Tribune, formerly a public newspaper and broadcast company, lost the publisher of its largest newspaper, the LA Times, and the editor of its flagship, the Chicago Tribune. New controlling shareholder Sam Zell is in trouble, burdened by buyout debt he may not be able to pay.

Most analysts saw another modest drop in newspaper ad revenue this year. It has been much worse than that. At some companies in the industry, ad sales are off nearly 15%. An analyst recently dropped his price target on The New York Times Company (NYSE: NYT) to $8 and said the firm would have to cut its dividend. The stock currently trades at $13.21.

The two public companies which are at most risk for not making it another year are Gatehouse (NYSE: GHS) and McClatchy (NYSE: MNI). Both took on big debt loads buying newspaper properties. Both are seeing operating income chopped by falling sales. Either could hit debt service problems which could force them to sell properties of file for Chapter11.

Gatehouse dropped as low as $1.11 in the last few days. Its 52-week high is $19. McClatchy is down to $4.93 from a 52-week high of $28.65. Gatehouse is the most troubled with a high dividend and $1.3 billion in long-term debt.

Newspapers companies have gone from being in a tight spot to being candidates for liquidation. They are a short-seller's dream.

Douglas A. McIntyre is an editor at 24/7 Wall St.

MAJOR PAPERS:

• According to the Wall Street Journal, citing a person familiar with the matter, Bear Stearns Companies Inc (NYSE: BSC) plans to give its top trader, Warren Spector, the ax.
• The Wall Street Journal reported that Kroger (NYSE: KR) announced last week that it would stop selling milk that carried synthetic hormones that are made by Monsanto Company (NYSE: MON), despite the FDA saying the hormones are safe.
• A group of financial experts predicted that the U.S. will enter a recession soon, due to inflation, the economic prescriptions of a Democratic president, and the housing market meltdown, reported Barron's Magazine.

OTHER PAPERS:

• According to insiders, Martha Stewart is not happy with Lampert's Kmart chain as she feels the company is not doing enough to sell her Martha Stewart products in its stores, which in turn is causing a "drag" on Martha Stewart Living Omnimedia Inc's (NYSE: MSO) earnings, reported the New York Post.
• While shopping on the Internet has always been a 24-hour ordeal, some traditional retailers such as Sears Holdings Corporation (NASDAQ: SHLD), Kohl's Corporation (NYSE: KSS) and Dick's Sporting Goods Inc (NYSE: DKS) are starting to realize the potential of offering online-only discounts when their stores are closed, reported the Chicago Tribune.
• Qatari investment firm Delta Two may have to provide more than GBP1B in additional equity in order to win backing from J Sainsbury's (OTC: JSAIY) board for its offer for Sainsbury, reported the U.K. Times.

Two of the major newspaper companies reported second-quarter earnings today. The New York Times (NYSE: NYT) reported EPS of $0.34 from continuing operations compared with $037 in the second quarter last year, before items. Tribune Company (NYSE: TRB) reported EPS from continuing operations of $0.17 compared with $0.53 in the second quarter of 2006. Those earnings were brought down by about $0.30 in one-time charges related to job cuts and write-offs.

Tribune is expecting to be acquired by mogul Sam Zell through a complex process where employees would own a large portion of the company but, according to the Associated Press, "Now the industry's accelerating decline has some Wall Street experts wondering whether the deal for the parent company of the Chicago Tribune, Los Angeles Times and Chicago Cubs could fall apart." Revenues decreased 7% in the quarter and while the company remains publicly confident in the deal's prospects, the stock will plunge if it doesn't go through.

Shares of the New York Times soared on the news of Rupert Murdoch's bid for Dow Jones (NYSE: DJ). It has since given up all those gains as investors realized that was a one-shot deal rather than a sign of some new paradigm where the newspaper industry is something other than a declining wreck.

Tribune's saving grace has been the fact that its non-newspaper properties are performing well, but the industry continues its free fall. Advertising revenues fell 5.7% at the New York Times.

The newspaper industry remains one of the ultimate contrarian bets and, if the industry does somehow stage a turnaround, believers will be richly-rewarded. But none of these stocks are for the faint of heart, and I'll be staying far away for now.

