Tribune Credit Rating Sinks On Shaky Cubs Sale (Dinosaur Media DeathWatch™)

Editor & Publisher ^ | November 11, 2008 | Mark Fitzgerald

[abb]

Delaying the sale of the Chicago Cubs baseball team cost Tribune Co. its semi-respectable junk bond credit rating Tuesday.

After markets closed, Standard & Poor's Ratings Services downgraded its corporate credit rating to CCC from B-. Under S&P's system, the speculative-grade rating suggests that unless economic conditions turn favorable soon -- unlikely for the newspaper business -- Tribune is "not likely to have the capacity to meet its financial commitment on the obligation."

S&P assigned a "recovery rate" rating of 4, suggesting debt-holders can expect to get 30 cents to 50 on the dollar in the event of a payment default.

Credit analyst Emile Courtney said the downgrade reflects concern that Tribune won't get the $1 billion it once expected for the Cubs, its landmark Wrigley Field and its 25% stake in a Chicago sports cable TV channel. "We now believe that proceeds could be significantly below this amount and that the company will not likely receive them this year," Courtney wrote in a report.

Tribune has said it is going ahead with the sale despite the credit crunch and economic meltdown.

Tribune's flagship Chicago Tribune reported Tuesday in an article by Ameet Sachdev that the company has given bidders a deadline of before Thanksgiving Day to submit a new offer with details on how the deal would be financed.

S&P is also concerned about Tribune's accelerated fall-off in revenue and cash flow, she said. Third-quarter revenue fell 11%, and EBITDA (earnings before interest, taxes, depreciation, and amortization) plunged 42%.

S&P paints a gloomy picture of Tribune's next few months. It said it expected EBITDA to fall 10% in the last quarter of 2008 -- and another 30% through next year.

If that happens, S&P warned, Tribune could be in violation of its loan covenants that limit the debt-to-EBITDA ratio to 9 times for the last quarter of this year, and 8.75 time for the first quarter of 2009. This technical default would likely result in loan amendments with more onerous terms, increasing the cost of borrowing while at the same time tightening access to funds.

Tribune reported Monday that its long-term debt stood at $11.8 million. About $8 million was taken on to swing last December's going-private deal.

[abb]

It is my considered opinion that the Tribune Co. will be bankrupt by the end of the first quarter next year. There's a good chance they won't even make the end of this year.

[abb]

ping

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http://www.nytimes.com/2008/11/11/business/media/11time.html?_r=3&ref=media&oref=slogin&oref=slogin&oref=slogin

Time Inc. Seeks Volunteers for Job Cuts at Magazines

[ethics]

What a shame!

RIP!

[abb]

http://www.broadcastingcable.com/article/CA6613222.html
TV Revenue Down 8% at Tribune
Company says it’s due to lower cable copyright royalties, soft advertising demand

http://www.ft.com/cms/s/a523c27c-af7d-11dd-a4bf-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fa523c27c-af7d-11dd-a4bf-000077b07658.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fjournalism.org%2Fdailybriefings&nclick_check=1
TV advertising declines further in the UK

http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003889465
Gannett Credit Downgraded Again, This Time By S&P

http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003889323
Two Connecticut Dailies Face Shuttering Unless Buyer is Found

[abb]

http://www.adweek.com/aw/content_display/news/media/e3ied350e17682395176cde8d012a2b02a6
TVB Cuts Local Ad Projection

http://adage.com/mediaworks/article?article_id=132457
A Hulu for Cable Networks? Not Any Time Soon
How Free Online Video Threatens Pay-TV Model

http://adage.com/mediaworks/article?article_id=132400
Local TV Stations Anticipate Severe Downturn in ‘09
National Spot Advertising Now Expected to Be Down 11.5%

[abb]

http://www.buzzmachine.com/2008/11/11/the-last-thing-newspapers-need/
The last thing newspapers need

http://www.chicagotribune.com/business/chi-081110sun-times,0,7080181.story
Sun-Times board considers restructuring as shareholder pressure builds

http://www.bloomberg.com/apps/news?pid=20601204&sid=a6R.mwi9qY5E
Advertising Industry May Not Recover Until 2010, Citigroup Says

http://news.cnet.com/8301-13577_3-10094101-36.html
Layoffs hit Al Gore’s Current Media

http://www.reuters.com/article/reutersEdge/idUSTRE4A92OC20081110
As GE revamps, NBC expected to stay in the picture

[abb]

http://www.medialifemagazine.com/artman2/publish/Television_44/As_NBC_sinks_eyes_look_to_Silverman.asp
As NBC sinks, eyes look to Silverman
The question: How much longer can he survive?

http://www.medialifemagazine.com/artman2/publish/Television_44/A_real_snoozer_of_a_November_sweeps.asp
A real snoozer of a November sweeps

[abb]

http://www.tvweek.com/news/2008/11/cbs_news_boss_mcmanus_plots_re.php
CBS News Boss McManus Plots Resurgence
McManus on Quality, Katie, ‘Early Show’

http://www.courant.com/community/news/nb/hc-jrc1111.artnov11,0,6617024.story
Absent Buyers, New Britain, Bristol Papers To Close

http://www.nypost.com/seven/11092008/tv/primetime_137630.htm
PRIMETIME
I READ THE NEWS TODAY, OH BOY

[Milhous]

... cost Tribune Co. its semi-respectable junk bond credit rating ... "They were slightly worse than our very low expectations," said Mike Simonton, an analyst at Fitch Ratings ...

Analysts wax poetic to sublimely diss TRB. ROTFL.

[mlocher]

Barak’s home paper. Couldn’t happen to a more deserving trash can liner.

[MovementConservative]

Bankrupt most likely. However they will still operate. The creditors will not want to take possession of the assets. They will simply reorganize. It would be nice to see them spiral into oblivion sooner rather than later.

[MovementConservative]

Bankrupt most likely. However they will still operate. The creditors will not want to take possession of the assets. They will simply reorganize. It would be nice to see them spiral into oblivion sooner rather than later.

[abb]

Bankrupt most likely. However they will still operate. The creditors will not want to take possession of the assets. They will simply reorganize. It would be nice to see them spiral into oblivion sooner rather than later.

Well, lets analyze this. We know their book value (property, plant and equipment) is almost nil. And Zell is even now trying to sell everything that ain't nailed down.

So all that's left is their ability to generate revenue from advertising. That's plummeting and will not improve, I don't care what anyone says.

There will come a point of no return where there literally won't be enough bodies to put out a paper that brings in enough revenue to meet payroll. That's when the presses won't roll.

I think we're almost there.