Record number of newspaper publishers faced bankruptcy in 2009; three major Chapter 11 proceedings, including Tribune Co., still ongoing

Dec 30, 2009 — Forestweb

LOS ANGELES, December 30, 2009 (Forestweb) — The past year there were a record number of bankruptcies in the newspaper industry: At least three major publishers are in the midst of contentious bankruptcy proceedings, while another three companies entered and exited bankruptcy in 2009, Media Daily News reported Dec. 28.

The biggest current bankruptcy is that of Tribune Co., which publishes the Chicago Tribune and the Los Angeles Times. Chairman and then-CEO Sam Zell took the company private in 2007, which cost US$8.8 billion. On Dec. 8, 2008, Tribune Co. filed for Chapter 11 protection.

Rival legal claims by junior and senior creditors like J.P. Morgan Chase bank has tied up the process. In October, Zell, who has since handed off his CEO duties and title, said he hoped Tribune Co. would be able to exit bankruptcy by early 2010.

Philadelphia Newspapers is also undergoing bankruptcy. The Philadelphia Media Holdings subsidiary, like Tribune, made its $562 million purchase of The Philadelphia Inquirer and Philadelphia Daily News, from McClatchy, at the height of the credit bubble just before newspaper ad revenues plunged, Media Daily News noted.

The company declared Chapter 11 bankruptcy in February 2009, and creditors’ fights for control have delayed the process. A plan to use money from friendly creditors to pay the debts of hostile creditors is being challenged in court by the latter.

The September bankruptcy of Freedom Communications, publisher of the Orange County Register, will also likely continue into 2010. Freedom had hoped its plan to turn most of the company over to senior lenders in place of a $770 million debt would be quickly accepted, but earlier this month unsecured lenders successfully sued for the right to file an alternative bankruptcy plan.

Three newspaper publishers entered and exited bankruptcy within the year. The Sun-Times Media Group, publisher of the Chicago Sun-Times, was bought by a Chicago businessman in October after the paper’s employees’ union made big concessions. The Journal Register Co. exited bankruptcy in August after creditors, including J.P. Morgan Chase, accepted far less in debt payments than they were owed. In September, ownership of Star Tribune Holdings was transferred to lenders in a deal that reduced the debt from $480 million to $100 million.

The primary source of this article is Media Daily News, New York, New York, on Dec. 28, 2009.

All news reports are copyrighted by the respective papers.