According to a new report released Tuesday by Moody's Investor's Service, U.S. newspapers still have yet to prove that they're adapting to changing reader habits, which reiterated its negative outlook on the industry.

Print newspaper revenues have dropped steadily over the past three years while more readers switch to the Internet for news and information. The downturn in housing and in automotive sales have damaged classified ad sales in those two important categories, which aggravating the problem.

Even though newspaper publishers try to become more dependent on online sales, advertising sales staffs sometimes have difficulty in explaining the logistics as well as benefits of online ads to traditional media buyers, Market Watch reported.

Newspapers are trying to sell online advertising to some clients who had not purchased print ads before, pointing out that online ads are much cheaper than a print spread.

However, online ad sales are not gaining enough to making up for the sharp declines in print revenues.

"Downward pressure on newspaper credit ratings will remain until the industry can demonstrate that it is keeping pace with changing consumer media consumption habits and advertising delivery," said John Puchalla, Moody's Vice-President in a statement.

"A rebound from the current downturn is expected to be more muted than past recoveries," he added.