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Judge's Ruling Has Tribune Company Finally Close To Exiting Bankruptcy

After more than 3.5 years of battles and over $400 million in legal fees, Tribune Company today was finally given court approval to emerge from Chapter 11 bankruptcy protection. Although a plan has been approved, it has not yet been confirmed and the corporation will still have contend with gaining FCC approvals & exceptions, along with dealing with probable lawsuits from lessor creditors.

U.S. Bankruptcy Judge Kevin J. Carey chose to approve the latest plan put forth by a group consisting of Tribune Company and its major creditors, thus rejecting a plan proposed by a group of lesser creditors. Judge Carey today overruled junior creditor objections and was able to persuade another creditor to withdraw their objection, helping to clear the path for the Tribune bankruptcy exit. Before the Judge would officially confirm the bankruptcy exit & reorganization plan, he demanded that several wording revisions be done with portions of the plan, which the Tribune Company attorneys agreed to take care of right away. A full confirmation could be signed off by all parties and finalized well before the end of this month.

This confirmation would immediately assign ownership to the corporation's largest creditors -- Oaktree Capital Management, JPMorgan Chase, and Angelo, Gordon & Co. This will mark the first time since the Tribune was founded in 1847 that the company will be owned by entities outside of Chicago.

The next major hurdle to overcome before reorganization can take place would be gaining permission from the Federal Communications Commission (FCC) to transfer ownership of the numerous Tribune Company broadcast ownership licenses to the creditors. Once that approval is gained -- which could be as fast as just a few weeks or take as long as a few months -- the exit plan can truly begin.

The FCC will also have to rule on whether or not to make exceptions to its strict "cross-ownership" rules for the new Tribune owners for markets where the company has ownership in multiple media outlets. For example, here in Chicago, Tribune Company owns a newspaper and a television station, something that is no longer allowed, but was grandfathered in and granted via a waiver for ownership at the time. The new creditor owners already have ownership stakes in many other media companies that will have to be taken into consideration, complicating matters. The FCC could force the immediate sale of properties in some markets or could grant temporary waivers for the new ownership.

Regardless, it is expected that the FCC will act quickly, as Tribune attorneys have kept them appraised of all of the ongoing details of bankruptcy proceedings and probable outcomes. There is little doubt that Tribune Company will be completely out of bankruptcy and under new leadership by this autumn.

At that point, a whole new set of concerns take over. Aurelius Capital Management and many junior creditors will attempt to appeal the U.S. Bankruptcy Court rulings and file numerous lawsuits against the company. It is also widely expected that the new creditor owners will waste little time in breaking apart the media giant and selling off a majority of its assets as soon as possible.

Tribune Broadcasting's television stations and one radio station are together estimated to be valued at nearly $3 billion. Tribune ownership stakes in the Food Network and CareerBuilder.com are estimated to be to be valued at more than $2 million. It's newspaper and publishing ownership is said to be only worth approximately $623 million.

The creditors have claimed that at this time, they have no specific plans or timetables regarding the future of the company and its assets. Speculation is that the creditor "fire sales" on many of the assets could begin before the end of this year, or early next year. However, questions have been raised at just how easy it will be in this day and age to sell off many of the company assets at their true value and quickly, especially the broadcasting properties.

Chicago's Tribune Company is the country's biggest media corporation currently in bankruptcy. It filed for Chapter 11 bankruptcy protection in December 2008, with approximately $13 billion in debt, just one year after real estate developer Sam Zell completed the $8.2 billion leveraged buyout of the corporation.

Tribune Company owns thirteen newspapers, various magazines, twenty-four local television stations, two national television networks, one radio station, as well as numerous other websites and companies. Locally, among the company's bigger properties include the WGN-AM, WGN-TV, CLTV, Chicago Tribune, RedEye, Hoy, Chicago Magazine, and Naperville Magazine.

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