*Tribune prepares bankruptcy

WSJ reports that a filing could come as soon as this week. No word on what might be behind the move, though the company has been facing steadily eroding cash flow - and it's cash flow that has kept the place afloat. Tribune, which of course owns the LAT and a bunch of other papers, hired Lazard as financial adviser for a possible bankruptcy filing. The big law firm Sidley Austin is also involved. No official comments from anybody.

*The Journal points out that Tribune has one main option to stave off a bankruptcy filing: renegotiate terms of its debt package with lenders. That would mean higher interest rates, among other things. But other companies facing debt problems are managing to cut deals with lenders because the alternative - a bankruptcy court proceeding with creditors lining up - is a far worse prospect.

To be sure, a restructuring outside of bankruptcy court remains an option for Tribune. Executives have indicated previously that the debt talks are amicable, and it remains possible the two sides can agree to rework the company's borrowings on their own, as other newspaper publishers are doing. Tribune's hiring of Lazard, meanwhile, brings it a firm experienced in debt restructuring, and one that has become a go-to adviser for newspaper companies in financial distress.

Here's a take from the NYT:

While Tribune must contend with hefty interest payments over the next year, its most pressing problem is a maintenance covenant on some of its debt that limits the company’s borrowings to no more than nine times earnings before interest, depreciation and amortization. Even if the company continues to make interest payments, failure to maintain that level of debt means technical default — which does not always lead to a bankruptcy filing. Other newspaper publishers have halted making interest payments on their debt, but have yet to file.

From a short Chicago Tribune story: "It's an uncertain and difficult environment," Tribune Co. spokesman Gary Weitman said Sunday night. "We haven't made any decision. We're looking at all of our options."

The NYT just filed a story that modulates the first reports this afternoon:

It is not clear how seriously Tribune is thinking about seeking bankruptcy protection; analysts and bankruptcy experts say that the hiring of advisers, including Lazard and Sidley Austin, one of the company’s longtime law firms, could be a just-in-case move, or a bargaining tactic. The company would not comment on Sunday.

This would seem to sound the right tone for what's going on, though obviously everybody on the outside is flying blind.