STEVE INSKEEP, Host:
Some of the newspapers reporting on the bailout have their own trouble. Papers owned by the Tribune Company have a total readership in the millions and debts in the billions. The Chicago-based company has filed for bankruptcy protection. NPR's David Folkenflik has the story.
DAVID FOLKENFLIK: Gary Weitman is a senior vice president of Tribune. He says the company won't skip a beat, despite filing for bankruptcy.
M: I can assure you, you will see your paper in the morning. And our readers, our listeners, our viewers, our advertisers will see absolutely no interruption of service or any difference in the quality of the paper they've come to expect.
FOLKENFLIK: But it's been a rough time for Tribune, the owner of eight big dailies plus 23 TV stations and the Chicago Cubs. Real estate magnate Sam Zell took the company private a year ago, putting down only several hundred million dollars of his own to do it. That highly leveraged deal left the company deeply in debt - just shy of $13 billion, according to bankruptcy papers filed yesterday in Delaware. And the economy has gotten a whole lot less forgiving in the intervening year. Tribune's Gary Weitman.
M: We simply have too much debt in light of the current environment. And this gives us the opportunity to continue operating our businesses without interruption while we go about the process of restructuring our debt and making it more manageable.
FOLKENFLIK: Bankruptcy is a story common enough to airlines and Internet start-ups, but it's a new one for major newspaper companies. Yet in retrospect, the equation seems pretty simple. Newspaper revenues are falling steeply as advertisers and readers head to free Web sites. And Tribune's debt payments are daunting.
M: It really is just a company fessing up that they need some help. It's a way of putting their creditors at bay. It's a way to legally work through some of their problems - in this case, massive amounts of debt.
FOLKENFLIK: Lauren Rich Fine is research director at ContentNext, a digital media company. Some suitors previously expressed interest in the Los Angeles Times and the Baltimore Sun, but Fine says it's a tough time for a fire sale.
M: This is hardly the market to try to do wholesale sale of assets. It doesn't matter what the industry, the credit markets are very difficult. It would be hard to get financing.
FOLKENFLIK: And that's a tremendous distraction. Former Minneapolis Star Tribune editor Tim McGuire says journalists are talking these days, but about...
M: Things like leverage. And you're talking about the soundness of the pensions and the future of the health plans. And you're not talking about journalism, you're talking about survival.
FOLKENFLIK: But Tribune is not alone. The owners of the Star Tribune and the Philadelphia Inquirer are also laboring under heavy debt obligations, as are the McClatchy and MediaNews chains. It makes Tim McGuire wince.
M: Quality journalism has been looking for a good business model for the last few years. But right now, quality journalism is looking for owners who are not leveraged up to their turtlenecks.
FOLKENFLIK: Last spring, Zell made the rounds to his new properties but sometimes chafed at what he felt was resistance to change, as in this recording obtained by NPR of a closed-door meeting with Tribune journalists in Washington, D.C.
(SOUNDBITE OF CLOSED-DOOR TRIBUNE COMPANY MEETING)
M: I don't have a choice. Every month, I've got to make the payment. Every month, I've got to make the payment. So the question is, how do I make the payment? Well, I can't have redundancy, and I can't have a bloated Washington bureau for a declining business. It makes no sense.
FOLKENFLIK: Under Zell, buyouts and layoffs have been accompanied by snappier layouts and shorter stories driven by the desire to lure back vanishing readers. So the story of Tribune continues. This week: Chapter 11. David Folkenflik, NPR News. Transcript provided by NPR, Copyright NPR.
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