The Tribune Media Company filed for bankruptcy protection today. Most of the headlines position this as a newspaper company filing for bankruptcy. They do own the Chicago Tribune, LA Times along with others, including my local paper. They also have the Chicago Cubs and television stations among their properties. I’m sure a lot of the press will position this as a story about how newspapers are struggling and vanishing. I don’t see it this way, and here’s why…
They’ve been devaluing their own newspaper product, cutting back on what their product delivers and removing any unique attributes. They’ve targeted profits as their metric and decided to cut back the product to meet their targets rather then try to build income.
But more importantly, it’s the debt of a leveraged buyout that killed the business. They borrowed money to buy the company and incurred a bunch on debt. Absolutely nothing was added to the product in return for that debt.
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.
And then there’s this…
Tribune’s debt was so outsized and so disproportional to its cash flow compared to these other companies that it can be the sore thumb sticking out rather than an example of the industry…
Seems to be right in line with our current financial predicament. You can only grow through debt for so long, then people realize it’s all fake, with no value was added, and the bill comes due.
Perhaps they need to read Andy Ihnatko and get a clue as to how to differentiate and add value to their product.
Tribune Media Goes Bankrupt
The Tribune Media Company filed for bankruptcy protection today. Most of the headlines position this as a newspaper company filing for bankruptcy. They do own the Chicago Tribune, LA Times along with others, including my local paper. They also have the Chicago Cubs and television stations among their properties. I’m sure a lot of the press will position this as a story about how newspapers are struggling and vanishing. I don’t see it this way, and here’s why…
They’ve been devaluing their own newspaper product, cutting back on what their product delivers and removing any unique attributes. They’ve targeted profits as their metric and decided to cut back the product to meet their targets rather then try to build income.
But more importantly, it’s the debt of a leveraged buyout that killed the business. They borrowed money to buy the company and incurred a bunch on debt. Absolutely nothing was added to the product in return for that debt.
And then there’s this…
Seems to be right in line with our current financial predicament. You can only grow through debt for so long, then people realize it’s all fake, with no value was added, and the bill comes due.
Perhaps they need to read Andy Ihnatko and get a clue as to how to differentiate and add value to their product.
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Tags: newspapers