Skip to comments.Tribune: After the Fall; Company's Troubles May Cost Studios (Dinosaur Media DeathWatch™)
Posted on 12/15/2008 5:15:25 AM PST by abb
Warner Bros., Twentieth Television, Disney-ABC and NBC Universal face multimillion-dollar ramifications after Tribune's announcement last week that it was declaring Chapter 11 bankruptcy protection to restructure its massive debt.
Tribune's 23 TV stations are among the biggest buyers of syndicated shows, including Warner Bros.' Two and a Half Men and Friends, Twentieth's Family Guy, Disney-ABC's Legend of the Seeker and NBC Universal's Maury, Jerry Springer and Steve Wilkos.
Moreover, a deal to launch CBS Television Distribution's T.D. Jakes next fall is pending. The future of that show, which had been cleared on Tribune stations, is now uncertain, according to many sources. A spokeswoman said CTD had no comment. (Related: Watch CTD president John Nogawski discuss T.D. Jakes' "Obama-esque" qualities.)
According to Tribune's bankruptcy filing before a federal court in Delaware last week, Tribune owes Warner Bros. $23.7 million, Twentieth $8.1 million, Disney-ABC $6.2 million and NBCU $4.9 million. Tribune has a few options it can exercise to deal with its outstanding studio debts. It could just proceed with business as usual, paying its bills on time. It could also negotiate longer payout terms with the studios.
Another possibility is that studios will be forced to take writedowns for portions of payments they expected to receive and accounted for, but now will not be paid. Regardless of any revenue hits, studios will likely want to work with Tribune to find ways to preserve future business.
None of the studios or Tribune would comment for this story. But players in the industry say the manner in which the studios resolve this issue could set a precedent should other TV broadcast groups be forced to declare bankruptcy in the rocky months to come, a scenario that wouldn't surprise many industry executives.
Whatever the studios do for Tribune, they will have to do for everyone else, says Bill Carroll, VP of programming for Katz Television Group Programming. If the studios are smart, they will figure out a way that doesn't hurt them that much. They'll all be better off if they have a healthy Tribune to deal with at some time in the near future.
Tribune's unsecured bills to the studios are relatively small compared to the amount of money it owes its major secured financial-sector creditors: JP Morgan Chase, Tribune's main lender; Merrill Lynch Capital Corp.; Deutsche Bank; Goldman Sachs Group; investment management firm Angelo Gordon & Co.; and hedge fund Highland Capital Management. Tribune's next debt payment of $593 million was due to come up in June but is now stayed because of the bankruptcy. Overall, the company is $12.9 billion in debt while it holds $7.6 billion in assets.
When billionaire investor Sam Zell bought the company in April 2007, Tribune's financials looked stronger, justifying a deal that in hindsight looks incredibly shaky. As Zell said on CNBC last week, We looked at Tribune before we made our offer. It had basically eroded at about a 3% level in the previous five years. We underwrote [the deal assuming] 6%, and we ended up with 20. And in an operating leverage business like this, a 20% reduction in gross revenue is a disaster on a cash-flow line.
That said, Tribune's TV stations remain profitable. In its filings, Tribune says it doesn't expect to operate its TV stations any differently than it ever has. And while Tribune may not be shopping as aggressively for new syndicated product in the near-term as it has in the past, no one expects to count the group out as a buyer.
The positive out of all of this, says Chuck Larsen, president of October Moon Television, a television distribution consulting company, is that hopefully Tribune will come out the other side a healthier company that's better able to support its stations.
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Hopefully not. The way they've acted in the Blago case alone makes me want to see them go down the tubes. First they don't report a story in which they're directly involved and have first hand knowledge that could damage a sitting Democrat governor, then they do report the story when it could damage the investigation of his wrong-doing. Anyone see a pattern here?
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That big balloon payment is upcoming. The cheese will bind about that time.
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I think I do. I'm in CA and go to the supermarket once a week. There are racks of gossip magazines that nobody buys. The LA Times is only read by 2 people at work. Britney Spears and Paris Hilton need to find some trouble to get into again. If OJ Simpson hung around with them, at least he would stupid things that arent criminal.
Isn’t Sam Zell, Tribune Co. owner a big time Democrat donor? “ Will he need government help in the future?
I agree government wants control of the internet. But I’m optimistic that they won’t be able to accomplish their goal.
Five hundred years ago, the invention of the printing press caused similar angst among the power elites of that time: the Church, the King of England, etc. They tried everything in their power to stifle the spread of knowledge.
They failed only initially, once they discovered that the press was a great instrument of indoctrination they utilized it to brainwash people. They understand this very well. The twentieth century has seen the left infiltrate and take over every major institution of education and information dissemination. The internet caught them off guard. They also temporarily lost control of the AM radio band, a mistake they are about to rectify, using hate speech legislation and FCC regulatory power they will launch an attack on both AM radio and the internet. Congress can well try to control even cable television under the abused interstate commerce clause of the constitution. We are headed for either the hubris of a sheepish population or a civil war. Either way the future does not look bright for individualists who oppose the collectivist mentality of the democrats and republicans. We have our work cut out for us.
Some navel-gazing on a Monday morning.
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I agree. But when has this never been the case? Freedom has been under assault since the dawn of mankind. Men have always wanted to enslave others by any means possible.
And I agree the 20th century has seen a great infiltration of information distribution by collectivist thinking. But individuals now have the tools to rectify that situation.
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