New York Times & Tribune Co's In Trouble

Instead of breaking news stories this week, it appears that the news is going broke. Tribune Co. has filed for bankruptcy and The New York Times Co. is borrowing against its assets.

The Tribune Co., the owner of the Chicago Tribune, the Los Angeles Times and other properties, has announced today that it is filing for bankruptcy protection in order to try to cope with an estimated $13 billion (US) of debt and $7.6 billion in assets. The Chicago based company says that advertising revenues have dropped dramatically over the last year due to the recession. The Tribune Co.'s next principal payment of $563 million is not due until next June, however, lenders did set targets for the company which analysts say the Tribune will probably miss. It was only last year, in 2007, when Sam Zell, a Chicagoan billionaire entrepreneur, took the Tribune Co. private via a deal that was worth $8.2 billion. The deal was an Employee Stock Ownership Plan. Today, Zell told employees that the Chicago Cubs franchise is not a part of the bankruptcy filing and said in a memo:

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.

Also today, the International Herald Tribune is reporting that the New York Times Co. is facing a cash squeeze of its own and is planning on borrowing up to $250 million (US) against its Manhattan, New York headquarters building. The paper says that it is borrowing the money because it is "grappling" with the worldwide credit crunch and also it's own shrinking profits. The Times building is located on Eighth Avenue and is a 1.5 million square foot office tower. The New York Times Co. owns 58 percent of the building and has hired real estate firm Cushman & Wakefield to act as its agent in securing financing.