The Chicago Tribune's parent company was working with bankruptcy advisers at investment bank Lazard and law firm Sidley Austin to weigh financial options, sources told the Chicago Tribune for this morning's paper.
Tribune Co. has been struggling under a $13 billion debt load since real estate magnate Sam Zell took the company private last December in an $8.2 billion leveraged buyout. The company faces a deadline today on $70 million of unsecured debt it took on before Zell's deal.
Analysts have said the sale of the Chicago Cubs baseball team by the end of this year is critical to keeping Tribune Co. within its existing debt covenants, which prohibit borrowing more than nine times its earnings before interest, depreciation and amortization.
But even a potential windfall of a Cubs sale might provide only temporary relief if the Tribune Co. and its advertisers continue to be dragged down by the current economic crisis, which has compounded the effects of splintering audiences for media companies.
My question is, did Zell expect this outcome? Or did he figure, as others have done in the past, that because he made a lot of money in one arena he was therefore qualified to work in another?