The Tribune Co.'s financial mess
by 3744nsheffield on Dec 3, 2008 3:34 PM CST
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Fitch Co., which rates corporate debt, issued a report today that says it expects more newspapers and newspaper groups to default on their debt, be shut down and be liquidated in 2009. (The report also says that several cities could go without a daily print newspaper by 2010.)
What does this have to do with Tribune Co. and the Cubs' sale? The report identifies Tribune debt as junk, with a serious possibility that Tribune Co. will default and not be able to meet its obligations. It also assigns a negative outlook to the company and the newspaper sector, which means its credit rating is probably going to get worse. If that happens, it's time for what the bankers call chaptering out -- bankruptcy.
Are we in a situation where a bankruptcy court could force a Cubs sale? I couldn't find the Fitch report -- the account I saw was in a newspaper trade journal that didn't discuss the Cubs or go into much detail about the Tribune Co. But this is the first serious discussion I've seen that any of this is possible.
This is a FanPost and does not necessarily reflect the views of SB Nation or Al Yellon, managing editor (unless it's a FanPost posted by Al). FanPost opinions are valued expressions of opinion by passionate and knowledgeable baseball fans.
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I suppose a sale COULD be forced.
But I will defer to those with more knowledge of bankruptcy proceedings.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
I blame the internet
Okay, just so I understand it... in your wildest fantasy, you are in hell. And you are co-running a bed and breakfast with the devil.
It is all Global Warming's Fault
"When two Whales Fight, many Shrimp Die" - Korean Proverb
by TheRiot Police on Dec 3, 2008 3:45 PM CST up reply actions
Seriously
its destroyed or at the very least is destroying the daily newspaper business
Okay, just so I understand it... in your wildest fantasy, you are in hell. And you are co-running a bed and breakfast with the devil.
It is sad
It’s especially sad in Chicago because our crooked politicians can go ape-s**t now in regards to corruption. The Tribune and Sun-Times were at least 2 of the sherifs in town. Say good bye to local investigative journalism.
Formerly NO100
by jerry morales rules on Dec 3, 2008 4:12 PM CST up reply actions
Newspapers
That’s something to see the financial trouble a paper like the Chicago Tribune is experiencing. I don’t how this affects the Baltimore Sun and Los Angeles Times.
"The big possum walks late." - Harry Caray
Other than Zell trying to sell both of them...
…it doesn’t affect them at all :^)
Sweet Lou for Mayor in '11.
In some ways I agree
and in other ways I disagree. It probably has had a negative affect on the selling of the daily papers themselves but I would think it also created new revenue streams and lean opportunties for the company.
A few of examples where I think they would/could inject profit into the business
1)www.chicagotribune.com has the potential to reach customers outside of the chicago area that the physical newspaper can’t. It allows them to maintain a larger customer base and has a direct affect on what they can charge for advertising.
2)New Revenue Streams are generated by the advertising on the website. Allows them to supplement the loss revenue stream in print media and to be more competitive in their advertising prices for the print media.
3)It would allow them to lean out the newspaper. The can chose not to print certain things and instead put them in the online edition. This would save valuable print space for real news
4)Labor Costs – The vastness of the Internet and the power of other technologies has the potential to make the employee more productive from the confines of their desk.
The papers need to try to re-invent themselves in order to stay viable. The boomers are the last generation that will not be raised to be computer/internet/cellphone savy so as they move on the demand for the daily newspaper is probably going to decline even more.
"When two Whales Fight, many Shrimp Die" - Korean Proverb
by TheRiot Police on Dec 3, 2008 4:46 PM CST up reply actions
Another barely tapped revenue stream for Tribco
is WGN America. For those not in Chicago, this cable channel continues to revamp to make itself a national player. I have never heard radio spots for the national service until the past few weeks. Commercials for original WGN America programming are now running. The new management team is actually trying to draw viewers to its’ programming, like a real network should.
If WGN America can finally crack the cable ratings (sorry, Cubs baseball isn’t enough) they can raise their rates — even in a down market. I’m sure they’ve been rock-bottom for years, so there is nowhere to go BUT up.
by San Diego Smooth Jazz Man on Dec 3, 2008 4:55 PM CST up reply actions
i suppose I shouldve mentioned that
I thought it was killing the tangible delivery/reading aspect of newspapers, not the actual profession of journalism.
But i doubt thats entirely responsible for the Tribs problems
Okay, just so I understand it... in your wildest fantasy, you are in hell. And you are co-running a bed and breakfast with the devil.
