Well are newspapers and information sources dieing? The answers are mixed but here is an update from the New York Times:
Are Papers About to Land or Take Off?

By KATHARINE Q. SEELYE
and ANDREW ROSS SORKIN

Published: March 9, 2006


The fate of Knight Ridder newspapers, the nation's second-largest newspaper chain, could be determined any day — and with it, the future of what has come to be known as the mainstream media could become clearer.


Knight Ridder was put up for sale in November under pressure from its three biggest shareholders, who said the company's stock was undervalued. In what may be an early sign that the newspaper industry's value has declined, it appears that only two bidders are likely to make offers by the deadline, which is today. Several private equity firms looked over the property but dropped out.

Offers are expected from the McClatchy Company and from the Gannett Company in partnership with the MediaNews Group. How high they bid will be significant. Low bids would suggest pessimism about the prospects for newspapers, as readers and advertisers increasingly decamp to the Internet. High bids would indicate more optimism for their future.

Knight Ridder owns 32 daily newspapers, including The Philadelphia Inquirer, The Miami Herald, The San Jose Mercury News and The Kansas City Star. As late as yesterday, a consortium of buyout firms led by Thomas H. Lee Partners of New York and including the Texas Pacific Group was still interested, but industry analysts said a Lee bid was unlikely.

That leaves the bidding to two very different newspaper companies, one small, one large, both of them respected on Wall Street for their disciplined operations and high profit margins. But there is no sure sign either will offer a price that Knight Ridder will take.

Analysts said any bid over $65 a share would probably be accepted; anything less would put the company in a quandary. If Knight Ridder were unhappy with the offers, it might drop the sale and buy back more of its own stock in an attempt to revive its share price and provide its shareholders with a special dividend.

Whatever the outcome, the process portends a stringent climate for those toiling away at Knight Ridder.

"The bottom line on Knight Ridder papers is that in order to make these deals work, someone has to get extremely aggressive with costs," said Frederick W. Searby, an analyst with J. P. Morgan. "There's no question that this means that any buyer has to go in with a very, very sharp knife and trim the fat and maybe into the muscles to get this to work."

At the same time, bids that Knight Ridder considered too low could send a further message of worry through an industry already on the defensive.

"It will be very negative," Mr. Searby said. "Given the easy money out there, if these kind of prime assets can't get taken, it will rattle a lot of investors and depress sentiment."

James M. Naughton, a former executive editor of The Philadelphia Inquirer and retired president of the Poynter Institute for Media Studies, was less certain of the ramifications, especially if no deal were made.

"My concern is that it will be considered a referendum on the news business rather than an acknowledgment of what it really is — the failure of Knight Ridder many years ago to protect itself in the way it organized its stock," he said, referring to the company having only a single class of stock, making it more vulnerable to takeovers.

"I don't know that it speaks to the wider issue of whether there is money to be made in newspapers because the answer is yes, a lot," Mr. Naughton said. But Knight Ridder, he said, "is more apt to be under pressure from investors and therefore more apt to do bad things to its newsrooms to try to protect itself."

In any case, analysts said that a deal, if there was one, would move quickly and could be resolved in a matter of days. Paperwork on many minor aspects of a sale has already been signed by all three parties, they said. Still, no one rules out a last-minute scenario in which McClatchy joins with Gannett and MediaNews and divvies up the Knight Ridder empire, each according to its needs.

Knight Ridder is attractive largely because, despite the current environment, its newspapers remain profitable — its overall profit margin in 2004 was 19.3 percent, which is robust, albeit lower than McClatchy's and Gannett's, which own papers with margins above 30 percent.

Moreover, Knight Ridder, which has several strong newspaper Web sites and various online ventures, could serve as a gateway to a substantial presence on the Internet, from which analysts expect strong revenue in the future. Its assets include CareerBuilder.com, a popular Web site that it owns jointly with Gannett and the Tribune Company.

The downside is that its newspapers are just that — newspapers, the emblem of the old media, with big costs for printing and distribution at a time when readers and advertisers are turning to multiple other sources of news and entertainment.