The biggest media industry bankruptcy ever will end today after four years with Tribune’s chief creditors — Oaktree Capital Management, Angelo, Gordon & Co. and JPMorgan Chase & Co – empowered to run the Chicago based broadcasting and newspaper power. The reorganization values the company at about $4.5B. The new management is expected to look for buyers for its assets which include 23 television stations and major metro dailies such as the Los Angeles Times and Chicago Tribune. The company will close on a $1.1B senior secured term loan, which will be used to pay off creditors, and a $300M asset based revolving credit facility to fund its operations. It also will have a new board that consists of CEO Eddy Hartenstein, Oaktree’s Bruce Karsh and Ken Liang, former Disney exec Peter Murphy, former Yahoo and News Corp exec Ross Levinsohn, lawyer Craig Jacobson, and former Fox and Discovery exec Peter Liguori. He’s widely believed to be in line to take the top job at Tribune. Today’s release says that the board will meet “in the next several weeks” and Hartenstein “will remain in his current role until that time.” The plan to emerge from bankruptcy ensures that creditors and vendors “will be receiving payment in full—100% recovery of what they are owed,” Hartenstein says. “These long-term relationships are very important to the company and we are pleased to be successfully resolving these obligations.” Tribune ran into trouble after 2007 when real estate mogul Sam Zell took on debt to finance his $8.2B acquisition. He found himself over his head the following year when the recession hit, and newspaper values plummeted.
The FCC’s Media Bureau gave Tribune a permanent waiver so it can continue to own a TV station and newspaper in Chicago, and temporary ones so it can ignore the government’s cross-ownership restrictions in New York, Los Angeles, South Florida and Hartford. The decisions “will enable the company to continue moving forward toward emergence from Chapter 11, a process we expect to complete over the course of the next several weeks,” CEO Eddy Hartenstein says. It also could set a precedent if News Corp — which also owns TV stations in LA and Chicago — decides to buy the Los Angeles Times or Chicago Tribune. Tribune owns 23 TV stations and eight newspapers, and would like to sell some assets to stabilize its finances. Rupert Murdoch is intrigued by the possibility of picking up some major newspapers once News Corp splits its publishing operation off into a separate, publicly traded company.
A federal bankruptcy judge today approved Tribune Co.‘s plan to emerge from Chapter 11 bankruptcy. After overruling one objection and persuading a creditor to withdraw another, U.S. Bankruptcy Judge Kevin Carey said he would sign an order approving the plan after final wording changes were made. Tribune owns 23 television stations and and eight daily newspapers including the Chicago Tribune and Los Angeles Times. The company will now seek Federal Communications Commission approval for the new owners — banks and hedge funds including Oaktree Capital Group, J.P. Morgan Chase & Co. and Angelo Gordon & Co. Without the FCC’s permission and transfer of station broadcast licenses to the new owners, Tribune can’t execute its restructuring plan. Depending on how long that process takes, some believe Tribune could emerge from bankruptcy as early as August. Tribune filed for bankruptcy protection in December 2008.
Is Michael Eisner still interested in the top Tribune job? What will happen to all of the stations? Those are the pressing questions now that Tribune has supposedly found a way out of Chapter 11. The company and many of its creditors announced a settlement after many of the lenders were holding out. Tribune said it …