Go Cubs!

I'm no financial expert, but this would seem to rule out Sam Zell as a potential new owner of The San Diego Union-Tribune.

The New York Times (Dec. 7, 2008)
Tribune has hired bankruptcy advisers as the ailing newspaper company faces a potential bankruptcy filing, people briefed on the matter said.

The newspaper, which was taken private last year by billionaire investor Samuel Zell, has hired advisers including Lazard and Sidley Austin, one of its longtime law firms, these people said. Tribune has been hobbled by debt related to that sale last year, which has been compounded by the growing drought of advertising for newspapers.

It is only the latest — and biggest — sign of duress for the newspaper industry yet. Several newspaper companies have struggled to cope with declining revenues and mounting debt woes. Tribune has pared back the newsrooms of many of its papers, including The Chicago Tribune, The Los Angeles Times and The Baltimore Sun, and it sold off Newsday to Cablevision’s Dolan family earlier this year.

While Tribune must contend with hefty interest payments over the next year, its most pressing problem is a maintenance covenant on some of its debt that limits the company’s borrowings to no more than nine times earnings before interest, depreciation and amortization.

Even if the company continues to make interest payments, failure to maintain that level of debt means technical default — which does not always lead to a bankruptcy filing. Other newspaper publishers have halted making interest payments on their debt, but have yet to file.

Tribune has sought to ameliorate its woes by selling off assets like the Chicago Cubs, the company still faces a looming debt crunch. Tribune hired Lazard several weeks ago to assess its options, these people said. Sidley Austin is a longtime outside adviser to Tribune, and it has a well-respected bankruptcy practice as well.

–Michael J. de la Merced, Richard Pérez-Peña and Andrew Ross Sorkin