I've written before, here, of how the Tribune Co. is not losing money on operations, but is threatened with violations of its loan covenants. Here is the take of TellZell.com on this argument: "no newspaper is losing money. Each paper takes in more cash than it pays out. The problem is, they don't take in enough money to pay off Sam's $13-billion debt."
This may be slicing the story thin, but I don't think there is currently evidence the Tribune Co. will default on its loan payments, as TellZell writer the InkStained Retch says. ISR is going back and forth, saying there is enough to print the paper, but there isn't enough to pay off the debt. Let's be clear: there is an operations profit, and the company seems able to make its payments for the next year. But it has loan covenants that it may be violating.
So, when Sam Zell says, "we have to have enough money coming in the door to turn on the lights and print the newspaper on a daily basis," that's stretching the truth too. That's operating profit.
The agreement made between the Tribune Co. and the banks included provisions for certain financial ratios to be guaranteed by the Tribune. The Tribune may not be able to meet those promises. That is the nub of the story. The purchase price of $34 a share was fair at the time. But, the industry has a serious problem that economists use a technical expression to describe: the situation, it sucks.
The situation isn't that Zell overpaid for the assets but that the assets haven't performed as expected. Why?
This detail lies at the heart of the story about why the Tribune Co. is in serious trouble currently. On Tuesday Randy Michaels and Zell held a press conference for Tribune Co. reporters on this issue. In Chicago, the story has been covered by Phil Rosenthal, but Michael Oneal was assigned to the story. MediaBistro panned Oneal's story saying, "someone at the Chicago Tribune is clearly trying not to get fired, treating the press conference like a re-written press release."
That was unfair. Why single Oneal out? I did a search on each of the Tribune Co. newspaper's web sites for stories about the web conference. I'd have expected news of continuing cuts to the staff of the local newspaper to elicit some interest among each of the editors. Perhaps, even, they could have followed the new corporate line and shared the story with each other?
Irritated? Hell yes. Back in the day, the people at the Los Angeles Times lectured people from the Chicago Tribune about how great their paper was. The Chicago Tribune, in comparison, was a provincial rag. Let's get something right, first, your newspaper didn't cover the press conference, a blogger from your paper did at TellZell.com. Second, the promise of a West Coast answer to the New York Times and the Washington Post under the Chandlers never materialized. Get a clue, cover your own house. The great Chandler family is at least partly responsible for what happened to your newspaper. No one from LA seems to get that.
The Allentown Morning Call has been hit very hard by the current round of layoffs, losing a quarter of its editorial staff. And, it is profitable and it is the essence of a local newspaper. So much for local values. Despite all these issues it managed to assign a reporter to cover the event, here. Maybe there is something to that comparison of production in LA compared to the smaller papers?
Newsday also wrote about the conference, here. It focused on discussion of the sale of the Long Island newspaper to Cablevision.
So, of the Tribune papers, who did not cover the story? Besides the Los Angeles Times there was The (Dade County) Florida Sun-Sentinel, the Orlando Sentinel and the Hampton Roads Daily Press.