Tribune Co. set to exit bankruptcy protection

Tribune Co. is expected to emerge from bankruptcy protection Monday with a new board of directors composed largely of entertainment-industry veterans.

Exiting bankruptcy would mark a milestone for Tribune, the parent of the Los Angeles Times and other newspaper and television properties.

Tribune sought Bankruptcy Court protection in December 2008 after a leveraged buyout by real estate magnate Sam Zell saddled the company with $12.9 billion in debt just as advertising revenue was collapsing. It is one of the longest bankruptcy cases in U.S. corporate history.

Tribune will emerge as a slimmed-down entity with a more stable financial base. But the media conglomerate will still be buffeted by the larger forces pounding the newspaper industry, specifically uncertainty over whether papers can generate sufficient revenue from digital operations.

“Tribune is far stronger than it was when we began the Chapter 11 process four years ago and, given the budget planning we’ve done, the company is well-positioned for success in 2013,� Eddy Hartenstein, Tribune’s chief executive, wrote in a note to employees Sunday night.

Tribune’s new board of directors is expected to be made up of a who’s who of Hollywood players. Most have no hands-on experience running newspapers and television stations, which are Tribune’s biggest assets.

Five of the seven members have ties to the entertainment and media industries, including Hartenstein and Peter Liguori, a former News Corp. executive who is expected to succeed Hartenstein as Tribune CEO in the next few weeks.

Also expected to be named to the board are Peter Murphy, previously a longtime executive at Walt Disney Co.; Ross Levinsohn, former head of global media at Yahoo Inc.; and Craig A. Jacobson, a veteran entertainment attorney.

The board will be rounded out by Bruce Karsh, president of Oaktree Capital Management, the Los Angeles investment firm that owns about 23% of the new Tribune; and Kenneth Liang, an Oaktree managing director.

Tribune owns 23 local television stations, eight daily newspapers and Internet and other media properties.

Those holdings include KTLA-TV Channel 5, the Chicago Tribune, and national cable station WGN-TV. Tribune also holds slightly less than one-third of the Food Network cable channel and about a 25% stake in the CareerBuilder website.

Liguori is also a former Discovery Communications senior executive whose resume is in programming and marketing. He headed both the FX cable network and Fox Broadcasting at News Corp. At Discovery he served as chief operating officer of the cable programming giant.

Murphy spent almost two decades at Disney, rising to the position of chief strategist. He founded private investment firm Wentworth Capital Management. He has close ties to Angelo, Gordon & Co., an investment firm that will own roughly 9% of the new Tribune Co.

Levinsohn is a former head of global media at Yahoo. He also served briefly as its interim CEO before Google Inc.’s Marissa Mayer being tapped for that job. Levinsohn also is a former News Corp. executive who headed its interactive unit.

Jacobson, an attorney at Hansen, Jacobson, Teller, Hoberman, Newman, Warren, Richman, Rush & Kaller is one of Hollywood’s more prominent deal-makers. His clients have included several high-profile executives and performers such as Ryan Seacrest.

Tribune remained profitable throughout the bankruptcy, building cash reserves of more than $2.5 billion as of Nov. 18, according to a U.S. Bankruptcy Court filing this month. Creditors are expected to immediately take nearly $3 billion in cash out of the new company, some of it coming from a new $1.1-billion loan that was approved as part of the bankruptcy.

The value of Tribune’s newspaper properties has sunk to $623 million, a fraction of their value a few years earlier, according to an estimate filed in Bankruptcy Court in April.

A key question still to be answered is what Tribune will do with its newspapers. Some analysts believe the company will seek to sell the slower-growing newspapers to focus on TV holdings.

As for the Los Angeles Times, Rupert Murdoch’s News Corp. has expressed interest, according to people familiar with the matter.

Aaron Kushner, owner of the Orange County Register, and Doug Manchester, the San Diego real estate developer who last year bought the local Union Tribune newspaper, also have shown interest.

Austin Beutner, the former venture capitalist and former deputy mayor of Los Angeles, told The Times in October that he has reached out to civic-minded investors who would consider acquiring the paper.

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