Tribune bankruptcy not death of newspapers, MU professors say
The company will still operate its newspapers and broadcasting stations.
Published Dec. 11, 2008
Despite the Tribune Company's announcement Monday that it is voluntarily filing for Chapter 11 bankruptcy protection, the rest of newspaper industry shouldn't worry just yet.
"Most newspaper companies aren't in that situation," said Tom Warhover, the MU Print and Digital News faculty chairman and the executive editor of the Columbia Missourian. "This really isn't reflective of a trend at all. That's not to say newspaper companies are doing great, but there are other indicators of trends for newspapers, and this is not a good one to use."
The Tribune Company, the nation's largest employee-owned media company, owns the Los Angeles Times, the Chicago Tribune and Baltimore Sun, in addition to seven other smaller publications. The company also operates 23 television stations including WGN nationally as well as Chicago's WGN-AM radio station.
Although the company also owns the Chicago Cubs and Wrigley Field, they are seeking to monetize the Cubs and their related assets. The Cubs were left out of the filing so that the reorganization of the company's finances would cause the least amount of interference in the process of monetizing the team, according to a company statement.
MU finance professor Stephen Ferris, who also specializes in bankruptcy research, said a Chapter 11 bankruptcy filing does not require a company to liquidate its assets or mean that it is going out of business.
"With Chapter 11, the firm is given another chance," Ferris said. "The bankruptcy court looks at the company and says, 'How can we work with this company so it can continue its business?' For Chapter 11 to really work, the company has to have some kind of value there."
To remain in business, the company will have to restructure their finances, which could mean selling some of its assets or renegotiating with creditors, Ferris said.
On Wednesday, the company announced in a news release that the U.S. Bankruptcy Court has granted them approval on its first-day motions, meaning the company will be able to maintain employee payroll and benefits, to continue it's cash management system, and to honor customer programs, according to the release.
Warhover said though the newspaper industry is going through hard times, most papers aren't in the same situation.
"The Tribune situation has come about because Sam Zell bought that company with so much debt that it was an overwhelming amount," he said.
MU journalism professor Jacqui Banaszynski said the Chapter 11 filing would have more of a psychological and emotional effect on students pursuing a career in newspaper journalism, rather than a tangible one.
"The message that a lot of students are inferring from things like this is that the industry, the profession, is so shaky that maybe they should reconsider," Banaszynski said. "I don't think the Tribune Company filing bankruptcy means that there isn't going to be great journalism to do or a way to make a living out of it."
Although the Tribune Company is mainly in debt due to its privatization, problems in the newspaper industry are widespread.
In September, the Columbia Missourian also faced financial troubles with a deficit of $95,000 for the 2008 fiscal year.
"Some of the industry issues that are troubling other papers, including Tribune Company papers, are also affecting the Missourian, but then the Missourian has additional challenges beyond that," Banaszynski said.
She said some of those problems include competing with a second newspaper in Columbia, not having a permanent reporting staff and being attached to MU.
Banaszynski said Tribune Company is just one more sign of the newspaper industry's troubles overall. She warned of the possible implications of losing big papers like the Chicago Tribune and L.A. Times.
"I think it's not just a problem with the industry," she said. "I think it's a problem with our society."
