In a move that comes as surprising and shocking, The Tribune Co. – home to the Chicago Tribune, WGN-TV and WGN-AM and the Chicago Cubs, has filed for Chapter 11 bankruptcy protection.
It’s no secret Tribune has been under heavy debt load since the company was taken over by Sam Zell for $8.2 billion and was taken private last year. Under Zell, Tribune assumed more than $13 billion in debt.
But with the economy continuing to go south and the worsening credit crisis, Tribune had no choice but to file for Chapter 11, as the prognosis for its newspapers, television businesses, and WGN-AM are growing worse by the day.
It is possible some television stations in markets outside of the ten largest and WGN America could be sold. But with the ongoing credit crisis, it would be impossible to make such deals.
But despite that, Tribune continues to operate its businesses normally. The Chicago Cubs and Wrigley Field are not part of the bankruptcy filing.
Zell purchased Tribune, but had to get waivers from the FCC to keep in television stations in markets where it also owns newspapers, which were New York, Los Angeles, and Chicago (Newsday in New York has since been sold to Cablevision owner James Dolan.) Despite objections from media activists, the FCC approved the waivers in a 3-2 partisan vote.
Thought: Well, this what happens when Big Media gets – well, too big. We knew the sharks were circulating the water when Tribune bought the Los Angeles Times a few years ago. And Tribune, which 18 years ago had just six television stations, now has 23 (at one time, they had 26.)
And so what happens when you expand and buy, buy, buy? You go deeper and deeper into debt. Then when the economy goes south like it just did recently, your ass is up the creek without a paddle. It’s as simple as that.
Too bad the Federal Communication Commission didn’t get the message. The three Republicans on the board, including Kevin Martin, voted to approve the deal in a very partisan vote. He and his ilk thought bigger was better. While Chicago Democrats and Illinois politicians initially supported the deal, they didn’t say a word when the sale became final – though fellow Dems Michael Copps and Jonathan Adelstein had plenty to say.
Interestingly enough, Martin – who is more concerned about protecting children from dirty words on television rather than keeping a competitive balance in the marketplace – had nothing to say about Tribune’s bankruptcy.
And now, look at the media business. Along with the rest of corporate America – which sold out to Wall Street instead of Main Street – you have firings, mass layoffs, downsizings, and now bankruptcies. In fact, another station group owner filed for bankruptcy today (Equity Media Holdings.)
How many layoffs and firings have their been the last two years in Chicago? Too many to count. Though some deserved it (Joe Ahern and Carol Fowler of WBBM-TV come to mind), others did not. And a few others (Eddie & JoBo, Steve Dahl, and “Crazy” Howard McGee) were highly paid radio stars whose large contracts and declining ratings were no longer justified in keeping them on the air, at least as far as their employers is concerned – though you don’t need declining ratings to get canned. Ask Mr. McGee, who was fired from WGCI last year – despite being in the top five in morning drive.
While yours truly admittedly supported the deal at first, I thought the sale would keep jobs in Chicago, keep the media conglomerate together, and serve all of Chicagoland better. Boy, was I wrong on the first (Tribune has made numerous layoffs since) likely wrong on the second, and definitely wrong on the third (the “Breaking News” section full of mostly crime blotter stories on the Trib’s website is not what I call serving Chicagoland better.) It’s more proof Zell took us for a bunch of saps and dips (maybe Tim Kring has a point…)
And look at WGN-AM. The station has gone from a top dog to just a dog, as the new Portable People Meter surveys show the station falling to seventh place overall and failing to show up in key demos – especially the all-important 25-54 age bracket in November.
Zell thought he could take a mountain load of debt and make it work, taking a huge gamble in the process – a gamble he now has clearly lost.
And now, Tribune may be facing even more layoffs and firings. May I suggest they start – and end – with the editorial board, who endorsed media consolidation – and Zell himself. But that’s wishful thinking, right?