Sam Zell's Tribune Company is exploring a bankruptcy filing, the Wall Street Journal and Times are reporting. Profits have fallen faster than the media conglomerate can sell off assets, leaving the company in likely violation of debt covenants and scrounging to pay nearly $1 billion in interest. Of course, nearly two-thirds of the company's $12 billion debt comes from Zell's leveraged buyout of the Tribune last December. The cranky old real estate mogul is like a guy who bought his house with a subprime mortgage: He thought he could refinance before interest rates kicked in, but now the price of his home is plummeting and he's getting desperate.

Except instead of a house it's a giant newspaper company, and thousands of journalists at the Los Angeles Times, Chicago Tribune, Florida Sun-Sentinel and other papers stand to lose their jobs. Apparently Tribune's insane newspaper savior Lee Abrams is going to have to send even more rambling and pointess memos to get them and their advertisers out of the "fear/acceptance zone."

Bloomberg predicted all this, as usual, by listening to fancypants Wall Street analysts, with their attention to things like fiscal solvency and balance sheets and other things of zero interest to new media visionaries like Zell and Abrams.

Tribune paid off some debt by selling Newsday to Cablevision for $632 million. But it still needs more cash to avoid going into default, and several of its big ideas look dubious amid the economic meltdown: selling the Chicago Cubs (S&P is skeptical and Tribune delayed the sale , originally to come by the end of the year, until spring), issuing securities on the moribund commercial paper market and selling the properties now housing the LA Times and Chicago Trib (commercial real estate is in the toilet).

Driving this whole firesale mentality are continued declines in newspaper advertising, which Zell apparently didn't count on, and which radio-industry clown Abrams couldn't correct. Operating profits declined 83 percent companywide in the most recent quarter, according to the Journal.

Tribune's best hope at this point is that its lenders will decide the company is in better shape than most other distressed debtors and give it some breathing room, rather than lose all their money in bankruptcy. The lenders have supposedly been "amicable" with Tribune thus far, according to the WSJ, but demoralized empoyees won't be so forgiving the next time Zell comes around to cuss them out.

UPDATE: Leverage with creditors might be precisely the point, actually. Writes the Times this morning: " 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" (emphasis added). On the other hand: "As the economy weakens, other lenders have become more aggressive about forcing debtors into bankruptcy when they believe such a move is inevitable, to preserve a company's valuable cash reserves."