No, the lack of significant revenue
from WGN America isn’t a big factor. But, in a down electronic media sales market — any income from this division (which was almost an afterthought — why even bother with this ‘network’ if you don’t exploit it?) TBS, TNT, USA, A & E, etc etc….took a long time to nurture into significant players in the cable industry. It has taken Tribco 25 + years to realize the ‘Superstation’ wasn’t going to gain ratings without any work. (The only significant ratings that can be found for WGN America is in the midwest. That’s one of the reasons that WFBQ/Indianapolis’ “Bob & Tom” morning radio show is now being edited down to a Midnight EST feature on WGN America.)
It’s similar to 40+ years of Bill Wirtz believing that all he had to do was open the gates of Chicago Stadium/United Center and the fans would show up, no matter what. That’s outdated thinking. Now, what’s left of Tribco Broadcasting is scrambing to make up time.
Strangely, Tribco’s old Hollywood production unit — abandoned some years ago, would have been the perfect place to start sculpting programming for a national service. They didn’t do much, and probably wasted money in the process.
by San Diego Smooth Jazz Man on Dec 4, 2008 1:49 PM CST up reply actions
Something I never really understood...
is why the “traditional” newspaper companies don’t work on something in between a daily paper delivery and the internet connectivity.
Take something like this digital reader and work with the company to develop a daily delivery system. A docking station next to your computer that automatically downloads the daily paper at 3AM while you sleep. It would be easy to take to work on the L or bus in a city like Chicago. Keep a subscriber from canceling his daily delivery while also eliminating the paper needed to print his edition.
Not to mention you could open up your subscriber base to transplanted Chicagoans who live all across the US who might like their local Phoenix, Denver, St. Louis, etc papers but want the Chicago sports section. If this was correctly, I could see myself subscribing to at least three “newspapers” to read instead of just the one I get delivered.
That is an extremely cool device.
I’d get one if it were mass-produced and reasonably priced. Then you could deliver the equivalent of the print newspaper that way.
The dinosaurs have to get their heads out of the sand first, though. (Pardon the mixed metaphor.)
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
wow
that is awesome
Dear Santa:: All I want for X-mas this year is an official 2009 Jake Peavy Cubs Jersey. Oh and a Beimel one too. I've been a real good guy for the most part!!!
Yeah, but would you take it
into the bathroom?
Facts are meaningless. You could use facts to prove anything that's even remotely true! --Homer J. Simpson
by Shanghai Badger on Dec 3, 2008 9:52 PM CST up reply actions
Hmm. I won't be asking to borrow yours, then.
The device has been “flagged”
Facts are meaningless. You could use facts to prove anything that's even remotely true! --Homer J. Simpson
by Shanghai Badger on Dec 4, 2008 3:13 PM CST up reply actions
The other thing...
that would be interesting is what exactly would the revenue be with a device like that. The world is obviously run on ad revenue but a device like that might only appeal to buyers if you could guarantee no ads (kind of like what satellite radio originally promised). Since it is mostly digital the only big cost I could see is converting it from the file they probably use now to print it onto paper into the file they could use on a reader. There’s no delivery cost, gas, paper, ink, delivery guy’s salary, etc.
I also would hope that there would be either a tablet style writing implement or a way to print out a page or two for those that like to do Sudoku or crossword puzzles.
If it had a virtual keyboard...
… you could do puzzles like that without a writing implement or stylus.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
TechCrunch Tablet-A
http://www.techcrunch.com/2008/08/30/update-on-the-techcrunch-tablet-prototype-a/
I believe this is what you’re looking for. Don’t worry; they will be coming soon. With LCD prices dropping like crazy, this is the future of tablet-like devices.
by dr stabbingworth on Dec 4, 2008 1:43 PM CST up reply actions
Interesting.
A little different than the one above in that it’s a web-enabled device rather than something used to push newspaper or magazine content onto.
But it just might work, too.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
Newspapers do need to re-invent themselves to survive...
but so far, there’s little agreement on how to do so. Some say more local information and news that one might not get from the usual internet news sources might be one direction. It’s going be interesting to see what’s going to happen.
As far as revenue being generated by advertising on the newspaper website, that’s part of the problem. The revenue that’s generated by the website advertising can’t match the amount that used to be generated by print side. With paper, you have nearly all the pages available to fill with advertising at different rates depending on the size and placement of the ad, day of the week etc., plus one-sheet inserts and multi-page flyers. Maybe there are ways to match the revenue but so far, they haven’t figured it out.
"Pinky, are you pondering what I'm pondering?"--The Brain
one way or another
I wish the sale of the cubs would end immediately. This is beginning to be a very dark cloud hanging over.
Dear Santa:: All I want for X-mas this year is an official 2009 Jake Peavy Cubs Jersey. Oh and a Beimel one too. I've been a real good guy for the most part!!!
It depends
On what type of Bankruptcy they file for (assuming they do) and whay type of judge they draw to oversee the proceedings. Generally yes, a Bankruptcy judge has the power to force a sale. His primary responsibility is to the creditors, and if there is an asset that can be sold to raise cash, he can make that happen.
