Western Communications Files Bankruptcy

Western Communications field for Chapter 11 bankruptcy protection per an article by David Nogueras at OPB News.  The company hopes to recover from bankruptcy in six months.

Western Communciations owns the Bend Bulletin, along with four other papers in Oregon and two in California.

Tracy Press Publisher Files for Bankruptcy

The Tracy Press, a weekly publication, has filed for Chapter 11 bankruptcy.  The Tracy Press was formerly a daily newspaper, which reduced distribution to twice a week because of declining circulation, and then last year reduced to once a week. 

The Press will continue publishing during the re-organization.

Brown Publishing Files for Bankruptcy

Newspaper publishers Brown Media Holdings Co. and Brown Publishing Co. filed for Chapter 11 Bankruptcy protection on April 30th.  An unnamed bidder plans to assume a substantial portion of the liabilities and assets.

Brown Publishing has publications in ten states: Ohio, New York, Texas, South Carolina, Illinois, Iowa, Colorado, Utah, Arizona and Wyoming, which includes fifteen daily publications, thirty two weekly publications, forty one shoppers / free publications and eleven business publications. The sale will include all the assets.

Some of the papers involved are the Delaware Gazette, Wilmington News Journal, Troy Daily News and Piqua Daily Call.

Baltimore Jewish Times Files Bankruptcy

Alter Communications, parent company of the Baltimore Jewish Times filed for Chapter 11 Bankruptcy protection on Wednesday, April 14th. The publishers are committed to continuing the weekly publication of the Times.

Singleton's MediaNews Group Emerges From Bankruptcy

CHICAGO MediaNews Group’s holding company said Friday it is out of Chapter 11 bankruptcy protection.

On Jan. 22, the parent of The Denver Post and 53 other dailies filed a so-called prepackaged bankruptcy that had been approved in advance by its lenders.

Under the plan, confirmed March 4 by a U.S. Bankruptcy judge in Delaware, the debt of Affiliated Media, the newspaper group holding company, drops to approximately $165 million from $930 million to approximately $165 million.

Secured lenders exchanged their debt for an 89% stake in the company, but Chairman William Dean Singleton remains in control of the chain with the power to appoint four of the seven directors.

Morris Publishing Files 'Prepackaged' Bankruptcy

Family-owned Morris Publishing Group is joining the long list of newspaper companies who have sought bankruptcy protection. The publisher of The Florida Times-Union in Jacksonville and a dozen other dailies said that by Jan. 19 it will file a "prepackaged" bankruptcy petition that would cut its debt load by more than half.

The announcement had been expected since Morris faced the nearly impossible task of persuading nearly all its creditors to agree to a debt exchange offer of $100 million in new debt for $278.5 million in existing debt.

But Morris had already won support for its plan from creditors holding more than 75% of its notes.

The increasingly popular "prepackaged" route through bankruptcy court is generally a quicker and less expensive approach than a typical contested Chapter 11 filing.

Under its reorganization plan, Morris needed the approval of the debt exchange offer from holders of 99% of its existing notes by Jan. 12 to avoid a bankruptcy filing. Morris said it did not meet that requirement and had terminated the offer.

Freedom Communications Seeks Bankruptcy Protection

Sept. 1 (Bloomberg) -- Freedom Communications Inc., the owner of more than 30 daily newspapers including the Orange County Register in California, sought bankruptcy protection after print advertising revenue declined.

Freedom, owner of eight television stations, has assets of as much as $1 billion and debt of more than $1 billion, it said today in Chapter 11 papers in U.S. Bankruptcy Court in Wilmington, Delaware. The Irvine, California-based company’s revenue totaled $734 million last year, according to Moody’s Investors Service Inc.

The company said it filed to implement a pre-petition agreement it reached with its lender on a restructuring of its debt. A majority of the lenders will support a “pre-negotiated plan of reorganization,” Freedom said in a statement.

“Reaching this agreement with our lenders provides us with an orderly process to realign our balance sheet with the realities of today’s media environment,” Freedom CEO Burl Osborne said in the statement.

The average weekday circulation of the Orange County Register in the six months through March fell 12 percent from the year-earlier period to 233,626, according to the Audit Bureau of Circulations. That compares with a 7.1 percent industrywide decline.

Freedom’s Gazette of Colorado Springs, Colorado, in the period lost 2.4 percent of its weekday circulation, to 91,599.

