Just when you think that the newspaper business could not get any more depressing along comes a report that Advance Publications Inc. will sell the Newark Star-Ledger, New Jersey’s biggest circulation paper, unless 26 percent of the employees accept buyouts by October 1.

The company also wants new concessions from unions representing its drivers and mailers, according to the Associated Press. Its smaller paper in Trenton, the Times of Trenton, must shed 25 members of its staff. Advance has hired JPMorgan to assist with the sale, the AP said. That is no easy task.

Advance, the privately held company owned by the Newhouse family, like other publishers is faced with the vexing challenge of finding new ways to make money in the face of a soft advertising market and shifting marketing spending to the Web. Remember that for all of their talk about the Internet, newspapers remain primarily a print business.

If Advance, which also owns Conde Nast magazine publishers, is hurting this bad than the fortunes of the publicly traded companies such as Gannett (GCI), the New York Times (NYT) and McClatchy (MNI) whose stocks are all down by double-digit percentage points.

Even as these companies shed assets, buyers are going to be few and far between. The private owners of The Philadelphia Inquirer (where I have done free-lance work) are continuing to struggle.  Sam Zell is trying mightily to dig himself out from under the debt of the Tribune Co. he acquired. People who know better are staying away from this industry.

About the only saving grace for newspapers is that they continue to attract power-mad billionaires with gigantic egos. That’s the only explanation for Cablevision’s (CVC) recent $650 million purchase of Long Island’s Newsday. Maybe the Dolan family, which controls the cable company, was looking to emulate the Murdochs of News Corp. (NWS) who acquired Dow Jones & Co. for the astronomical price of $5 billion.

Anyone thinking of investing in this industry should heed the words of Star-Ledger publisher George Arwady who recently told his staff: "Although we have implemented a variety of plans to reduce expenses and create new sources of revenue, our financial picture continues to deteriorate. We simply have been unable to offset the unprecedented and continuing steep decline in advertising revenue."

Jonathan Berr

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