MAJOR PAPERS:

• Thanks to a downturn in sales, sportswear maker Liz Claiborne Inc (NYSE: LIZ) will seek to divest itself of 16 of its 36 apparel brands, equal to about $800 million of its $5 nillion in annual revenue, reported the Wall Street Journal (subscription required)
• The Financial Times (subscription required) reported that Dell Inc (NASDAQ: DELL) has listened to customer concerns and has moved to eliminate "trialware" from a range of small business laptops and desktops computers.

OTHER PAPERS:

• British mining company Rio Tinto plc (NYSE: RTP) is believed to be preparing a $34 billion, or $90 per share, takeover bid for Canadian aluminum company Alcan Inc (NYSE: AL), reported the U.K. Times.
• According to the Economic Times, FedEx Corporation (NYSE: FDX) has failed in its attempt to buy out Indian logistics company SafeExpress.
• The Chicago Tribune reported that the U.S. faces an "increased risk" of a terror attack this summer, according to U.S. Homeland Security Secretary Michael Chertoff.

As Americans emptied their wallets to pay for gas over the weekend, BP p.l.c. ADS (NYSE: BP), London, hurried to fix a problem in Alaska that is contributing to the consumer price spike.

BP officials at America's largest oil field -- Prudhoe Bay on Alaska's North Slope -- cut oil production by a quarter last week after they found a hole about the diameter of a pencil in a water pipe. On Sunday, after several days of round-the-clock repair work and tests to the damaged area, they restored full production. BP is in the process of replacing 16-miles of pipe after corrosion caused the North Slope's largest oil spill in August of 2006.

A detailed report in the Chicago Tribune traces problems at BP to cutbacks during the days of cheap oil in the late 1990s. Tribune chief business correspondent David Greising says that the scrimping of a decade ago has left the oil industry ill-prepared to deal with even small problems, such as pencil sized holes in pipes in the wilds of Alaska. He writes that the company's inability to handle technological challenges has forced it to delay pumping from one of its best prospects for the future -- the Thunder Horse platform on the Gulf of Mexico.

MAJOR PAPERS:

• According to the Wall Street Journal, citing people familiar with the situation, the NY Attorney General and the SEC are both investigating "suspicious trading" in shares and options of Dow Jones and Company Inc (NYSE: DJ) prior to the $5B offer by News Corporation (NYSE: NWS).
• The Wall Street Journal reported that the UK's financial-services regulator has begun a preliminary review of trading by hedge funds in ABN Amro Holdings (NYSE: ABN), according to people familiar with the situation.
• BAE Systems (OTC: BAESY), the British defense contractor, is in the final stages of its $3.5B takeover of Armor Holdings Inc (NYSE: AH), the U.S. manufacturer of military and heavy vehicles, reported the Wall Street Journal.
• The Wall Street Journal reported that a consortium led by the Royal Bank of Scotland Group (OTC: RBSPY) has made a formal $24.5B offer for ABN Amro's LaSalle Bank, according to people familiar with the situation.
• The Financial Times reported that Dutch bank ABN Amro rejected a $24.5B offer for its U.S. bank, LaSalle, from a consortium led by Royal Bank of Scotland today. However, ABN said it would allow its shareholders to vote on the offer.

OTHER PAPERS:

• Safeway Stores Inc's (NYSE: SWY) CEO, Steven Burd, said that Dominick's is not for sale in an interview with the Chicago Tribune.

WEBSITES:

• According to TheAlarmClock.com, Global Equities Research analyst Trip Chowdry believes Google Inc (NASDAQ: GOOG) is "stepping up its efforts" to acquire job search engine SimplyHired.

Tribune Co. (NYSE: TRB) is close to accepting Sam Zell's $8 billion offer to take the company private, ending a soap opera that's gone on for too long.

The owner of the Los Angeles Times and Chicago Tribune will probably reach an agreement with Zell by a self-imposed deadline of March 31, people familiar with the matter told Bloomberg News. Zell's offer values Chicago-based Tribune at $33 a share, a 6.8 percent premium over yesterday's close.

Zell plans to create an employee stock ownership plan to finance the debt needed for the acquisition, Bloomberg says, adding that billionaire plans to keep the company in tact.

Tribune should take Zell's money and run as fast as it can to the bank.