Newspaper Bankruptcies

U.S. newspaper publishers including Tribune Co., owner of the Los Angeles Times and Chicago Tribune, and Journal Register Co., owner of 20 daily newspapers, previously filed for bankruptcy as the recession speeds declines in ad spending and more readers seek news from the Internet.

Industrywide ad revenue fell 29 percent to $6.82 billion in the second quarter from $9.6 billion a year earlier, according to figures released by the Newspaper Association of America. Ad sales dropped 28 percent in the first quarter, the Arlington, Virginia-based trade group said.

The drought has forced publishers to cut jobs, wages and sections, and boost newsstand prices. Ad sales make up more than half of revenue for publishers including New York Times Co. and Gannett Co.

U.S. advertising revenue for media and entertainment companies will decline through 2010, not returning to growth until 2012, when marketers increase spending on the Internet, PricewaterhouseCoopers LLP said. The New York-based accounting firm predicts print-ad sales will continue to fall until 2013.

Blackstone Group LP owns a 27 percent stake in Freedom and Providence Equity Partners Inc. holds about 18 percent.

The case is In re Freedom Communications, 09-13046, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Reorganization plan cleared for the Journal Register

Reorg plan cleared for publisher Journal Register
By ANDREW VANACORE

NEW YORK (AP) — A federal bankruptcy judge in New York has cleared the way for newspaper publisher Journal Register Co. to emerge from Chapter 11 protection.

The plan had won the backing of the vast majority of creditors, despite objections from some quarters, including state officials in Pennsylvania and Connecticut.

The company has drawn criticism for its plans to pay executive bonuses following its emergence from bankruptcy. Some creditors also questioned a provision that would arrange a $6.6 million payment from secured lenders to key suppliers, including ink and newsprint providers.

Judge Allan Gropper said in a ruling Tuesday that despite those objections, Journal Register's reorganization plan is consistent with federal bankruptcy law.

Journal Register publishes the New Haven (Conn.) Register and dozens of other newspapers. Like almost all publishers, it has been pummeled by declining advertising revenue as the traditional newspaper business model comes under assault from the Internet.

The company filed for bankruptcy in February, the third in a wave of Chapter 11 filings in the industry that has also claimed The Tribune Co., The Minneapolis Star-Tribune, The Chicago Sun-Times and the owner of both of Philadelphia's daily newspapers, among others.

The company's bankruptcy plan was essentially "prepackaged," having been negotiated with major lenders led by JPMorgan prior to its filing. The plan cancels Journal Register's stock and cuts obligations to secured lenders to $225 million from $696 million in return for ownership of the company.

The only significant addition that came during hearings is a $2 million fund set aside for unsecured lenders, who will receive about 9 cents on the dollar.

Unsecured lenders that qualify as critical suppliers, such as ink and newsprint providers, will be made whole with a $6.6 million gift from secured debt holders.

The latter provision drew criticism from Central States, a multi-employer pension fund, which called the plan inequitable. But the company contended any disruption in basic supplies could cripple an already fragile business.

Plans to pay out $1.3 million in bonuses to top executives also led to objections. State officials from Connecticut and Pennsylvania as well as the Newspaper Guild, one of the company's largest unions, asked the court to block the payments.

But in his opinion Tuesday, Judge Gropper said the planned bonuses do not violate bankruptcy code. He noted that debtors had been given the chance to review the bonuses and voted overwhelmingly to approve the bankruptcy plan anyway.

Connecticut Attorney General Richard Blumenthal offered a blistering response and said his office is reviewing the judgement to "determine whether further action is appropriate."

"This decision means that bankruptcy is no bar against bloated big-time bonuses," Blumenthal said in a statement. "The unfortunate bankruptcy court ruling means that (Journal Register) executives will be substantially rewarded more than $1.3 million in blatantly undeserved bonuses for shutting down newspapers and laying off employees."

Last year, deteriorating ad revenue led the company to shutter several weekly newspapers in Connecticut, including the Pictorial Gazette, the Branford Review, Clinton Recorder, Main Street News and the East Haven Advertiser.

Lawyers for the company did not return calls seeking comment on the case Tuesday. It was not immediately clear how quickly Journal Register can emerge from bankruptcy now that its reorganization has been approved.

Copyright © 2009 The Associated Press. All rights reserved

Last to Enter Bankruptcy, ACN is First to Emerge

American Community Newspapers (ACN), which in April became the seventh and most recent newspaper company to declare bankruptcy in the industry recession, has become the first to emerge from its protection.

