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Tribune Files For Chapter 11

Saddled with a massive debt load, Tribune has filed for bankruptcy protection and is “voluntarily restructuring its debt obligations under the protection of Chapter 11,” according to a statement. The company asserted that it will continue to operate its myriad media businesses, including its 23 stations.

Tribune has stations in each of the top 5 markets and others in top markets like Houston, Seattle, San Diego and Denver. In a typical television climate those stations could fetch billions, but the TV market is also quiet. Tribune owns 13 CW affiliates, seven Fox outlets, a pair of MyNetworkTV stations and an ABC affiliate.

Tribune was acquired last year by Chicago billionaire real-estate investor Samuel Zell, who had hired bankruptcy advisers in recent weeks. To buy the paper, which is also owned by its employees in an employee stock ownership plan, Tribune was plunged into debt worth over $13 billion.

"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," said Zell, Tribune's chairman/CEO. "Unfortunately, at the same time, factors beyond our control have created a perfect storm--a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt.

"We believe that this restructuring will bring the level of our debt in line with current economic realities,” he said, “and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and plays a vital role in the communities we serve. This restructuring focuses on our debt, not on our operations."

Continuing troubles at Tribune papers, the disintegration of the advertising market nationwide and the real estate plunge that created the recession, caused a multitude of problems for Tribune.

 The Los Angeles Times said Tribune had roughly $300 million cash on hand, more than enough to make a $70-million payment due today. But it said executives couldn’t convince lenders to undertake a broader restructuring of the debt. That includes a $500 million principal payment on the leveraged buyout due in June.

The Tribune hoped to shorten some of its money gap with the sale of the Chicago Cubs baseball team, which some said could get reap more than $1 billion. But despite the popularity of the club nationwide, even that acquisition is stalled by the current credit crisis. The franchise, including Wrigley Field, is not included in the Chapter 11 filing. Tribune said efforts to monetize the Cubs and its related assets would continue.

A spokesman for FCC Chairman Kevin Martin had no comment on the news about Tribune. Martin caught some flak from media activists for a decision last year to grant Tribune a temporary waiver of the newspaper-broadcast cross ownership rules to extend station-newspaper combos in five markets. The waivers paved the way for the purchase by Zell, though they also led to Tribune challenging the FCC’s newspaper-broadcast rule revision because it did not lift the ban on cross ownerships altogether.

Without the waivers, and the Zell deal, Tribune had argued that the company would be

auctioned off in pieces

. But the deal also meant over $4 billion in debt that has to be repaid, a sum that has grown even larger as media revenues have shrunk in a recession that began about the time the FCC approved the waivers last fall.