Chicago dailies tell different bankruptcy stories

All our Big Media is bankrupt. Chicago's two dailies are operating under bankruptcy court protection, but under different circumstances. Their paths to bankruptcy court are familiar. The print-based franchises of the Chicago Sun-Times and the Chicago Tribune had been eroding for years, as traditional newspaper audiences —and the advertisers that target them — switched to cheaper online alternatives. Then the industry, like many other sectors, got socked by the credit crisis, the recession and the financial turmoil of late last year. To combat the triple-whammy of declining readership, falling advertising revenue and a lackluster financial climate, both papers cut staff and other costs. It wasn't enough. Tribune Co. filed for bankruptcy protection in December, followed little more than three months later by Sun-Times, the fifth major newspaper publisher in the nation in recent months to seek court protection from its creditors. That's where the similarities end. For starters, Sun-Times is losing money — $14 million a quarter on average for the first three quarters of last year. That's eating into a cash cushion that stood on Sept. 30 at just $100 million. A $21-million payment earlier this year to settle a dispute with a Canadian company sucked out more cash. Tribune, by contrast, makes money, and plenty of it. A recent bankruptcy filing showed its net cash influx for the month of January was just north of $200 million. Its biggest creditors are J. P. Morgan Chase & Co. and other banks that loaned Sam Zell the $8 billion he needed to take Tribune private in December 2007. While Tribune generates enough money to cover its operational costs, the sudden decline in ad revenue that began shortly after Mr. Zell's purchase meant it no longer had enough to pay the banks, too.