Bad Day For Old Media
There’s a slew of bad news today for old media companies, and all signs are that it’s only going to get worse.
NEW YORK (AP) – Media conglomerate Tribune Co. has filed for bankruptcy protection.
The owner of the Chicago Tribune, the Los Angeles Times, the Chicago Cubs and other properties has $13 billion in debt.
Severe reductions in advertising this year because of the recession has put pressure on the company. Most of its debt comes from the complex transaction in which the company was taken private by real estate mogul Sam Zell last year.
Although the next major principal payment isn’t due until June, analysts say Tribune has been in danger of missing lender-imposed financial targets.
Tribune isn’t the only company in trouble. Scripps is looking to sell The Rocky Mountain News, McClatchy has put The Miami Herald on the block, and The New York Times is going into hock:
The New York Times Company plans to borrow up to $225 million against its mid-Manhattan headquarters building, to ease a potential cash flow squeeze as the company grapples with tighter credit and shrinking profits.
The company has retained Cushman & Wakefield, the real estate firm, to act as its agent to secure financing, either in the form of a mortgage or a sale-leaseback arrangement, said James M. Follo, the Times Companyâ€™s chief financial officer.
The Times Company owns 58 percent of the 52-story, 1.5 million-square-foot tower on Eighth Avenue, which was designed by the architect Renzo Piano, and completed last year. The developer Forest City Ratner owns the rest of the building. The Times Companyâ€™s portion of the building is not currently mortgaged, and some investors have complained that the company has too much of its capital tied up in that real estate.
The company has two revolving lines of credit, each with a ceiling of $400 million, roughly the amount outstanding on the two combined. One of those lines is set to expire in May, and finding a replacement would be difficult given the economic climate and the companyâ€™s worsening finances. Analysts have said for months that selling or borrowing against assets would be the companyâ€™s best option for averting a cash flow problem next year.
I suspect we’ll see more of this as the combined forces of the recession and the rise of the New Media continue to put pressure on newspapers and other media companies. There will be consolidation, acquisitions, and we may even see the death of a newspaper or two.