There has been talk that The New York Times (NYSE: NYT) may have to file for Chapter 11. The company quieted that talk by mortgaging part of its headquarters, cutting its dividend, and putting some of its New England properties up for sale.

Also, the Journal Register has gone bankrupt. It lost its NYSE listing months ago.

Which company in the newspaper industry is next?

McClatchy (NYSE: MNI), the third largest newspaper chain in the US, cut 10% of its work force as its May advertising fell about 16%. According to The Wall Street Journal, "McClatchy, which owns the Miami Herald, the Sacramento Bee and 28 other dailies across the U.S., expects to save about $70 million annually from the job cuts."

McClatchy made the mistake of buying competing chain Knight-Ridder two years ago, just as the business was falling apart.

The fact that newspapers are in trouble is old news. What is not is the terrible rate at which newspaper revenue is falling now. Based on the current rate of advertising attrition, papers could loss 40% to 50% of their major sales base in three years. Revenue from online versions of the papers is not growing nearly fast enough to replace that.

Many of the public newspaper chains still pay large dividends. With share prices down as much as 70% in the last year, they sport yields which their cash flow cannot support. Dividend cuts are likely to cause more investors moving out of the stocks.

McClatchy now has $2.4 billion in debt, most of its from the Knight-Ridder deal. That plan, put together by CEO Gary Pruitt, has nearly ruined the company.

Odd that he is not one of the 1,400 people leaving.

Douglas A. McIntyre is an editor at 247wallst.com.