Both the Wall Street Journal and New York Times reported on their websites late yesterday that Tribune Company has hired the investment banking firm Lazard and a special law firm to help the company prepare for a possible filing to seek federal bankruptcy court protection. That would be a petition for reorganization under Chapter 11 of the Bankruptcy Code.
Tribune’s financial woes stem primarily from the rapid deterioration of the newspaper industry. The company took on $12 billion in debt to go private as Sam Zell came onboard as CEO and declining cash flow could soon make the company unable to service its debt. The company is said to be in negotiations with its lenders, but is also preparing for the Chapter 11 option as well.
Tribune owns eight large daily newspapers, 23 television stations, WGN America on national cable, WGN-AM Chicago and the Chicago Cubs baseball team.