Much as airlines such as United and Delta sought the cover of Chapter 11 bankruptcy to reorganize and attempt to meet the demands of changing market dynamics, the venerable Tribune Company publisher of eight large daily metro newspapers, is teetering on the edge of Chapter 11 as it faces billions of dollars in debts it is unlikely to have the funds on hand to satisfy. Selling the Chicago Cubs could help somewhat, but putting a Major League Baseball franchise on the block is slightly more complex than listing a sewing machine on eBay.
In a Gartner document published in May 2006, “Transforming Value in Digital Publishing Companies,” Mike McGuire and I suggested that incumbent publishers trapped in businesses laden with large infrastructure expenses might be wise to consider some sort or cost-realignment based on the airline industry model where many airlines lease rather than buy costly fleets. It was our belief, then as now, that newspaper publishers must attempt to do their businesses over with a focus on future opportunities, most of which can be met without print-related expenses. Or, at least look for efficiencies that would allow a publisher to keep both web and print channels alive. One such trend is the editorial hub and spoke model, where newsrooms are organized by topic (sports) as opposed to function (web vs. print). Any newspaper (or magazine for that matter) not implementing such a strategy must strongly consider it as the economic slippery slope for publishers shows no sign of letting up.
For The Tribune Company, one mandate appears clear (at least to me). In the four major markets in which Tribune owns both a newspaper and TV station, it will be crucial to merge those organizations as tightly as possible. Not only is there IT areas of overlap that can be scaled down, but the hub and spoke should work well for TV/print news operations. The Tribune is in the process of doing this in South Florida, but escalating such efforts across all properties should be a priority. In addition, Tribune must do more to leverage its ownership (full or partial) in such web 2.0 assets as Classified Ventures, Careerbuilder, Metromix, Cars.com, Apartments.Com. Zap2it (TV listings) and Topix. Alternatively, Tribune might consider selling off some of these assets to raise some cash. Some of these subsidiaries might be attractive to the new class of media cloud providers such as Microsoft, Google or Apple.
One thing is for sure. All publishing eyes are on the Tribune; a successful execution of reorganization under Chapter 11 bankruptcy is likely to cause a ripple effect. Sounds like it’s a good time to be a bankruptcy lawyer.