Tribune Co. files for bankruptcy

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NEW YORK (CNNMoney.com) -- Media conglomerate Tribune Co., publisher of the Chicago Tribune, announced Monday it is filing for Chapter 11 bankruptcy protection.

The Chicago-based company said the restructuring focuses on the company's $13 billion debt, not on its operations. The company said its businesses will remain in operation throughout the restructuring of its debt obligations.

"Factors beyond our control have created a perfect storm - a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt," said Sam Zell, chief executive of Tribune, in a statement. "We believe that this restructuring will bring the level of our debt in line with current economic realities, and will take pressure off our operations."

Real estate mogul Zell took the company private in December 2007 for close to $13 billion.

The company said it has enough cash to continue its operations and listed $7.6 billion in assets under the bankruptcy filing but that it owes $1 billion in interest payments this year and another $500 million by June.

Zell and the Tribune Co. have faced wide criticism and legal battles since going private. Employees said the move compromised the value of their stock holdings and the public has complained that Zell's deal has exempted the company from paying corporate income taxes.

The company has suffered since the deal, but mainly because the newspaper advertising market has dried up over the past year.

"A lot of the media are losing revenue because of their newspaper divisions, as people go to alternative sources for their news like the the Internet," said Edward Neiger, founder of creditors law firm Neiger LLP. "Combine that with a terrible economy and banks unwilling to negotiate a deal, it results in a very big bankruptcy."

In a letter to Tribune Co. employees, Zell said the company faces several headwinds but will cut costs when it can throughout the current uncertain economic times.

"Our challenges are consistent with those facing all media companies, and an increasing number of companies across a variety of industries today," said Zell in the letter. "We will continue to operate responsibly in a challenging environment - aggressively managing costs and maximizing revenue opportunities."

Besides the Tribune, Tribune Co. owns such newspapers as the Los Angeles Times and Baltimore Sun, as well as television and radio stations across the nation.

Neiger said as part of the company's restructuring, Tribune could opt to spin off some of its less profitable companies. The company said last December that it is looking to sell the Chicago Cubs, the Major League Baseball franchise it owns. The Cubs was not one of the businesses included in the company's bankruptcy filing.