Tribune deal aids reducing its debt

NEW YORK (AP) — Tribune Co.’s $650 million sale of Newsday is an important step toward alleviating its debt burden — for this year.

Now the Chicago company must move on its next big asset sales, including the Chicago Cubs baseball team and Wrigley Field, in order to meet its obligations to creditors looming in 2009.

The deal announced yesterday puts one of Tribune’s largest newspapers in the hands of cable operator Cablevision Systems Corp., which like Newsday is based on New York’s Long Island.

Investors have been skeptical about the benefits to Cablevision from the deal, given that it hasn’t operated a newspaper and that the newspaper industry is struggling as readers and advertisers move to the Internet.

For Tribune, there’s no doubt why the deal make sense: The company needs cash. Last December, Tribune bought out its public shareholders in an $8.2 billion deal orchestrated by real estate mogul Sam Zell, and now it’s struggling to service that debt.

Mr. Zell had originally hoped to keep Tribune’s newspaper and broadcasting businesses intact, but it had to change course and consider options for Newsday because of the rapid deterioration in the newspaper business this year.

Tribune last week reported an 11 percent decline in first-quarter newspaper revenue, which have been hit hard by the slumping economy and online competition.

Tribune now seems to be covered on a $650 million lump-sum debt payment coming due in December as well as other near-term obligations, but analysts say it must move on other asset sales in order to be in shape to deliver on another $750 million debt payment due in June 2009.

The next step for Tribune is selling the Chicago Cubs and Wrigley Field. Together, the two could fetch as much as $1 billion, which would get the company past the 2009 payment.

Tribune is still marketing the Cubs, while it’s in talks with an Illinois state agency about Wrigley Field. Those talks are complicated by the fact that the agency, which also owns U.S. Cellular Field, where the Chicago White Sox play, wants laws that restrict changes to Wrigley Field loosened.

Cablevision, which is controlled by the Dolan family, has about 3.1 million subscribers in the New York metro area and owns Madison Square Garden, the NBA’s New York Knicks and the NHL’s New York Rangers.

Newsday is the 11th-largest newspaper in the country, according to the latest figures from the Audit Bureau of Circulations, with 379,613 average paid weekday copies in the six-month period that ended in March.