In a memo to employees, CEO Gene Carr said the chain closed the sale to its creditors on Friday. ACN's emergence from bankruptcy was first reported Monday by MinnPost media writer David Brauer.

ACN's prepackaged bankruptcy plan was approved by a judge in Delaware earlier this month. Under the plan, the chain --which publishes the Stillwater (Minn.) Gazette and clusters of community papers in Texas, Ohio and suburban WashingtonD.C. -- was for $32 million plus $5 million in post-bankruptcy financing to its creditors, including the General Electric Corp. andthe Bank of Montreal.

At the time of its bankruptcy filing, ACN said it had $102 million in debt.

The chain’s parent company will be known as American Community Newspapers II.

“Under our new ownership, our debt has been substantially reduced, which places us in a much better position to execute onour business strategy, serve our communities, and provide ample opportunities for our employees,” Carr wrote in the memo.

Philly Newspapers' Parent Company Into Bankruptcy

The group of business people who paid $562 million to return The Philadelphia Inquirer and Philadelphia Daily News to local ownership in 2006, only to file for bankruptcy protection earlier this year, have now filed for Chapter 11 protection themselves.

Philadelphia Media Holdings LLC (PMH) filed for bankruptcy protection in U.S. Bankruptcy Court in Philadelphia, claiming assets of between $100,001 and $500,000, and liabilities estimated between zero and $50,000.

A PMH spokesman said PMH is a holding company with no employees or revenue. "What it holds is the actual legal entity Philadelphia Newspapers LLC and other smaller properties that are also incorporated separately," spokesman Jay Devine said.

Last Feb. 21, Philadelphia Newspapers, the publishing company of the two dailies, filed for Chapter in Philadelphia, to restructure its debt load of $390 million in debt load.

When Philadelphia Newspapers filed for bankruptcy last February, it wasn't thought necessary to include PMH in the filing, headded. But PMH is also named in some litigation along with Philadelphia Newspapers. Since the litigation is stayed during bankruptcy proceedings, filing for Chapter 11 ensures that PMH cannot be pursued in court separately.

PMH is the group formed by local public relations executive Brian P. Tierney to buy the newspapers from The McClatchy Co.,which acquired them in its acquisition of Knight Ridder Inc. The group put up $152 million in cash and borrowed the rest of the $562 million purchase price.

According to the bankruptcy petition, filed last Wednesday, the largest stakeholders in PMH are the Carpenters Pension and Annuity Fund of Philadelphia with a 30.35% interest, followed by luxury housing magnate Bruce E. Toll with a 20.26% stake. William A. Graham IV is listed as having a 16.88% stake. Tierney's interest in PMH totals 6.75%.

Journal-Register Co. to sell Lapeer County Press, other papers

The bankrupt owner of The Oakland Press and The Macomb Daily has signed a purchase agreement to sell the Lapeer County Press and several smaller Michigan newspapers.

Yardley, Pa.-based Journal-Register Co., which filed for Chapter 11 bankruptcy protection in February, will sell the Lapeer newspaper and a dozen other publications to Lapeer-based Jams Media Inc. for an undisclosed sum, according to a news release issued this morning.

The sale is expected to be finalized before July 31.

American Community Newspapers - Chapter 11

American Community Newspapers LLC Voluntarily Files Petition for Reorganization

- No Impact on Day to Day Operations: Newspapers and Web Sites to Continue Serving Their Local Communities -

DALLAS, April 28 /PRNewswire-FirstCall/ -- American Community Newspapers Inc. (Pink Sheets: ACNI) today announced that its subsidiary operating company American Community Newspapers LLC ("ACN" or the "Company") has voluntarily filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

ACN will continue to operate its businesses during the reorganization process. There will be no change in the Company's day to day operating activity and its newspapers will continue to serve their local communities, readers and advertisers without interruption. ACN's secured creditors will be providing a $5 million debtor in possession credit facility. In addition, the secured creditors are the contemplated stalking horse bidder for ACN's assets.

"A difficult economic environment and weak advertising market have created a number of challenges for our industry and our company," said Gene Carr, Chairman and Chief Executive Officer of ACN. "While we have proactively managed our business by right sizing our cost structure and driving efficiencies to maximizing our cash flows our operations are not able to support our current capital structure. As a result we intend to reorganize via the 363 sale process with continuing support from our lenders which, if approved, will reduce our debt. This will place us in a better position to execute on our business plan and serve our communities. We worked with our financial advisors to explore a wide range of alternatives before making this filing, however the decision to proceed with the reorganization was determined to be the best alternative."

