Dec 8, 2008

Tribune files for bankruptcy*

The Tribune Co. has filed for Chapter 11 bankruptcy protection. Here's the memo from Sam Zell:
Partners,

We just announced that Tribune is restructuring its debt under Chapter 11 protection. I’m sure you saw the speculative coverage last night and this morning. I would have preferred everyone get the news from me first, but since our debt is publicly traded, we had to keep this decision confidential until we had a formal board decision. The Cubs franchise is not part of the filing.

Most importantly, I want to stress that we will continue to operate our business as usual. That includes meeting payroll and covering benefits (such as healthcare, disability and others), and paying vendors for all goods and services they provide to us going forward.

As is routine with Chapter 11 filings, we have filed “First-Day Motions” to get court approval on these and many other programs that are essential to continuing our businesses without disruption. We expect to get approval on these motions within the next few days.

You are also most likely wondering about the other aspects of your compensation. The 401(k) is unaffected by the filing, and in general, the existing benefits in the pension and cash balance plans are also unaffected by the filing. The ESOP is part of the ownership structure, so its value and role long-term will be determined in the restructuring. We believe the structure is a valuable asset to the company and that there are strong reasons to preserve it.

So, how did we get here? It has been, to say the least, the perfect storm. A precipitous decline in revenue and a tough economy have coupled with a credit crisis, making it extremely difficult to support our debt. All of our major advertising categories have been dramatically impacted.

By restructuring our debt, we will reduce the pressure on the company’s operating businesses, enabling us to pursue our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and that plays a vital role in the communities we serve.

This filing should not impact the way you do your jobs on a day-to-day basis. We will continue to operate responsibly in a challenging environment – aggressively managing costs and maximizing revenue opportunities. These are all things we would do whether or not we were restructuring our debt.

Our challenges are consistent with those facing all media companies, and an increasing number of companies across a variety of industries today. The reality is that we – along with the rest of the country – have very little visibility on where the economy is headed and how our businesses will perform given the recession.

The good news is that we have great brands, and we produce great products every day. It’s up to all of us to continue to focus on what it is we do best.

As your Chairman and CEO, I will continue to be actively engaged in the business and I remain committed to the company, to you and to our lenders. Randy, Gerry and the rest of the management team are equally dedicated to moving this company forward.

I’m sure you have a lot of questions that this email doesn’t cover. I encourage you to visit TribLink where we’ve posted some anticipated Q&A, or call the toll-free number we’ve established – 888-287-7568. We’ll also have information posted on Tribune.com. But, recognize that there is quite a bit we don’t know – or that we cannot confirm – at this point.

I am proud of the work we have done at Tribune in the last year. I’ve seen strong determination to take hold of this company and put it on a new course. As a result, we’ve reduced costs, gained market share, and laid the groundwork for creating a new business model out of traditional media. This restructuring will give us the time we need to build that model, to secure sustainable and growing cash flow, and to achieve the success the talented partners in this company deserve.

Sam
*Los Angeles Times, New York Times

15 comments:

Edward Barrera said...

It gets worse. Wall Street wants Medianews to buy the LA Times. It would "fit well," they say. Like concrete shoes.
http://online.wsj.com/article/SB122851089222183735.html?mg=com-wsj

Mike Rappaport said...

Omigod. Can you imagine the L.A. Times becoming part of LANG? I think that would be three different signs of the Apocalypse.

Anonymous said...

MediaNews must NOT buy the LA Times. That would be a disaster. Can you imgaine little Hitler running that paper?

Mike Rappaport said...

Who, dare I ask, is little Hitler?

Anonymous said...

On L A Observed it was reported that the gay magazine Clout was killed. The editor blamed it on prop 8. What a bunch of crap. The magazine wasn't profitable, a bad idea from the beginning, no new ad dollars, and the only reason it started was to take the heat off for the misguided dictate of speciality publications.

Shouldn't newspapers be required to tell the truth even on their own failures.

If some competent level of accounting looked at the entire speciality publication unit of lang it wouldn't be pretty.

Come to think of it, I can't put my finger on one good/new idea that has worked for the higher ups running lang.

I think I know who little hitler is, but, would rather wait for the writer to tell.

warpedcowgirl said...

Forgive me, for I have been away from SoCal for a while, but isn't LANG in serious debt? I'm sorry, but I just can't wrap my head around the fact that Wall Street wants an already wobbly LANG to be saddled with the LAT.
It's a stupid idea, but so was using a gov't program to give $500,000 home loans to illegals ... Oh, God. LANG IS GOING TO OWN THE LAT. F*ck.
Years ago, when LANG and the LAT had some "agreement" regarding the purchase of the Daily News, I wondered out loud in the newsroom if Deano was playing a game of chess that one day would lead to him owning the LAT. I was mocked; copy editors said I was delusional.
To those of you who laughed at me: I TOLD YOU SO!!!!

Edward Barrera said...

Actually, and I'm trying to remember, Medianews borrowed money from Tribune to buy the LADN with conditions. One was if Medianews ever sold the DN, the Tribune gets first crack. Whether you like it or not, business wise it would make sense if a consortium of Medianews-Lee-Freedom buys the LAT.

Anonymous said...

It does make sense Eddie. But the suspicion that everyone has that Deano is stretched thin is spot on. How could he make that work. With his credit rating at its worst, papers a really bad risk, the only reason to take on the LAT is to make IT into what the DN is now and completely shut down the DN.

I keep telling myself that Billy Dean always knew he could just start cutting jobs and and dismantling newspapers if things got bad. You can pretend you're still providing coverage to those places who just lost their paper by having reporters write token stories. When the critics start to harp, ignore them.

Oh and Little Hitler is a certain bald-headed idiot who worships baseball and the image in his mirrors and loves to exploit the communities he covers.

Anonymous said...

My bad. I thought it was the guy who runs LANG. Maybe they should build a car assembly line at their old facility and go for a bailout!

Mike Rappaport said...

It isn't fair to call Lambert "Little Hitler." He isn't the one pulling the strings. He's just a functionary a few steps down the chain who does what he can to protect his own job.

He may not be a guy worthy of respect, but he's hardly somebody worth hating.

And yes, he did fire me and I still don't hate him.

Anonymous said...

LANG and the LAT = one drowning man trying to save another.

They both suck ...

Anonymous said...

sounds like bankruptcy for good ole dean. debt as big as tribune with no relief in sight. sure hope his top generals with unsecured deferred compensation have figured a way to get to the front of the line.

not a lot of sympathy for him especially within his organization.

Anonymous said...

maybe Dean can apply for food stamps>

Anonymous said...

It's very noble of you to defend his character Mike. Unnecessary however as my unflattering nickname is not just due to the fact the company cut staff. In fact the layoff and dismissals are one of the few things that likely were not under Mr. Lambert's control. No matter how you slice it, Steve Lambert is responsible for a great many failures that go deeper and beyond the job losses. I'm not sure if you were privy to anything beyond the firings. But a lot of other people sure got a front row seat to some of the goings on. Interesting stuff.

Anonymous said...

I recognize that it is easy to throw stones at people from afar. Sometimes they are deserved, many times not. The group that runs LANG of which Mr Lambert is part of deserves all of the stones that come their way. They don't build a business or people, they only tear down. They don't provide vision, only life through a straw. The truth has no place in their management tactics.

Other than reduce costs, which a second year accountant could do, what have they brought to the table the last year? In talking to several current and past employees, nothing that has worked. Not one idea that has made sense and provided increased revenue or a better read. Very sad indeed.