Cubs Win!! Cubs Win!
But let's not forget that
MLB has the anti-trust exemption. I’m sure the bankruptcy judge is going to wait to hear from Bud Selig to make sure the new Cub owner is acceptable to Bud and Co. before he worries about those silly creditors.
Formerly NO100
by jerry morales rules on Dec 3, 2008 3:53 PM CST up reply actions
Chapter 7 and Chapter 11
Could someone clue me in on what the difference is between the two?
"The big possum walks late." - Harry Caray
Chapter 4?
count it!
Okay, just so I understand it... in your wildest fantasy, you are in hell. And you are co-running a bed and breakfast with the devil.
I think
Chapter 11 means that the business can still function, but the debts are erased. Chapter 7 means that the company is liquidated and all assets are sold. You stil go on after Chapter 11 but Chapter 7 is the end. The Cubs could be sold off as one asset under Chapter 7.
Formerly NO100
by jerry morales rules on Dec 3, 2008 4:02 PM CST up reply actions
Thats a pretty simple analysis
But I’m pretty sure thats what you were going for, however debts are really not erased (they can be to some degree but it depends on the class of creditor – secured vs unsecured). Many companies go through Chap 11 for many many years restructuring debt with their creditors and reorginizing the company to meet those obligations.
this is simple economics
Daily Newspapers are too expensive to operate. They need to sell ad space on a daily basis that is losing its market utility because the expanse of far more effective and less costly marketing mediums.
Daily or immediate information is available in so many ways especially the Internet. It used to be that the Daily’s were the single source of Cubs or Bears or Bulls information, but now this website is a better and more complete source of Cubs information. It is only the opinions of certain writers that is found interesting. Sure some sourced information is from the newspapers but it is so quickly transmitted here. Furthermore MLB or Cubs.com can offer the same information as the newspapers.
So what is their market utility and thus their value. Here in CO Springs the Daily has lost its circulation by almost half while a weekly free (ad revenue) newspaper which offers a unique utility of fewer but far more in depth news and opinions has a circulation that is double and is thriving.
Failure is a decision by the marketplace. Newspapers don’t get it, they have to find a market value their readers and sponsors see as a utility. Everything is upside down—-distribution costs, manufacturing costs, talent costs for them.
The weekly newspaper simply has a distribution center locations all over the city where people pick up papers for free inside grocers, convenience stores, even churches, colleges, coffee shops, office buildings et cetera. Their articles are can’t miss but they are not about the daily news.
Piniella: "This is a tougher job than I thought it would be, I'm going to be honest with you."
what this portends for the Cubs
Zell was stupid not to divest right away…maybe he was blocked but the longer he waited the less value he was holding.
Now there is the economic meltdown.
Being a buyer I would wait….for you want to see what the bottom is.
Piniella: "This is a tougher job than I thought it would be, I'm going to be honest with you."
What's surprising...
… considering Zell was viewed as a smart businessman (he couldn’t have made that much $ by being stupid), why he bought Tribco in the first place. Almost all of us could have told him that their business was in trouble.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
He ain't stupid...
…but there is a chance he has gone down a path even his will can’t make a success. He is a real estate guy, and the Tribune company is a whole new ballgame.
"I don't like them fellas that drive in two runs but let in three" Casey Stengel
Zell wasn't the only one buying newspapers just before they tanked...
McClatchy bought the Knight RIder papers. MediaNews bought a bunch of papers including a few of McClatchy’s Knight Rider acquistions. GateHouse Media which owned pennysaver and weekly papers went on a buying spree and bought even more weekly papers and small and mid-market dailies all over the country. Zell and the others didn’t see or didn’t realize the magnitude of the problem.
Now, Tribune Co stock is rated “junk”, GateHouse is de-listed from the NY Stock Exchange, McClatchy is bleeding money, and MediaNews is struggling too. Everyone is cutting costs, laying off people, etc. One of the cost-cutting measures several newspapers are looking at is dropping Associated Press service. Some have already done so. Why? Too expensive. You’re a small daily with a circulation of about 25.000. You pay about $100,000 a year for AP.
"Pinky, are you pondering what I'm pondering?"--The Brain
Doesn't McClatchy still own the Pirates?
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
WGN America...
is kinda lousy. Just moved to Vegas and I watch it for the WGN Nine o’Clock news. The rest of the prgramming is pretty lousy. I probanly will throw the TV out the window when they broadcast a White Sux game. They would be smart to show all the Cubs games they could, as the Cubs have a national audience. As for the White Sux, does a trailer park in Indiana count?
Hey now
no cheap shots at Indiana.
