This sounds like pretty scary news to me. You had better get those checks into us!
Tribune Co. seeks Chapter 11 protection from creditors
Hit hard by the recession and loss of advertising to the Internet, a major newspaper company has filed for bankruptcy protection from creditors.
BY MATTHEW HAGGMAN AND MARTHA BRANNIGAN
Media giant Tribune Co., owner of the Sun Sentinel, filed for bankruptcy protection from its creditors Monday in the first filing for a major newspaper company amid mounting industry woes.
The filing comes as Miami real estate developer Jorge Perez confirmed Monday that he and Florida sugar magnate Alfonso Fanjul held talks with executives from the McClatchy Co. and The Miami Herald Media Co. about a possible sale of the Miami paper.
''Nothing has materialized,'' said Perez, chairman of Related Group in Miami.
Perez said he met a couple times with newspaper executives about a month ago but hasn't talked since.
''It didn't proceed any further than that, at least on my side,'' Perez said.
Fanjul, CEO of West Palm Beach-based Florida Crystals, couldn't be reached immediately for comment.
It isn't clear whether McClatchy -- whose stock has slid 80 percent this year -- has met with other potential buyers.
''It's absolutely not our policy to comment on any market discussions of any acquisitions or dispositions,'' said Elaine Lintecum, treasurer of Sacramento, Calif.-based McClatchy, which owns 28 other daily newspapers in addition to The Herald and El Nuevo Herald.
The newspaper industry is in upheaval as it confronts a severe recessionary downturn in advertising just as it is coping with a structural revolution as advertisers and readers shift to the Internet.
Although newspapers are moving rapidly to adapt to the Web, with multimedia content and continuous news updates, the new revenue from online hasn't grown fast enough to make up for the lost revenue from advertising and circulation at the printed newspaper.
John Morton, president of Morton Research, in Silver Spring, Md. said ``half or more of the advertising revenue of big city newspapers comes from classified ads -- from auto, real estate and job formation. And all three are in the tank since the middle of last year and unlikely to come out of it until the latter part of '09 or 2010.''
But the larger question, Morton said, is ``how much of what newspapers have lost will they be able to get back when the recovery comes.''
The Chicago-based Tribune Co. also prints the Los Angeles Times and Chicago Tribune and owns a string television stations. It owns the Cubs and Wrigley Field, home of the baseball team, which aren't included in the filing.
Tribune Co. has $13 billion in debt and $7.6 billion in assets. The company was taken private a year ago by billionaire Sam Zell.
Although Tribune's next major principal payment on the debt of nearly $600 million isn't due until June, Tribune has been in danger of missing lender-imposed financial targets at year's end.
To generate additional cash, the Tribune has been looking to sell the Cubs, Wrigley Field and the company's 25 percent stake in a regional sports cable channel.
In a memo to employees, Zell said: ``We will continue to operate our business as usual.''
He added that the Chapter 11 petition would enable the company to restructure its debt.
This summer, Atlanta-based media company Cox Enterprises said it was selling all but three of its dozens of papers but plans to keep the Palm Beach Post.
McClatchy Co., parent company of The Miami Herald, itself took on significant debt when it purchased Knight Ridder, former owner of The Miami Herald, in 2006. It's carrying $2.07 billion in debt, which it has been paying down.
By Dec. 31, the company expects to close on a sale of 10-acres surrounding The Miami Herald's bayfront offices for $190 million. It plans to pay down debt with proceeds from that deal.
McClatchy has said in public filings that the credit crunch could affect the buyers' ability to get financing. ''If the deal doesn't go through, we will have a valuable piece of land we can sell to someone else,'' Lintecum said.
But the prime real estate owned by McClatchy is the waterfront site of the Herald building. It was not part of the parking lot deal.
Perez, a residential builder facing his own financial challenges amid the housing downturn, said the real estate wasn't his primary interest in The Miami Herald. ``It is a fantastic asset for this community and I would love to see The Herald in local hands.''
This report was supplemented with material from The Associated Press.
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