Bankruptcy for Tribune won't stop the inevitable
(update: Tribune Co. has filed for Chapter 11 bankruptcy in Delaware. Read Tribune's official release.)
As much as we hate to face it, there comes a time when the older family members of start to pass on - maybe your parents, your grandparents, the older aunts and uncles who helped raise you. Sure, some of them still have some fire left in them, but others have slowed down considerably and it's unclear how much longer they'll be with us.
Journalistically, I was raised by the newspaper industry. The industry - from good editors to bad editors, supportive communities to competitive landscapes - survived the arrival of telegraph, telephone, radio and even television, with its real-time reporting of current events. The thing about each of those formats, though, was that none could ever bridge the gap between real-time news and depth reporting. Sure, they could tell you what happened today - but if you wanted to know why it happened, the details that led up to it and what might happen next, you turned to a dead-tree version of the news that was faithfully available about 5:30 the next morning, every day of the year.
But then came the Internet - which offered timely (ummm, instantaneous) headlines and more depth than you could ever imagine, thanks to the blogosphere. What followed was the slow crumbling of a business that had withstood so many other threats to its model. But the rapid shift of advertising dollars into new platforms and mediums was the one battle wound that newspaper companies first ignored, then tried to bandage. By the time the executives realized how deep the wound was, it was too late. It was the beginning of the end.
Tribune's latest actions underscore the deepening distress enveloping Tribune and other newspaper publishers. Their businesses are being battered by dwindling advertising sales, and many are carrying debt loads that are unmanageable in current market conditions. Industry insiders expect some papers will need to fold in coming months or seek protection from creditors to reorganize
The company's current debt is about $12 billion but its cash flow may be short of what's needed to settle more than $1 billion in interest payments this year, as well as a payment of more than $500 million by June. The company's third quarter saw a loss of $121.6 million, compared to earnings of $152.8 million a year earlier. Already, it's trying to liquidate. Earlier this year, the company - which was acquired and taken private by real estate mogul Sam Zell in late 2007 - agreed to sell a 97 percent stake in Newsday to Cablevision. And, yes, the Cubs are for sale, too.
It would be one thing if Tribune was the exception to the rule in this industry. But increasingly, it's just another casualty. According to a story in today's Washington Post, shares of the New York Times Co., which is also facing a cash crunch, are down more than 60 percent. Knight Ridder, a chain I once worked for, was absorbed in 2006 by McClatchy Co. (my first employer) over pressure from Wall Street. McClatchy's stock has since lost 90 percent of its value. Shares of the The Washington Post Co. (also an employer during my career) are down more than 40 percent.It's a sad story for me, on so many different levels. But I'm starting to accept that the end may be near. Like the ailing relative, newspapers won't go away immediately. I hope that we'll still have many, many Sunday mornings to spend together. But, these bandages - like bankruptcy protection for Tribune - are just short-term solutions to larger problems. In the long term, they won't change the inevitable.