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Could 'This' be the Future for Newspapers?

Gannet
AP
Gannet

Everyone's looking for the silver bullet to save the newspaper industry.

This week all eyes are on Gannett; its stock has been flying higher, up more than 500 percent excluding dividends since hitting a low of $1.95 in March. The owner of 84 newspapers including USA Today has managed to beat expectations thanks to dramatic cost cutting and just this week improved guidance for the third quarter, well above Wall Street expectations. But for all that optimism and positive commentary, the company still expects revenue to be down 19 percent for the quarter, thanks to continued weak ad revenue.

So what's a newspaper company to do?

The Washington Post and Los Angeles Times, announced they're breaking up their news service after nearly a half-century. Instead the Los Angeles Times will distribute many of its stories through a news service jointly owned by its parent company, Tribune and McClatchy. The long-running Los Angeles Times/Washington Post deal distributed stories, like a wire service, to about 600 subscribers. To me this says less about a rift between the Post and the Los Angeles Times and more about the Tribune Company, which has been operating under Chapter 11 bankruptcy protection, and is trying to bolster its revenue stream.

Sources in the industry tell me that the Tribune is working on aggregating content from the Tribune's top papers that could be widely distributed - say food and travel pieces from the Los Angeles Times, human interest stories and political analysis from the Chicago Tribune. The idea would be to tap into content that was considered "local" but could have a national appeal. Down the line the publishing company could assemble verticals like "lifestyle" and "travel" that would work as targeted news websites with content pulled from all the company's papers.

Meanwhile, another new play in the newspaper business is local, which seems odd considering how many regional and city papers have shuttered. The man behind San Diego News Network (SDNN.com), Neil Senturia, a "hyperlocal," news site, is now looking to raise $40 million to create about 40 similar sites for cities around the country. The theory is that local news and lifestyle stories will attract local advertisers. Senturia says he wants to retain ownership of all forty local sites, "like Starbucks," as he said to Forbes.com. But in fact the model hinges on keeping costs way down, by using freelancers instead of full-time employees and a tech platform, built overseas, it can use for each of the sites.

The big problem for Pulitzer Prize-winning papers like Denver's Rocky Mountain News, which folded, was their costly, experienced employee base. But it's also those journalists that made their content appealing enough to attract readers outside Denver and win Pulitzers. But Senturia isn't trying to win any awards; he's going lean and mean and trying to make some money. In a way he's taking a lesson from Gannett's various rounds of cost-cutting, looking to implement an impossibly cheap model from the start.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.