Mr. Carr concluded, "The community newspaper business model places us in the unique position to deliver truly local content and be the mainstay of the markets we serve. The value we provide has been recognized many times over the years with our employees, newspapers, Web sites and niche publications winning numerous awards. Our readers and advertisers are our most important assets and we are committed to providing them with outstanding service in the months and years ahead."

About American Community Newspapers

ACN is a community newspaper publisher in the United States, operating within four major U.S. markets: Minneapolis - St. Paul; Dallas; Northern Virginia (suburban Washington, D.C.); and Columbus, Ohio. These markets are some of the most affluent, high growth markets in the United States, with ACN strategically positioned in many of the wealthiest counties within each market. ACN's goal is to be the preeminent provider of local content and advertising in any market it serves.

Chicago Sun-Times Bankruptcy

BY DAVID ROEDER Staff Reporter, March 31, 2009
Read Chairman and CEO Jeremy Halbreich's letter to readers

Sun-Times Media Group Inc., owner of the Chicago Sun-Times and many suburban newspapers, today voluntarily filed for Chapter 11 bankruptcy protection with the aim of reorganizing operations, settling a tax liability and making the company fit for a buyer.

The petition was filed with the U.S. Bankruptcy Court in Delaware. Chairman Jeremy Halbreich said the filing was a difficult decision but essential for the company “to re-establish itself as a self-sustaining, profitable operation. That is worth fighting for.”

His overriding goals are to sustain the company’s print and online news operations while “preserving as many jobs as possible," he said.

The company has one significant creditor -- the Internal Revenue Service. The IRS has said Sun-Times Media Group owes up to $608 million in back taxes and penalties from past business practices by its former controlling owner, Conrad Black, now imprisoned for theft from corporate coffers.

Unlike other newspaper owners that have filed for bankruptcy amid steep dropoffs in advertising, including Chicago-based Tribune Co., Sun-Times Media Group has no bank debt. But its IRS debt thwarted efforts to raise new capital.

Halbreich said Sun-Times will continue talks with the IRS while implementing a "strong and impressive" business plan. It also will pursue a deal with buyers and has hired Rothschild Inc., which was involved in the bankruptcy of United Airlines' owner, to field offers.

Several potential buyers have approached Halbreich since he took over Feb. 10 as chairman and interim chief executive, he said. "We're very confident that there's going to be some interest here," he said. "We intend to start that process immediately."

Chapter 11 allows vendors and employees to be paid for ongoing business activities. But vendors owed money prior to the bankruptcy filing will have to submit claims. The company has provided a link to the bankruptcy case on its Web site, thesuntimesgroup.com.

A bankruptcy judge could force the company's unions to accept wage and benefit reductions. Halbreich said he will use the proceedings to seek unspecified concessions.

Halbreich, a former executive of the Dallas Morning News, was installed as Sun-Times chairman by shareholders who engineered a board of directors takeover late last year. But by going for bankruptcy, the shareholders confront the likelihood that their stake in the company is worth nothing after an IRS accord.

Asked if there will be anything left for shareholders after bankruptcy, Halbreich said, "You never want to say never and you never know because we haven't solicited offers yet, but realistically, probably not."

Sun-Times Media Group shares are traded on the Pink Sheets and closed Monday worth just a nickel each. That means that based on the stock, the entire company is worth about $4 million. As of Nov. 7, the company had assets of $479 million and liabilities of $801 million, according to the bankruptcy filing.

Halbreich predicted that the bankruptcy will be resolved by the end of the year, speedy by the standards of such cases.

As part of the process, the company hired Huron Consulting Group as a restructuring adviser and Kirkland & Ellis as legal counsel.



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Sun-Times Media Group files for bankruptcy

To Our Valued Readers:

Today our corporate parent, Sun-Times Media Group, Inc. and certain of its affiliates voluntarily filed for Chapter 11 bankruptcy protection. This action begins a legal and financial process that is designed to protect our Company’s brands, stabilize our business and create a brighter future for all of our stakeholders, including our news organizations, advertisers, employees, and you our valued readers.

