Wednesday, June 18, 2008
Tribune Company in Default by End of Year?
As I glanced over the Bloomberg headline Tribune, MediaNews May Wind Up in Default as Ad Sales Evaporate yesterday, I questioned the timing of this article, with the elimination of many in editorial looming at Tribune Newspapers across the country.
Is this just a ploy to justify shedding twenty percent of the writers and editors at all Tribune Company newspapers? Didn’t we just sell Newsday to Cablevision for $632 million, which would almost cover the $650 million due this December?
In a message to the owners (employees) of the Tribune Company, Sam Zell made it clear we would be able to make the payment at the end of the year, so how could this article say we may default on the loan, I asked?
The ratio of debt to cash flow at the Tribune Company is currently 8.1 times cash flow at the end of the 1st quarter, and must not meet or exceed 9 times cash flow for the remainder of 2008. If the ratio of debt to cash flow reaches 9, the loan violates the terms of the agreement and goes into default.
According to the Los Angeles Times Grapevine, David Hiller (publisher) or Russ Stanton (editor) will reveal the restructuring of editorial at the end of June.
Many of my colleagues and I feel all departments will be required to downsize a bit more to improve the bottom line.