The bloodletting at L.A. Times, Chicago Tribune has been staunched, but the money guys who are likely to take over may not care
What will be the fate of the Tribune Company’s flagship newspapers when the giant media company emerges from bankruptcy later this year?
While a judge is expected to approve a reorganization plan in March to clear away the company’s crushing debt, the fate of Tribune newspapers like the Los Angeles Times and Chicago Tribune is not at all clear.
That’s not because the newspapers are failing financially. Indeed, reports from knowledgeable executives inside the Times and Tribune suggest that the bloodletting has been staunched, the newspapers are reasonably profitable and that some semblence of stability can be presumed.
But the creditors who are expected to emerge as the new owners of the company may not care. Leading creditors like JPMorgan Chase, the private investment firm Angelo, Gordon & Co and Oaktree Capital Management, presumed to be the likely new owners, will place a premium on maximizing value for those assets now as print continues to decline over time.
And it may be an opportune time to sell a prestigious title like the L.A. Times. Before Tribune was bought by Sam Zell in 2007 and became mired in bankruptcy, the paper had garnered the interest of local billionaires Eli Broad, Ron Burkle and David Geffen. (At the time, the property could not be sold separately from Tribune Company because of the tax implications.)
"Tribune's long standing policy is to decline comment on speculation or rumor regarding the company or its assets," spokesman Gary Weitman told TheWrap. "We will decline comment on this story."
An individual with knowledge of the company’s financials said that both the L.A. Times and Chicago Tribune were now operating at a profit, and that some analysts believe the Los Angeles-based daily could go for as much as $1 billion. The more profitable but less prestigious Tribune would be worth substantially less but still bring in a significant sale price.
The company is now private, thus no verifiable revenue figures are available. Currently, the company is run by a four person Executive Council, including Los Angeles Times publisher Eddy Hartenstein, who is also co-President of Tribune.
Tribune owns 10 daily newspapers, with the L.A. Times as its most prominent and largest daily, and the flagship Chicago Tribune close behind. Other papers include the Orlando Sentinel and the Hartford Courant.
In October 2009, Tribune sold the Chicago Cubs and Wrigley Field to Tom Ricketts.
The company’s remaining assets are its 23 television, and cable and radio stations, which would remain the hub of the company if a sale were completed. The company runs 13 CW stations and seven Fox stations and owns one third of the Food Network, a combined reach of 80 percent of American TV households.
Amidst that, there has been no shortage of Tribune sideshows in recent months.
There was the resignation in the fall of CEO Randy Michaels and other company executives for frat boy behavior.
A number of creditors, including the large Unsecured Creditors’ Committee, have taken legal action or have sought the right via a trustee to take legal action against Zell, who has said he will leave the company post-bankruptcy, and other company officers involved in the buyout.
Michael Eisner has been cited as potentially taking over the company. The former Disney CEO is a close friend of John Angelo, head of investment firm Angelo, Gordon & Co. The NYC-based firm is a significant player in crafting a reorganization plan to get the company out of bankruptcy court in Delaware.
Three reorganization plans were mailed out to company creditors on Dec. 22 with creditors having until Jan. 28 to actually cast their votes.
The judge in Tribune’s Chapter 11 case has scheduled March 7, 2011, as the beginning of five days of argument on the merits of the submitted plans and accompanying disclosure statements.
At the end of that hearing, if all goes ahead, Judge Kevin Carey will confirm a plan to exit the company from Chapter 11. That final plan, which won’t necessarily be the one with the most creditor votes, could be one of the submitted reorganizations or an amalgamation of two or more.