The Tribune Co, owner of the Los Angeles Times and the Chicago Tribune, will emerge from bankruptcy on December 31, sources said on Friday, ending four years of Chapter 11 protection and setting the stage for the new company to sell off its newspapers to focus on the WGN cable channel and other TV assets.
The Chicago-based company expects to emerge with all of its assets, which include eight major daily newspapers and 23 TV stations, and to name former Fox TV and Discovery Communications executive Peter Liguori as chief executive, according to two people with knowledge of the company's plans but who are not authorised to speak to the press.
In early December, Tribune owners began interviewing investment bankers to sell some or all of its newspapers. Among those interested are San Diego Union-Tribune owner Doug Manchester and Orange County Register owner Aaron Kushner, according to people familiar with the situation.
On December 14, Warren Buffett hinted he would be interested in buying at least one Tribune newspaper, the Morning Call in Allentown, Pennsylvania.
Gary Weitman, a Tribune spokesman, had no comment.
Oaktree Capital Management, JPMorgan Chase & Co and Angelo, Gordon & Co, the controlling Tribune owners, made the decision to sell off its print business to focus instead on Tribune's television operations, which include stations in New York, Los Angeles, and Chicago.
In November, Tribune received regulatory approval from the Federal Communications Commission to transfer its broadcast licenses to the owners who will take over the company when it emerges from bankruptcy.
Tribune's WGN America is a national news feed of its Chicago station, which it repackages as a super-station and distributes via cable and satellite to more than 76 million homes, according to Nielsen Co data.
Liguori is expected to build Tribune's TV operations, including through acquisitions. Former Disney strategic planning chief Peter Murphy will be added as a board member and will advise Liguori.
Tribune's TV operations are estimated to account for $2.85 billion of the company's $7 billion valuation, while its publishing assets are estimated to represent $623 million, according to a report by its financial adviser, Lazard. The rest of its value is in other assets, including its stake in the Food Network and its cash balance.
Despite its low valuation relative to the rest of the company's assets, Tribune's newspaper unit is profitable.
Tribune's move to shed its newspaper assets was expected by industry observers, who have noted the twin challenges of declining readership and a plunge in advertising revenue wracking the newspaper industry.
The industry lost almost half of its advertising revenue in a five-year period and is now down to $24 billion, according to the Newspaper Association of America trade organisation.
The declining fundamentals of newspapers, coupled with the large amount of debt Tribune carried, forced it into a long and complicated four-year bankruptcy case.
Real estate investor Sam Zell took control of Tribune in 2007 through a leveraged buyout that saddled it with $13 billion in debt just as the newspaper industry hit its downturn.