Tribune Company Plans to Dump Associated Press, Also Facing Default

Of course they'll just pick up another biased wire service and will still present the news in typical left-slanted fashion, but this could help usher the demise of newspapers just a bit more. While these companies clearly have financial issues, they refuse to realize their own bias is also a huge problem.

Tribune Company has given a two-year notice to the Associated Press that its daily newspapers plan to drop the news service, becoming the first major newspaper chain to do so since the recent controversy over new rates began.

Tribune, which owns nine daily papers including the Los Angeles Times and Chicago Tribune, joins a growing list of newspapers that have sought to end AP contracts, or given notice of that, following plans to introduce a new controversial rate structure in 2009. The notice was given earlier this week.

AP Spokesman Paul Colford confirmed the cancellation notice, but said he had no more specifics. He issued the following statement about it:

"We understand that in this climate a lot of newspapers are re-examining their strategies. The Associated Press will continue to work with all members of the cooperative to ensure that we are providing the most efficient, valued and essential news service for them."

The notice, of course, does not mean Tribune is cutting AP immediately. The news cooperative requires the two-year notice as part of its current contracts. Negotiations may lead to the termination not moving forward.

Tribune Spokesman Gary Weitman did not immediately respond to requests for comment Thursday as he is traveling. The notice comes less than a year after Sam Zell, an AP board member, took control of Tribune.

Tribune daily papers besids the flagship in Chicago affected include The Sun Sentinel of Fort Lauderdale, Fla.; The Orlando Sentinel; Red Eye of Chicago; the Hartford Courant; The Baltimore Sun; The Morning Call of Allentown, Pa.; and The Daily Press of Newport News, Va.

In no small irony, the Tribune Company may be facing much larger problems.

Sam Zell saw opportunity in the Tribune Cowhen he took it private in April 2007, giving employees a majority stake in the debt-heavy company.

But now he's looking at a potential default. Zell has been slashing pages and staff at the company's papers around the country, including the Chicago Tribune and LA Times, and looking to sell the Chicago Cubs and other non-core assets.

But is it enough? Wednesday Fitch Ratings released a report saying "default (not necessarily bankruptcy) is a real possibility." Fitch's outlook on the company is "Negative," it's current rating on Tribune's IDR "CCC".

For months years now I've been reporting on the sector challenges facing the newspaper industry, and for the last few months, the cyclical downturn in advertising has really taken its toll. Fitch points out that Tribune's classified ads are showing double digit declines (real estate classifieds down more than 40 percent). And now with the economic downturn, Tribune and Zell no longer have a cushion. There are a few things working in Zell's favor: the non-core assets he plans to sell, like the Cubs, would provide a key infusion of liquidity.