The poor economy, especially the real estate market, is cutting into ad sales, and is the worst in California and Florida. The San Francisco Chronicle, for example, is losing US$1 million a week, according to Hearst Corporation executives, The New York Times reported.

“Never in my most bearish dreams six months ago did I think we’d be talking about negative 15 percent numbers against weak comps,” Peter S. Appert, a Goldman Sachs analyst, told The New York Times. “I think the probability is very high that there will be a number of examples of individual newspapers and newspaper companies that fall into a loss position. And I think it’s inevitable that there will be closures in this industry, and maybe bankruptcies.”

Newspaper companies are taking steps to fight against shrinking or negative profit margins, such as cutting thousands of employees (McClatchy Co., for example, cut 1,400 workers last week), outsourcing jobs or entire departments, cutting page numbers and distribution routes, printing smaller papers and combining printing and even distribution with other newspapers, but no amount of cutbacks seems to be enough.

Analysts have predicted the industry won't bottom out for about three or four years, The New York Times reported, but everyone wants to know “is how far things will fall before then,” Appert said.

Marshall N. Morton, chief executive of Media General, said it's important to not lose sight of the industry's major challenge: millions of new readers are drawn by the Internet, and it's important to continue to gain audience numbers.

“As long as we’ve got content, we’ve got something nobody else has” and must prove “to the advertiser that we, in fact, are the right link so that he can have his conversation with the customer through us,” he told The New York Times.