Tribune Company Goes Broke

Chicago-based news media stalwart Tribune Company (TXA) today announced it is filing for bankruptcy protection, less than 2 years after billionaire real estate mogul Sam Zell took the company private. Geez…and here we thought Zell had the magic touch based on the fact that he sold Equity Office Partners at the peak of the market a couple years back.

The Tribune is “America’s largest employee-owned media company,” according to the Tribune’s website. It owns the Chicago Tribune, Los Angeles Times, Baltimore Sun and Orlando Sentinel newspapers, to name but a few, as well as television stations across the country. The Tribune is also the owner of the Chicago Cubs baseball team, which is reportedly not being included in the Chapter 11 filing.

This news comes on a day when many of the financial institutions involved with the Tribune deal — such as JP Morgan Chase & Co. (JPM) and Goldman Sachs Group, Inc. (GS) — are up 10% or more on the day. However, all of the publicly traded companies with a hand in the Tribune buyout — which was itself cited as costly and time-consuming; understandable in retrospect: a $13 billion company taken private just as the recession in the U.S. began — are facing severe downward earnings pressure and continually lowered estimate revisions.

Media conglomerates have shown signs of struggle recently, as well, with massive layoffs at Viacom, Inc. (VIA) and General Electric’s (GE) NBC Universal announced only days ago. To what extent will Tribune’s bankruptcy status add to the growing totals of America’s unemployed?

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