LA Times Chapter 11

Whats going on with the LA Times?

You may have heard that the LA Times parent company-Chicago-based Tribune Co. filed for Chapter 11 bankruptcy protection in December of 2008. Tribune Co. got into trouble after Chicago Billionaire Sam Zell took the News Media Conglomerate private in 2007 with an ill timed leveraged buyout.  Tribune Co. owns 8 daily newspapers and 23 television stations, including KTLA Channel 5, the Chicago Cubs, and the LA Times.

Tribune Co. sought Chapter 11 because it was no longer able to service its $12 billion debt. In a move to raise capital, Zell is attempting to sell the Chicago Cubs. The winning bid in the closed bid auction came from the Rickets Family who own TD Ameritrade, their bid was $900 million.

Tribune Co. is doing everything that it can to keep the company out of creditors hands, however its hard for me to imagine that the senior lenders who are owed 8.6Billion will settle for any alternative other than a Debt-for-Equity swap. The Senior creditors include large banks such as JPMorgan, Chase, and Citigroup, as well as Oaktree Capital Management and Angelo Gordon Co. Currently the senior debt is trading on the open market for about 30 cents on the dollar, suggesting the company may be worth somewhat less than $3 Billion.

Here are some frightening figures for the print industry: Total U.S. newspaper advertising revenue plunged 28% in the first quarter, with both print and online businesses suffering big declines, according to the Newspaper Assn. of America.

Print advertising sales fell 29.7% compared with first quarter of 2008 to $5.9 billion. Online advertising revenue for newspaper companies slumped 13.4% to $696.3 million.


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