Please be assured that this action does NOT mean the Company or our newspapers or online sites are going out of business. We will continue to publish and operate our newspapers and corresponding online sites, including the Chicago Sun-Times, the SouthtownStar, Beacon News (Aurora), Courier-News (Elgin), Herald News (Joliet), Lake County News-Sun (Waukegan), Naperville Sun, and Post-Tribune (Merrillville, Ind.); our weeklies published by Pioneer Press and Fox Valley Publications; our free shoppers and content on corresponding online sites, including YourSeason.com and Rogerebert.com.

If you are a subscriber to any of our publications, your newspaper will continue to be delivered as it is today, and you will still get the great mix of news, sports, features and opinion that you count on in each edition. Like many U.S. companies today and like many other newspaper companies across the country, Sun-Times Media Group has faced significant declines in revenue. This process will help us to better address these challenges and ultimately work toward strengthening our commitment to remaining the Chicago area’s best, most reliable and most distinguished source of news and information for our readers.

Sun-Times Media Group intends to move through the Chapter 11 process as quickly as possible, and expects that the process will be completed in 2009.

In the coming weeks, we will be keeping you informed through our Web site thesuntimesgroup.com. If you have further questions, please do not hesitate to contact us.

I would like to thank you for your business and support during these challenging times.

Sincerely,

Jeremy L. Halbreich

Chairman of the Board
Interim Chief Executive Officer

Philadelphia Inquirer - Bankruptcy

By Harold Brubaker, Posted on Mon, Feb. 23, 2009

Inquirer Staff Writer

Philadelphia Newspapers LLC, which owns The Inquirer, the Philadelphia Daily News, and Philly.com, filed for bankruptcy protection yesterday in a bid to restructure its $390 million in debt load.

The company, bought by a group of Philadelphia-area investors for $562 million in 2006, said the voluntary Chapter 11 filing would not interrupt its daily operations.

"This restructuring is focused solely on our debt, not our operations," chief executive officer Brian P. Tierney, who led the group that provided about $150 million of the purchase price three years ago, said in a news release.

"Our operations are sound and profitable," said Tierney, referring to operating profits before interest and certain other costs.

The financial burden from an advertising downturn, rising costs for newsprint, and the migration of readers to the Internet caused Philadelphia Newspapers to fall out of compliance with its loan agreements last year. The same conditions have devastated the broadcast industry.

The company said it decided to turn to Bankruptcy Court after negotiating with its lenders for the last 11 months. During that time, the company was billed $13.4 million in penalty interest and fees.

It is not clear whether the current owners will retain a stake in the company if the debt is successfully restructured with the help of a bankruptcy judge. Ideally, a restructuring would reduce the amount of debt and lower the interest rate.

Citizens Bank is the agent for the senior lenders, who have included Angelo Gordon & Co., CIT Group Inc., and Wells Fargo & Co.

The Newspaper Guild, which represents newsroom and other employees of the company, alerted its members of the bankruptcy filing yesterday.

To fund operations during the restructuring, the company asked for court approval of $25 million in debtor-in-possession financing that was arranged by NewSpring Capital in Radnor.

The Philadelphia Newspapers filing follows last month's bankruptcy filing by the Minneapolis Star Tribune. The Journal Register Co., based in Yardley and the publisher of a number of local daily and weekly newspapers, filed for bankruptcy Saturday. Just last week, the publicly traded New York Times Co. suspended its dividend to cope with the economic downturn.

The Tribune Co., which was saddled with a massive $13 billion debt load when Chicago real estate magnate Sam Zell bought it in 2007, filed for bankruptcy protection in December.

Journal Register Company Bankruptcy

Yardley, PA, February 21, 2009 – Journal Register Company (the “Company”) (PINKSHEETS: JRCO) today announced that the Company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to implement a pre-negotiated plan of reorganization (the “Plan”) with certain of its secured lenders designed to substantially reduce the Company’s debt. The Company intends to continue to operate as usual, and does not anticipate any business interruption during the restructuring.

On February 19, 2009, the Company entered into a Plan Support Agreement with JPMorgan Chase Bank, N.A. and 26 of the 37 lenders party to the Company’s Amended and Restated Credit Agreement dated as of January 25, 2006 (as amended, the “Credit Agreement”), which hold approximately 77% of the aggregate principal amount of the indebtedness outstanding under the Credit Agreement. Each of the parties to the Plan Support Agreement have agreed to vote in favor of the Plan on terms and conditions set forth in the Term Sheet that is attached to the Plan Support Agreement.