"In an ocean or in a glass, cool water is such a gas."
by markleonette on Dec 3, 2008 10:41 PM CST up reply actions
Disparaging remarks
aside about that team from the Southside, I think you forget that there is also a National audience for the White Sox. Not everyone who follows Chicago sports (and baseball) outside of the City are Cubs fans. I’ll agree that the White Sox do not have the same level of national support but it is out there. I guess you don’t have a TV since they have been broadcasting White Sox games since about the same time as the Cubs (Although off and on). Be happy with what you get on WGN America…quite frankly I am not sure why they even broadcast baseball at all — they seem to be moving in the TBS direction (Where televised Braves baseball is all but extinct). Looks like those of us in Trailer Parks will eventually have to spring for MLB EI, that is unless one of our pals throws our TV out the window.
Televised Braves baseball IS extinct on TBS.
When TBS signed the MLB contract in 2007, they agreed to do the national non-exclusive Sunday afternoon game, and the postseason games we have come to know and loathe.
They do not do any Braves games, unless they happen to be one of the teams on a Sunday game they choose.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
Its a bummer
For alot of my buddies who grew up watching the Braves…and me too. As a kid I remember having to make tough decisions if the Cubs weren’t on as to which game to watch, itseemed like so many channels carried games. Thanks for the clairfication on why its dissapeared.
When cable first came to Chicago...
… I could watch the Braves on TBS, the Mets on WWOR, or Cubs or White Sox games locally. It was great — there was at least one game every day, sometimes more.
In these Extra Innings days, when you can watch nearly every game (for a price), that seems like ancient history.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
Extra Innings
I’ve held off last few years on getting it, simply because I love to listen to baseball on XM, but I think I might break down this next season — even though I would not be able to watch during the day. I catch all the Cubs games during the week on radio in my office.
Why American League Is Dead to Me
The Braves, Cubs, and Mets are all National League teams. I saw a lot of Cardinals games in a syndicated package on a local TV station. That’s another NL team. I didn’t see much AL baseball on NBC or ABC during the regular season, either. Chances were the local affiliates were going to pick up an NL game, if it was one of the choices.
There was a local TV station that put on about 25 Royals (Chicks parent club) games a year in the mid-late 1980’s. That provided most of my American League viewing before the ALCS back in those days.
"The big possum walks late." - Harry Caray
Chicago Robb
the current WGN America is actually BETTER than what was programmed before you moved to Las Vegas. The Cubs AND White Sox games….and I know you might find this hard to believe…barely register a number in national cable ratings. There are just too many TV choices out there — and, as I’ve said many times — WGN America has long been neglected. Finally, there is a team in place that actually is trying to raise the network’s profile.
I am waiting for the local news shows to vanish. (The 9 O Clock News is pre-empted from time to time, espcially on Friday/Saturday during crucial ratings periods, such as November. ) You and I may find the news shows interesting, but it’s a tune-out for everybody else in Idaho, Texas and Maine who has no connection to Chicago. The Morning News has never been shown on the national service. It’s a matter of time before the two local news programs are gone. (The Sunday show with “Instant Replay” might have enough juice to stay on the schedule.)
Baseball can still be viable programming for WGN America — but you have to lure other fans to watch — and then, try to recycle them to other shows on the network. This can’t be a network for displaced Cubs and White Sox fans.
by San Diego Smooth Jazz Man on Dec 4, 2008 2:04 PM CST up reply actions
The noon news might stick around.
That’s a daypart they can show off to the country. I can see the 9 pm news vanishing, since that is valuable timespace, especially on the west coast.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
Zell wasn't the only one who didn't see this coming.
How many of wish we had cashed out our stocks a year ago October?
Technically...
if you haven’t cashed out your stocks yet then you really haven’t lost anything. You’d only lose money if you sold them for less than you bought them. If you are able to hold onto them and ride this out for a few years who knows? If you sell 5 years from now and they’re worth 50% more than when you bought them did you really lose any money during this downturn?
How true, how true
It’s only on paper if you haven’t cashed out. Actually I moved a good portion of my 401(k) and other investments into money markets & cash; it wasn’t all of it but hindsight is 20/20. At least I’m not down 40-50% in the last 14 months.
I tried telling a buddy that for years when the housing boom was going on. He kept telling me how he’s “made” this much money on his house. And my first question was, “when did you sell?” When he responded, “I haven’t sold my house”, I told him, “you haven’t made shit, when you cash out, please let me know.”
Sweet Lou for Mayor in '11.
What if...
the Trib does have to file bankruptcy, how long until MLB forces the hand of Zell and takes over operations ala Montreal Expos, and inserts their hand picked owner
"I like coconuts, you can break them open and they smell like ladies lying in the sun" Widespread Panic
MLB won't have that kind of control.
The bankruptcy court will.
"That's my opinion and if you don't like it, well, I have others." ~ Groucho Marx
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