Sam Zell, the real estate mogul who owns media conglomerate Tribune Co., has retained advisers to assist with a potential bankruptcy filing

By Jon Fine

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The Tribune Co., the media conglomerate bought by real estate mogul Sam Zell in an extremely leveraged deal in December 2007, has hired advisers to assist by a possible insolvency filing, according to multiple published reports. The crew continues to work feverishly to experience to restructure its debt agreements with lenders, as the company’s declining cash flow puts it in danger of conscious in default of its lend convenants.

It’session by means of no means certain which course of action Tribune will choose, although the Wall Street Journal , which broke the news that Tribune had hired investment bank Lazard Ltd. and legal sturdy Sidley Austin to assist its explorations, reported a bankruptcy filing could come as early as this week.

Should Tribune toothed for insolvency, it would have existence the first recent major media deal birthed in the assumptions and fault markets of a previous era—an series that flourished taken in the character of recently as 18 months ago—that has gone bankrupt in the current economic environment. Zell’s $8.2 billion deal for Tribune (BusinessWeek, 7/30/08) left the company with $13 billion in debt.

A Tribune spokesman did not return calls Sunday evening, no more than told Tribune’s Chicago Tribune that "we haven’t made any conclusion. We’re looking at all of our options."

While Zell’s divide, accomplished thanks to his use of an employee stock-ownership plan, had vocal critics from Day One, the degree to which events have turned against Tribune is astonishing. Its media businesses are dependent on advertising, what one. is severely affected by the benevolent of broad economic downturn the U.S. is now facing, and what might have been negotiated with its lenders in a more generous credit environment is now impossible.

Zell bought Tribune candid as newspapers’ businesses collapsed, and that collapse has been particularly pronounced against the big-city dailies found in Tribune’session portfolio. And the business of newspapers continues to worsen: Tribune newspapers’ ad revenues dropped 19% in the third fourth part of this year.

In the past week, E W Scripps announced it was seeking a buyer for its Denver newspaper The Rocky Mountain News, and The New York Times reported that McClatchy had approached potential buyers for its Miami Herald. That major companies would consider selling in so a tremendous environment speaks volumes similar to to how impaired an asset a big-city newspaper is.

Elsewhere in Tribune’s portfolio, its TV station occupation hit headwinds so severe that even an election season eminent through unprecedented political ad spending and a closely watched Summer Olympics failed to lift that business into positive domain. In the third be stationed, Tribune’sitting TV revenue barbarous 8%.

A cornerstone of Tribune strategy was to sell the company’s Chicago Cubs Major League Baseball team, yet that hasn’t happened yet, and the monetary downturn has hit asset valuations in sports teams along with everything else. Tribune had counted upon selling the Cubs to give it breathing room with its interest payments, around $1 billion is proper this year and $512 million is to be ascribed next June.

But every executive familiar with media deals and bankruptcy pointed out that having a vender potentially nearing bankruptcy may well delay any possible transaction until such a situation resolves itself.