will be no interruption to its print publications or Web sites. In a memo to employees, Ryan said, "We will continue to serve the Baltimore market as we have for the past 171 years."
Sam Zell, chairman and chief executive of Tribune Co., said the bankruptcy filing was "about relieving the pressure on the company from too much debt."
"We believe we will be able to operate normally," Zell said in a conference call yesterday with Tribune reporters. "By virtue of the filing today, we will suspend making interest payments, which should give us added flexibility in order to continue moving forward."
In its filing yesterday in U.S. Bankruptcy Court in Delaware, Tribune listed assets of $7.6 billion and liabilities of nearly $13 billion owed to more than 1,000 creditors, including lender JP Morgan Chase Bank, which is the administrator for $8.5 billion in debt. Other unsecured creditors include Merrill Lynch Capital Corp., Warner Bros. Television and Paramount Pictures Corp.
Much of the debt came from a complex deal in which Zell took control of Tribune in an $8.2 billion sale a year ago. As a result of that deal Tribune, which has about 20,000 employees, is now owned by workers through an employee stock ownership plan.
Tribune and other media companies, long battling declining circulation and readership lost to online competitors, have struggled with steep advertising drops amid the faltering economy. The worsening credit crunch and expectations of a prolonged recession have added new layers of uncertainty.
Kelly McBride, an ethics group leader with the Poynter Institute, said that Tribune's bankruptcy is a sign of the financial turmoil the industry is facing and that more newspaper bankruptcies could be coming.
