The Minneapolis Star Tribune filed for bankruptcy yesterday. The Boston Globe announced it would lay off workers. The two papers are among the twenty largest in the US.

While some local papers in small towns are doing well because they have no competition, the dailies in large cities compete with radio, TV, and websites covering news in the same regions that the papers do.

The fact of the matter is that newspapers cannot cover their printing and distribution costs with the amount of money they bring in from advertising and subscriptions. Some have relatively successful websites, but these sites often compete with the physical paper for reading time. People are only willing to spend so much time getting information.

One of the options that newspapers have is to produce much smaller papers, perhaps eight pages a day. These products could have more pages on any given day if marketers supplied enough profitable advertising or inserts. But, the cost of manufacturing and distributing the big city daily would come down considerably.,

Why would that help? Only if the smaller paper had brief summaries of stories that pointed people to the paper's website for the detailed articles. The newspaper would become, in essence, a TV Guide for newspaper websites. The cost of production for the paper would drop. Audiences for their websites should rise.

Newspapers are running out of ideas to save themselves. Maybe this one would work.

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

In late December, Avista Capital Partners agreed to pay $530 million for the Star Tribune, less than half of what McClatchy paid for it in 1998. The deal comes amid growing concerns about the future of newspapers, which are facing competition from the Internet. But in spite of the ugly long-term outlook for newspapers, they may make an interesting investment for now.

For starters, Avista is purchasing the newspaper for 6.5 times its cash flow. Newspapers don't have the large capital expenditure requirements that many more booming businesses do. The industry is in decline, but it's still making money. I'm reminded of a profound statistic that I first read about in Jeremy Siegel's book The Future for Investors: Since 1957, railroad stocks have outperformed airlines, trucking, and the S&P 500.

This is of course not attributable to dramatic growth in the railroad industry. Rather, most investors saw that the companies were in decline and the share prices were driven down, and then provided a good return. The moral of the story: valuation matters. Most stocks are a good deal at the right price.

Are newspapers the new railroads? There are numerous similarities. Railroads were replaced by airplanes and trucks, but the railroad stocks were the better investment. Newspapers are being replaced by the Internet, but that in no way means that Internet stocks are better buys. Here's a quick look at some of the bigger newspaper stocks:

• Gannett (NYSE:GCI): Owner of 91 daily newspapers, including USA Today. The also own around 1,000 non-daily publications. Trades at around 11 times cash flow.
• E.W. Scripps (NYSE:SSP): Owns some newspapers, but also television stations, including HGTV and the Food Network. Also owns Shopzilla.
• Tribune (NYSE:TRB): Trades at around 8 time cash flow. Owns 11 daily newspapers, the Chicago Cubs, television stations, and other media interests.