Dec. 8 (Bloomberg) -- Tribune Co., the newspaper publisher and broadcaster taken private by billionaire Sam Zell last year, is considering filing for bankruptcy protection, according to the Wall Street Journal.

Lazard Ltd. and law firm Sidley Austin were hired to advise Tribune on a possible Chapter 11 filing as soon as this week, the Journal reported yesterday, citing unidentified people familiar with the matter. Gary Weitman, Tribune’s spokesman, said the company doesn’t comment on rumors.

Tribune continued talks with lenders to restructure its debt in recent days, the Journal said. The Chicago-based company, saddled with $11.8 billion in debt from the $8.3 billion buyout of the company last December, has been cutting jobs and selling assets including Long Island’s Newsday to reduce its obligations.

Last month, Tribune reported a third-quarter net loss of $121.6 million as advertising sales continued to slide. Fitch Ratings credit analyst Mike Simonton said at the time that the results were “slightly worse” than expected and that Tribune would have to sell its Chicago Cubs baseball team by year-end to avoid violating loan agreements.

Tribune’s $5.515 billion term loan is quoted as low as 31 cents on the dollar, according to Standard & Poor’s LCD. The so- called term loan X, which is paid off first by asset sales, is quoted as low as 45 cents. The X loan was $1.5 billion at the time of the buyout and is now $512 million.

Plunging Sales

The economic crisis is hurting newspaper publishers across the U.S. as advertising dries up and companies struggle to pay down debt with shrinking cash flow. To reduce costs, Tribune’s Los Angeles Times eliminated another 75 newsroom positions in October, or about 10 percent of the editorial staff. The company has also cut jobs at its other publications.

The drop in Tribune’s newspaper ad sales accelerated to 19 percent in the three months through September, steeper than the 15 percent slides in the first and second quarters. Overall publishing revenue declined 13 percent to $653.6 million, while broadcast and entertainment fell 5.6 percent to $383.4 million.

“The newspaper industry continues to see extraordinary declines in ad revenues, and Tribune is no exception,” Zell, 67, the company’s chief executive officer, said in a Nov. 10 statement when Tribune reported third-quarter results.

To contact the reporter on this story: Jennifer Sondag in New York at jsondag@bloomberg.net; Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: December 8, 2008 00:01 EST