Analyst: Credit Crunch Will Hit Newspapers Hard

By: The credit crunch, which gives struggling newspaper companies more difficulties obtaining any cash they might need, will hit high-debt companies such as Tribune Co. particularly hard, an analyst said Thursday.

Tribune, left with a $13 billion debt burden when real estate mogul Sam Zell orchestrated a complex buyout and took the company private, is "in a greater danger category" because it has more payments to make and more opportunities to default, said Ken Doctor, news industry analyst for the research firm Outsell Inc.

To generate cash for payments, Tribune already has sold the Long Island daily Newsday to Cablevision Systems Corp. (nyse: CVC - news - people ) for $650 million and is looking to sell the Chicago Cubs baseball team and its Wrigley (nyse: WWY - news - people ) Field stadium.

More job reductions and other cost cuts could be in store for Tribune and other newspaper companies, Doctor said. To trim costs, Tribune already has made hundreds of layoffs at its papers and decreased the page count of print editions.

But the troubles extend to all newspaper companies.

"Even in good economic times, it has been harder to find companies that are going to help with refinancing given uncertain future cash flows" at newspapers, Doctor said in an interview. With the meltdown in the financial sector, he said, lenders will be even less likely to take risks with newspapers.

"Clearly newspaper companies are wounded financially and in being wounded, that's not a good place to be in the herd in tough times," Doctor said.