Dec. 8 (Bloomberg) -- Sam Zell, who placed Tribune Co. into bankruptcy less than a year after taking the newspaper publisher private, said the filing is “right for the business” and may ultimately save the company.

“Clearly we have to address the cost of distribution, paper, and issues of consolidation,” Zell said in an interview. “We have ideas about how to monetize. We just can’t work on them as well as we’d like under the pressure we’ve had.”

Zell has styled himself as “The Grave Dancer” for his ability to resurrect wayward companies. He took Tribune private last December for $8.3 billion, after advertisers had started to abandon newspapers and broadcast TV in favor of Web sites and cable. The 161-year-old publisher of the Los Angeles Times and the Chicago Tribune listed assets of $7.6 billion and debt of $12.9 billion in a Chapter 11 petition filed today in U.S. Bankruptcy Court in Wilmington, Delaware.

After taking over, Zell cut jobs and sold assets including Newsday to cope with Tribune’s debt load and declining revenue. At the same time, U.S. newspaper ad sales have plunged at accelerating rates, dropping 18 percent in the third quarter.

The company also owns television stations and the Chicago Cubs Major League Baseball franchise. To raise cash, Zell has been entertaining bids for the Cubs and their Wrigley Field home, neither of which is included in the bankruptcy filing.

Newsprint Costs

Newsprint, publishers’ second-biggest expense after labor, reached a high of $751.31 a metric ton in November, up 34 percent from a year earlier, according to Foex Ltd. in Finland.

“We’re doing what’s right for the business to save the business,” said Zell, 67.

Tribune owes newsprint suppliers White Birch Paper Co. $5.15 million and AbitibiBowater Inc. $6.96 million, according to the bankruptcy filing.

The company lost more than two-thirds of its market value in three years before saying in September 2006 that it would consider a sale. Initial bids failed to meet Tribune’s expectations, a reflection of declining investor interest.

Tribune extended a deadline in hopes of drawing more interest before announcing a deal with Zell in April 2007.

“I’m sick and tired of everybody talking about and commiserating about the end of newspapers. They ain’t over,” Zell said at a press conference on Dec. 20, 2007, the day the transaction closed.

‘Going to Succeed’

Chief Operating Officer Randy Michaels said in an August conference call that, “for the first time, with confidence, I can tell you we’re going to succeed.” Still, Zell said on the same call that second-half newspaper ad sales hadn’t improved.

In September, a group of current and former Tribune journalists sued Zell for mismanagement, claiming he had breached fiduciary duties by saddling the company with debt. Zell called the suit a distraction.

The company lost $121.6 million in the third quarter as sales dropped 10 percent. A year earlier, the company had posted a profit of $152.8 million. Publishing revenue declined 13 percent to $653.6 million. Newspaper ad sales fell 19 percent, steeper than the 15 percent slides in the first and second quarters.

“It is astounding that it’s less than a year since he took the company private,” said Ken Doctor, a newspaper analyst at consulting firm Outsell Inc. in Burlingame, California. “From the beginning it was a house of cards.”

To contact the reporter on this story: Doron Levin in Southfield, Michigan, at dlevin5@bloomberg.net; Andrew Dunn in New York at adunn8@bloomberg.net.

Last Updated: December 8, 2008 17:31 EST