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Tribune files for bankruptcy

It seeks court protection, listing assets of $7.6 billion, liabilities of $13 billion.

NEW YORK - Media conglomerate Tribune Co., smothered by $13 billion in debt and a drop-off in advertising, yesterday became the first major newspaper publisher to seek bankruptcy protection since the Internet sent the industry into a tailspin.

Most of the company's debt comes from the complex transaction in which the company was taken private, with employee ownership, by real estate mogul Sam Zell last year.

Although Tribune's next major debt payment is not due until June, the company is in danger of missing financial targets set by its lenders.

Other newspaper companies also have struggled with their debts, but many have negotiated with lenders to ease their targets in exchange for higher interest rates.

The New York Times Co., facing a $400 million debt repayment in May, may borrow as much as $225 million against its Manhattan headquarters. The third-largest U.S. newspaper publisher hired commercial real estate firm Cushman & Wakefield Inc. to help obtain financing through a mortgage or a sale-leaseback agreement, spokeswoman Catherine Mathis said yesterday.

The Tribune owns the Chicago Cubs baseball franchise, as well as the Los Angeles Times, Chicago Tribune, The Morning Call in Allentown, Pa., The Sun of Baltimore, The Hartford Courant of Connecticut, five other daily newspapers, and 23 television stations, including WPHL-TV (Channel 17) in Philadelphia.

The company's lending agreements require it to keep its debt at a certain point relative to its cash flow. Those deals become harder to meet as revenue declines, even if the debt itself does not increase.

To make a debt payment this year, Tribune sold the Long Island daily Newsday to Cablevision Systems Corp. for $650 million.

To generate additional cash - and meet the next debt payment of $593 million, due in June - Chicago-based Tribune has been looking to sell the Cubs, Chicago's storied Wrigley Field, and the company's 25 percent stake in a regional sports cable channel.

"So, how did we get here? It has been, to say the least, the perfect storm," Zell wrote in a memo to employees. "A precipitous decline in revenue and a tough economy have coupled with a credit crisis, making it extremely difficult to support our debt. All of our major advertising categories have been dramatically impacted."

Yesterday's filing, made in Bankruptcy Court in Delaware, could give Tribune time to raise cash by waiting until the credit market eases to sell off assets. It also could put additional pressure on its lenders to ease the financial targets that Tribune must meet.

The company entered court protection with $13 billion in debt and $7.6 billion in assets.

Zell said the company's properties would continue to operate.