I've questioned before whether the grave dancer really understands what's he has gotten himself into. If Zell is a success, I will gladly admit that my skepticism is wrong. Still, I bet that this isn't the last private equity deal among newspaper publishers.

Gannett Co. (NYSE:GCI) and McClatchy Co. (NYSE:MNI) would seem like logical candidates to go private. Though like other publishers they are struggling, Wall Street has considered both companies to be well run. McClatchy's reputation, though, took a hit when it acquired Knight Ridder. Gannett has the advantage of owning both USA Today and strong local media franchises.

All newspaper publishers are better off out of the public markets.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Kohl's Corp (NYSE: KSS) may form a multi-year deal with Elle for an exclusive line of clothing.
• The Journal also reported that Comcast Corp (NASDAQ: CMCSA) is expected to announce an online video deal with Facebook.
• The Barron's Online (subscription required) "Weekday Trader" column highlighted Citrix Systems Inc (NASDAQ: CTXS), which it said could rise to $40 a share or more from its current $31. The company is a play on the success of Microsoft Corporation's (NASDAQ: MSFT) Vista Operating System.

OTHER PAPERS:

• According to the BBC News, Vodafone Group ADR (NYSE: VOD) is offering News Corporation's (NYSE: NWS) MySpace in the UK through its subscribers' mobile phones.
• The Economic Times wrote that EMC Corporation (NYSE: EMC) has bought India's privately-held enterprise data security company Valyd Software for an undisclosed sum.
• The Chicago Tribune reported that Chicago real estate magnate Sam Zell has entered the bidding for the Tribune Company (NYSE: TRB).

MAJOR PAPERS:

• The Wall Street Journal (subscription required) highlighted Apple Inc's (NASDAQ: AAPL) ongoing options probe among its headlines.
• Federal Authorities are "actively" investigating backdated stock-option grants awarded to Steve Jobs, Apple's CEO.
• The NYSE Group's (NYSE: NYX) New York Stock Exchange is planning a pilot program later this year that may bring real-time stock price data to investors via web sites such as Google Inc (NASDAQ: GOOG) and Yahoo Inc (NASDAQ: YHOO).
• The Financial Times (subscription required) highlighted Britain's announcement to pull troops out of Iraq as the U.S. adds more to Iraq.
• Siemens AG's (NYSE: SI) ex-CFO Heinz-Joachim Neuburgerwas named in a bribery probe.
• British Prime Minister William Blair is set to announce an Iraq troop pullout of 2,600 soldiers.
• Regulators in Britain say that stem cell work with animals may be legal, despite a proposal to ban on hybrid embryo experiments.

OTHER PAPERS:

• The Economic Times reports that Reliance Industries may make a bid for General Electric Company's (NYSE: GE) Plastics Operations.
• The Chicago Tribune reports that McDonald's Corporation (NYSE: MCD) may put its Boston Market chain up for sale.
• CNet.com reports that Microsoft Corp (NASDAQ: MSFT) has lost its top executive in China, Li Gong.
• Investor's Business Daily's "New America" column said that Middleby Corp (NASDAQ: MIDD) should profit from the trend away from trans fats with their new Rocket Fryer.
• BusinessWeek's "Inside Wall Street" column mentioned Lockheed Martin Corporation (NYSE: LMT), Sempra Energy (NYSE: SRE) and Thermage Inc (NASDAQ: THRM) positively.

I just heard that Dean Baquet, the editor of the Los Angeles Times, has been pushed out by his Chicago-based overlords because he refused to oversee any more staff cuts.

Well, all of us members of the Fourth Estate, past and present, saw this coming. It's just another ill tiding for the newspaper industry.

The Tribune Company (NYSE:TRB), owners of the Chicago Tribune (and lots of other media outlets), own the Los Angeles Times. It's been relentless in its pursuit of profits, slashing staff and other resources. It's slowly starving its brand by trying to wring every last penny of profit out of its business. And when was the newspaper business ever a money-making operation?

Yes, the newspaper industry is dying. Yes, more people get their news now from the Internet or TV. Yes, advertising revenue has tanked, again thanks to the Internet. I'll even hazard to say there won't be newspapers as we know them in 20 years time. But it ain't dead yet. There are still millions of people who get a newspaper every day, for whatever reason. And those people want a good product. The Los Angeles Times was a good product. A great brand.