Tribune Co Faces Default in 2009

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Tribune Co is at risk of defaulting on its debt in as little as 18 months if the newspaper business deteriorates further, and it fails to unload more properties, Reuters reports.


By some estimates, Tribune could fetch $1.6 billion for the Newsday daily paper and the Chicago Cubs baseball team and related properties, the assets it has already put on the block.


Newsday has already attracted interest from News Corp’s (NWSa.N: Quote, Profile, Research) Rupert Murdoch and New York Daily News owner Mortimer Zuckerman.


Still, Tribune has nearly $4 billion in debt and interest payments due by the end of 2009, according to Gimme Credit analyst Dave Novosel, making it all but certain that the company will be forced to sell more marquee properties and make deeper cost cuts to avoid violating debt covenants.


“Tribune is a big microcosm of issues across the industry, and Sam Zell made an unfortunate bet, if you will, jumping into a business he knew nothing about,” said veteran newspaper analyst Miles Groves.


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