The Term Sheet provides that each of the existing lenders under the Credit Agreement will receive a pro rata share of a $175 million Tranche A Term Loan Facility, a $100 million Tranche B Term Loan Facility and the common stock in the reorganized company, subject to dilution for future equity issuances. The Tranche B Term Loan has a payment-in-kind feature for its five-year term allowing the Company to opt to either make regular interest payments in cash or to pay the interest in kind. The Plan is expected to reduce the Company’s total indebtedness by approximately $420 million. The Company expects to continue to generate sufficient cash flow to fund its operations and, as a condition to implementation of the Plan, will obtain a $25 million revolving credit facility upon its exit from bankruptcy to further enhance its liquidity position. The Company’s existing equity holders would receive no distributions under the proposed plan.

The Company’s Chairman and Chief Executive Officer James W. Hall said, “Journal Register Company has taken numerous steps to reduce its debt and strengthen its balance sheet through the divestiture of unprofitable newspapers, headcount reductions and various other means. However, due to the numerous challenges facing the newspaper industry and the overall economic downturn, our board of directors has decided, after careful consideration of all available alternatives, that a Chapter 11 filing was a necessary and best course of action for Journal Register Company. We intend to emerge from the Chapter 11 process stronger, leaner and more financially viable in the current environment. We are also pleased to have the support of our lenders in restructuring our debt obligations. Our business will continue its normal operations and we will publish content as usual throughout this process.”

The Company has filed a number of customary first day motions asking the Court for permission to, among other things, continue to pay employee wages and salaries and to provide employee benefits without interruption. The Company expects to pay its vendors and service providers on normal terms for post-petition goods and services provided in the ordinary course of business.

The Company filed its voluntary Chapter 11 petitions in the United States Bankruptcy Court for the Southern District of New York. Additional information about the Company’s restructuring is available at the Company’s website at www.journalregister.com. For access to Court documents and other general information, please visit http://chapter11.epiqsystems.com/journalregister.

The Journal Register Company is strategically situated within six major metropolitan areas, circulating to 469,000 daily newspaper customers and reaching about 3.4 million through weekly and other non-daily publications. We are in Greater Philadelphia, metropolitan Detroit as well as much of Michigan, Connecticut, Greater Cleveland, and both the Capital-Saratoga and the Mid-Hudson regions of New York. Our products are the primary source of local news, sports and entertainment information within their regions. Managing over 200 newspaper and specialty Web sites offers the opportunity to expand the print products to increase their reach and grow their readership within our markets, as well as to extend outside and reach beyond those boundaries.

Minneapolis Star Tribune Bankruptcy

By DAVID PHELPS, Star Tribune

Date: January 16, 2009

The Star Tribune, saddled with high debt and a sharp decline in print advertising, filed a Chapter 11 bankruptcy petition Thursday night.

Minnesota's largest newspaper will try to use bankruptcy to restructure its debt and lower its labor costs.

Chris Harte, the paper's publisher, said the filing would have no impact on home delivery, advertising, newsgathering or any other aspects of the paper's operations.

"We intend to use the Chapter 11 process to make this great Twin Cities institution stronger, leaner and more efficient so that it is well positioned to benefit when economic conditions begin to improve," Harte said in a statement.

The filing, which was made with the U.S. Bankruptcy Court in the southern district of New York, had been expected for months. It follows several missed payments to the paper's lenders, and it comes less than two years after a private equity group, New York-based Avista Capital Partners, bought the paper for $530 million.

In its filing, the newspaper listed assets of $493.2 million and liabilities of $661.1 million.

Like most newspapers, the Star Tribune has experienced a sharp decline in print advertising. Its earnings before interest, taxes and debt payments were about $26 million in 2008, down from about $59 million in 2007 and $115 million in 2004.

The Star Tribune, with Sunday circulation of 552,000, is the 10th-largest Sunday newspaper in the U.S. Its daily circulation of 334,000 makes it the 15th-largest daily based on circulation. The paper's website, StarTribune.com, averaged 76 million page views per month during the past six months, placing it among the top 10 newspaper websites in the nation.

It is the second major newspaper publisher to file for bankruptcy protection. The Tribune Co., publisher of the Chicago Tribune, Los Angeles Time and Baltimore Sun among other publications and television stations, filed for bankruptcy in early December, burdened by $13 billion in debt and the same deteriorating advertising environment plaguing the Star Tribune.

