Tribune gets OK to make payments

WILMINGTON, DEL. —  Tribune Co. was authorized Wednesday to make certain payments to employees, vendors and others as it works through a Chapter 11 bankruptcy reorganization.

Judge Kevin Carey said the company, which owns the Los Angeles Times and other newspapers, could pay $74 million that was owed to employees before Monday’s bankruptcy petition was filed. That total includes a cap of $10,950 per person but excludes payments for healthcare, long-term disability, reimbursable expenses, workers’ compensation and retiree medical care.

Carey also approved orders allowing Chicago-based Tribune to use its existing centralized cash management system during the reorganization and to continue a securitization arrangement with Barclays Bank that will allow it to access an additional $75 million, for a total of $300 million.

The judge also authorized Tribune to pay various other pre-petition obligations, including $20 million to vendors, and $18 million in tax, licensing and similar obligations.

Tribune attorney James Conlan said the company was forced to seek bankruptcy protection because of dwindling advertising revenue. “There has been, to say the least, a precipitous decline in the advertising business generally,” he said.

Tribune, which also owns 23 television stations and the Chicago Cubs baseball team, is the first major newspaper publisher to file for bankruptcy protection since the Internet plunged the industry into a struggle for survival.

Conlan told the judge that with the exception of two stock pledges, the Tribune operating companies have no secured debt, which leaves the company in “a strikingly good position” to reorganize intelligently.

The bankruptcy case involves 111 of Tribune’s 128 entities, with the others, notably the Cubs, not part of the proceedings.

In an interview on the CNBC financial news channel, Tribune Chairman Sam Zell described the bankruptcy filing as a “preemptive” action to preserve assets and allow for a reorganization.

“In the end, my responsibility is to preserve the value of the company and to make sure that it will go on into the future,” he said.

Zell said Tribune already had laid off hundreds of workers at its papers and reduced the number of pages published. Bankruptcy protection will allow it to focus on broader issues, he added, including consolidation.

He said the bankruptcy filing should not impede the planned sale of the Chicago Cubs, Chicago’s Wrigley Field and other sports properties, which Tribune had been looking to sell to generate cash for a $593-million principal payment due in June.