Tribune exits bankruptcy after four years, ending Sam Zell era *

Tribune's new owners named a board on Sunday night, filed papers with the court in Delaware and today will officially take over the media company that Sam Zell and friends saddled with huge debt. The new board is made up of mostly of entertainment industry executives with no news experience, plus current CEO and LA Times publisher Eddy Hartenstein. He is expected to remain CEO only until the new group meets in a few weeks to name its executive officers, both the Times and the Chicago Tribune report. The new CEO at that time is expected to become Peter Liguori, a former top television executive at Fox and Discovery. His role would suggest that the new ownership sees Tribune's future in television (it owns 23 stations, including KTLA Chanel 5 here) and likely will try to sell off the eight daily newspapers, including the Los Angeles Times. Whether the Tribune creditors-turned-owners will seek to sell the Times alone, or require a buyer to take all the papers, remains unclear.

"Eventually, all the assets are expected to be sold, according to the new owners," the Chicago Tribune says in its story.

The last day of 2012 is the first of a new era for Tribune Co.

After spending more than four years embroiled in a contentious Chapter 11 bankruptcy case, the reorganized Chicago-based media company will emerge Monday under new owners and a newly appointed board, freed from its massive debt and facing an uncertain future.

Senior creditors Oaktree Capital Management, Angelo, Gordon & Co. and JPMorgan Chase & Co. are set to take control of Tribune Co.’s storied portfolio of publishing and broadcasting assets, including the Chicago Tribune, officials said.

It was an almost anticlimactic end to a long and painful chapter in Tribune Co.’s 165-year history....

Despite the sharp decline in advertising revenue since 2007, Tribune Co. remained profitable during its long stay in Chapter 11, amassing a $2.54 billion cash balance as of Nov. 18. Much of that will be distributed to creditors beginning Monday.

Oaktree and Angelo Gordon, investment firms that specialize in distressed debt, purchased their stakes in Tribune Co. at a discount on the open market; JPMorgan was lead lender in the buyout. They and the rest of the senior creditor group hope to profit from the eventual sale of the company’s assets. They will also immediately take nearly $3 billion in cash out of their new company, executives said.

Tribune's daily newspapers are valued now at an estimated $623 million, way below what they were worth before the newspaper industry recession hammered their value and before Sam Zell did his little act. In 2006, David Geffen reportedly made a cash offer of $2 billion for the LA Times alone. Now it will fetch much less, if it comes on the market.

Orange County Register owner Aaron Kushner said last week he would be interested in acquiring the Tribune papers. “We clearly have the means and the team by which to look seriously at the Tribune papers and, from the outside, they may very well have enough of the elements that we’re looking for,” he told reporters. Kushner said it makes sense for Tribune to sell the papers as a group.

The Times story says, citing "people familiar with the matter," that Rupert Murdoch is interested in buying the paper.

So while the journalists at the Times wait to see which direction their livelihoods take in 2013, the Chicago Tribune's Phil Rosenthal closes the book on Sam Zell's misadventures as a media mogul. "Zell likely will be remembered by many largely as a caricature, the plain-spoken, pugnacious, gravel-voiced maverick with an affinity for jeans, open-collared shirts and salty language. But, in reality, it's possible he's just a wild-eyed optimist," Rosenthal writes in his column.

For all of Sam Zell's reputation as a steely, clear-eyed dealmaker, two misconceptions clouded his vision in the run-up to taking Tribune Co. private in December 2007.

Zell had told anyone who would listen as far back as 2006 that he didn't believe there would be anything resembling a recession until the first quarter of 2009.

The billionaire Chicago real estate magnate also maintained the media industry was too complacent. Whether out of arrogance or ignorance, it failed to see and address the dangers ahead and innovate around them, he asserted.

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A strong case can be made that much of what undid Tribune Co. under Zell might well have undone the company under its previous regime as well. The costs and unrealized benefits of its $8 billion acquisition of Times Mirror Co. in 2000, which brought the Los Angeles Times and its sister media properties but few of the hoped-for synergies to Tribune Co., was just one set of powder kegs left behind by the old guard.

For that matter, the only reason the company was in play for Zell to pick up was that the heirs of the once-mighty Times Mirror empire, welcomed into the Tribune Co. boardroom with the deal, sought to cash out.

Zell and his management team, however, did little to deliver on promises of unlocking value through a more intelligent corporate structure and other strategies. Combined with the huge debt their acquisition piled on, the company's slide only accelerated.

From the Chicago Tribune: Meet the new board

10:45 a.m. update: Here's the note to staffers from Hartenstein last night.

From: Tribune Communications
Subject: Message from Eddy Hartenstein/Tribune Emergence from Chapter 11

Colleagues—
Tonight we issued the attached press release, announcing that Tribune will successfully emerge from the Chapter 11 reorganization process tomorrow, Dec. 31, 2012. The restructuring plan approved last July by the U.S. Bankruptcy Court for the District of Delaware will become effective at that time.

Tribune will emerge as a dynamic multi-media company with a great mix of profitable assets, powerful brands in major markets, sufficient liquidity for operations and investments and significantly less debt. In short, Tribune is far stronger than it was when we began the Chapter 11 process four years ago and, given the budget planning we’ve done, the company is well-positioned for success in 2013.

The press release also contains details about Tribune’s new Board of Directors, which will convene in the next several weeks, at which time it will define the roles of its members, its committee structure, and designate and ratify the company’s executive officers.

You can find additional information regarding our emergence and some Q&A related to employees on TribLink.

Once again, I want to thank you for your talent, effort and focus these last four years—I know it has been a challenging period. Throughout it all, you have been resilient, dedicated to serving the company, our customers and your fellow employees. You are what sets Tribune apart from our competitors.

Now, let’s get the new year off to a strong start. There is a lot of opportunity ahead.

eddy

New board member Ross Levinsohn, formerly Yahoo's head of global media, tweeted today: "Very excited to be part of the new Tribune Company. Amazing brands and people!"