Newspaper Bankruptcies--More to Come?

From Worldmagblog:

A sign of more to come?

by Kristin Chapman

On Monday, the Tribune Co. (which owns the Los Angeles Times, Chicago Tribune, The Sun of Baltimore, as well as the Chicago Cubs) filed for bankruptcy protection, listing $13 billion in debt and $7.6 billion in assets. Tribune Chairman and Chief Executive Sam Zell has called the move a “pre-emptive” act to preserve the company’s assets and allow for reorganization. It marks the first time, however, that a major newspaper publisher has had to take such a step in our downturn economy–and it may not be the last.

For a sense of who might be next, consider publishers that have put individual papers up for sale or have had trouble meeting their debt contracts.

Analysts said Tuesday that most publishers fall into that category. The exceptions often cited: Gannett Co., whose $4 billion in debt is reasonable for its size even though its revenue has shrunk, and McClatchy Co., which in September bought about two years of flexibility on $2 billion in debt by agreeing to higher interest rates.

According to Rick Edmonds, media analyst with the Poynter Institute in St. Petersburg, Fla., the Tribune case is considered “extreme.” But even still, some experts warn that the Tribune’s bankruptcy could have a ripple effect in the industry by making it more difficult or expensive for other publishers to get new financing. “A large-scale bankruptcy like this is evidence,” said Mike Simonton, a bond analyst at Fitch Ratings, “that the default risk across the space could be very high.”