As widely reported, The Tribune Company, owner of the Chicago Cubs, the Chicago Tribune, the LA Times and much more, filed for bankruptcy yesterday:
Facing what Chairman Sam Zell called a “perfect storm” of forces roiling the media industry and the broader economy, Chicago-based Tribune Co. filed for Chapter 11 bankruptcy protection from its creditors Monday.
The move opens the most painful episode yet in a tumultuous period at the company that started when the former owners of the Los Angeles Times, which Tribune Co. acquired in 2000, forced the company to seek a restructuring more than two years ago.
Although, generally speaking, the newspaper business and the advertising business are in the toilet now, pundits were quick to blame owner Sam Zell’s over-leveraged business plan:
Even when measured against today’s sub-prime standards for CEO performance, Zell is in a class by himself. The CEOs of the Big Three auto companies may have paid a good deal less attention to the quality of their cars than they should have, but Zell repeatedly and profanely expressed his disdain for quality journalism. The company’s leading papers, the Chicago Tribune and the Los Angeles Times – the latter one of the four great American newspapers – carried too much national and international news, he decreed. Hundreds of excellent reporters and editors were unceremoniously shown the door; the Times lost its Sunday book review and opinion sections; the Washington bureaus of the papers were consolidated and cut back at the very moment when readers are following decisions made in Washington more intently than they have in decades.
And from Forbes:
Bad economy or not, if it wasn’t for Zell and the enormous debt load he packed on the company, Tribune Co. would be trundling along profitably. It hauled in operating cash flow–which is net before taxes, depreciation, amortization and interest–of $90 million on $1 billion in revenue in the third quarter. In the six quarters before that, Tribune Co. was hauling in $200 million to $270 million per quarter in cash flow. Sure, lots of that comes from the company’s sports and broadcast arms. But even Tribune’s publishing group, which includes those oh-so-old-fashioned newspapers, pulled in $13 million in operating cash flow on $654 million in revenues last quarter.