The Star Tribune may not be the last to go that route, said Alan Mutter, a Silicon Valley-based analyst and former newspaper executive.

"We're in a period of sustained pain for the newspaper business," Mutter said. "The employment ad business has been melting away since 2000. Automotive has been falling apart for the last couple of years. And I don't even have to explain about real estate."

Hearst Corp., owner of the Seattle Post-Intelligencer, last week said it would close the 146-year-old paper if no buyer could be found in the coming months. Shares of the McClatchy Co., which sold the Star Tribune to Avista, have fallen 98 percent since the sale was announced, and the company has been trying to raise money by selling the land near the Miami Herald.

Total annual revenue at the Star Tribune peaked in 2000 at $400 million; by 2007 it was less than $300 million.

Over the past two years, Star Tribune management made several efforts to cut costs, mainly by reducing the workforce and renegotiating new cost-cutting contracts with its unions, which represent nearly two-thirds of the company's 1,405 full-time employee positions. Since 2007, the company said it had achieved cost reductions of $50 million through reduced news pages, attrition, layoffs, voluntary buyouts and other expense reductions. According to the company's filing, the workforce reduction amounts to 610 full-time employees.

In July, the Newspaper Guild, the union representing newsroom workers, agreed to a three-year contract that saved an estimated $2.5 million a year. But other unions refused to agree to new contracts.

In early December, however, Harte asked the unions for another $20 million in cost reductions and said he intended to impose $10 million in additional savings elsewhere in the company. Those negotiations resulted in no new agreements, however.

Graydon Royce, co-chair of the Star Tribune unit of the Newspaper Guild, said the union remained "committed to the future and the survival of the paper."

"It's unfortunate that a New York-based private equity company has put the Twin Cities largest source of news and information at risk," said Royce, a 29-year veteran and one of the newspaper's fine-arts writers.

Court documents indicate that two Avista investment funds own 96 percent of the equity in the Star Tribune, with Harte, through a family trust, owning the balance.

But that ownership structure is likely to change by the time the company emerges from bankruptcy. In a restructuring, a company's lenders often convert some or all of their debt to equity in the company. In that process, the existing owners often see their equity reduced or eliminated.

Bankruptcy protection is a calculated risk, experts say. If all the interested parties can find common ground, the company can survive. But sacrifices, from pay cuts to revised loan terms, are likely required.

"They need a new capital structure. They need a plan of how the company is going to pay off debts and obtain financing," said Gregory Duhl, a law professor who teaches bankruptcy at William Mitchell College of Law.

Chicago Tribune Bankruptcy

CHICAGO, December 8, 2008 -- Tribune Company today announced that it is voluntarily restructuring its debt obligations under the protection of Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company will continue to operate its media businesses during the restructuring, including publishing its newspapers and running its television stations and interactive properties without interruption, and has sufficient cash to do so.

The Chicago Cubs franchise, including Wrigley Field, is not included in the Chapter 11 filing. Efforts to monetize the Cubs and its related assets will continue.

"Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers," said Sam Zell, chairman and CEO of Tribune. "Unfortunately, at the same time, factors beyond our control have created a perfect storm -- a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt.

"We believe that this restructuring will bring the level of our debt in line with current economic realities, and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and plays a vital role in the communities we serve. This restructuring focuses on our debt, not on our operations."

The company filed today for Court approval of various, customary First-Day Motions, including: maintaining employee payroll and health benefits; the fulfillment of certain pre-filing obligations; the continuation of the Tribune’s cash management system; the ability to honor all customer programs. The company anticipates its First-Day Motions will be approved in the next few days.

While the company has sufficient cash to continue operations, to supplement its cash availability in the event of even more significant declines in its operating results, the company has negotiated an agreement with Barclays to maintain post-filing its existing securitization facility. Barclays has also agreed to provide a letter of credit facility. The company expects to submit these agreements to the Court for approval as part of its First Day Motions.

Since going private last year, Tribune has re-paid approximately $1 billion of its senior credit facility. During this time, the company has been rewriting the business model for its media assets with the goal of building a sustainable, innovative, competitive company that provides relevant products for its customers and communities.

For further information on Tribune Company’s Chapter 11 filing, please visit Tribune.com or http://chapter11.epiqsystems.com/tribune, or call 888-287-7568. The company will provide updates regarding ongoing operations plans as they become available.