Bloomberg News

Tribune May Get Last Approval Needed to Exit Bankruptcy

November 16, 2012

Tribune Co. got the final approval it needs to emerge from almost four years of bankruptcy today as the Federal Communications Commission granted the transfer of broadcast licenses to new owners.

Under a procedure that didn’t require a vote by its five commissioners, the FCC approved the license transfers and granted waivers so Tribune could keep newspapers and nearby television stations in five markets including New York, according to a release from the agency. A U.S. rule generally forbids such cross-ownership.

“We are extremely pleased with today’s action by the FCC,” Tribune Chief Executive Officer Eddy Hartenstein said in an e-mailed news release. “This decision will enable the company to continue moving forward toward emergence from Chapter 11, a process we expect to complete over the course of the next several weeks.”

Tribune holds television stations and newspapers in the same markets under exceptions to the 1975 rule that generally bars so-called cross-ownership. FCC Chairman Julius Genachowski has proposed relaxing that rule.

The combinations are in Chicago -- where Tribune publishes its namesake newspaper and opened TV station WGN in 1948 -- as well as Hartford, Connecticut and Los Angeles, South Florida and New York, where Tribune retained a minority stake in Newsday when it sold the newspaper to Cablevision Systems Corp. (CVC:US)

Cross Ownership

In July, Tribune won approval for a bankruptcy plan that would give control of the company to its senior lenders, including JPMorgan and hedge funds Oaktree Capital Management LP and Angelo, Gordon & Co.

Aurelius Capital Management LP and other, lower-ranking creditors filed an appeal, trying to overturn that decision by U.S. Bankruptcy Judge Kevin Carey. As part of that effort Aurelius tried unsuccessfully to block Tribune from leaving bankruptcy while the appeal went forward.

That appeal is still on file, although both sides said previously in court that once Tribune leaves bankruptcy, the appeal is unlikely to disrupt how the ownership will be divided or change the company’s future.

Bankruptcy Appeals

Often, bankruptcy appeals are dropped after a company exits court protection because it can be difficult to reverse many of the actions that take place when a Chapter 11 case ends.

Stephen Sigmund, Aurelius spokesman, said the company declined to comment.

Aurelius and other holders of Tribune’s oldest debts opposed Tribune’s reorganization plan and a related legal settlement that ended some lawsuits against the senior lenders that financed the more than $8 billion leveraged buyout of Tribune in 2007.

Tribune, owner of the Los Angeles Times, the Chicago Tribune, television stations and cable channels, filed for bankruptcy in December 2008 one year after real estate billionaire Sam Zell used borrowed money to buy out shareholders for more than $8 billion.

Under the reorganization plan Tribune will cancel most of the $13 billion in debt owed to creditors in return for paying them a lesser amount of cash, ownership stakes in the new company and the right to sue shareholders and Zell over the 2007 buyout.

Tribune officials have said the company will be able to leave bankruptcy this year if it wins FCC approval.

The case is Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net; Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editors responsible for this story: John Pickering at jpickering@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net


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