BIZMOLOGY — Holy cow! Chicago-based Tribune Company appears likely to finally emerge from its extended bankruptcy later this year. The company has been mired in contentious Chapter 11 proceedings since December 2008.
Earlier this week a judge approved a plan to transfer ownership of the diversified media company to a group of hedge funds and banks led by Los Angeles-based private investment fund Oaktree Capital Group. The ruling cleared the way for the Federal Communications Commission (FCC) to move forward with Tribune’s application to transfer its broadcast licenses for radio and television to its new owners. Before it can emerge from a bankruptcy period that has already lasted more than three and a half years, Tribune still needs to reorganize its corporate structure and secure millions in new debt financing and credit lines.
In addition to its flagship newspaper the Chicago Tribune and Chicago-centric WGN, Tribune also owns the Los Angeles Times and television station KTLA in Los Angeles, along with more than 20 other television stations in about 20 markets and a stake in the Food Network. Tribune owned the one and only Chicago Cubs between 1981 and 2009. It sold its majority ownership in the professional baseball team to a group led by Chicago billionaire and lifelong Cubs fan Tom Ricketts. Tribune retained a 5% stake in the ball club.
The company fell victim to a perfect storm of recession and shifting fortunes in the media industry landscape. Tribune’s newspapers had experienced declines in advertising revenue for several years as readers turned to other forms of media for news and information. Those declines were exacerbated by the sharp recession that resulted in a weak advertising market. At the same time, Tribune struggled under the crushing weight of increased debt due to past acquisitions and Chicago billionaire Sam Zell’s $8.2 billion going-private transaction back in 2007.
Since then, Tribune has laid off thousands of employees, endured an embarrassing management crisis and, like all conventional media companies, struggled to find a new business model as the proliferation of websites and mobile devices transformed how people consume news. Many analysts are speculating that once the bankruptcy process has concluded the new owners will try to sell the company’s newspapers in order to focus on Tribune’s more profitable television assets.