The ills of newspapers are now the everyday chatter of media people: circulation declines, newsroom layoffs, the flight of classified ads and the consolidation of major retail advertisers, declining profits.

It all sounds quite grim. One might think the American newspaper is headed into extinction. It is not, not today, not tomorrow and not for a long time, if ever.

For all its problems, the American newspaper remains an extremely healthy institution that enjoys a vital and powerful connection with readers and advertisers.

Among the things newspapers have going for them is their impressive profitability. Even with all their ails, newspaper still clock margins on the north side of 20 percent. Few other industries can claim anything like those margins, beyond pharmaceuticals and banking.

Surely profits will suffer in all the turmoil, and one of the nastier forecasts has profits shrinking to somewhere around 12 percent. But that still makes for a very healthy enterprise.

Indeed, if newspapers were headed toward extinction, then why would so many millionaires--all shrewd businessmen--be trying so hard to buy them, men like former GE chief Jack Welch, who's been after the Boston Globe? Not to lose money. Part of it is the prestige that comes with owning a newspaper, but they also see real opportunity. They see a new future for newspapers.

Among the other advantages of the American newspaper, ensuring its good financial health, is its ability to reach local audiences, and far more effectively than any other medium. There's TV and local magazines and radio, billboards and increasingly the internet, but none delivers near the audience of the local newspaper.
 
Newspapers have those larger local audiences because they deliver for readers and for advertisers tying to reach those readers. They do it through the news they print. They not only deliver more news, in terms of the sheer bulk of information that rolls off presses each day, they still command the most respect as sources of news, for all the complaints papers field from readers disgruntled over the cutbacks in coverage. 

When it comes to their local papers, readers have a sense of ownership. They call it "my paper." Nobody talks about "my TV station," or "my "radio station."

That's in large part because newspapers are a mass medium at the local level, and in that sense something that belongs to everyone. Newspapers offer readers a sense of community and also a sense of the public good, as a forum for discussion of issues facing communities, and this is never more so than during periods of crisis or dramatic social change.
 
One might argue that at the present pace, with declining ad revenues and rising competition, newspapers will lose that local dominance.

History suggest otherwise. In just the last several decades, papers have seen a proliferation of competitors with the rise of local cable and a flush of local magazines and alternative weeklies. And while they've suffered, newspapers remain the dominant medium. And that will be the case as local internet continues to surge in growth.

In an era of increasing media fragmentation, the newspaper stands to become even more powerful, not less. Even as its readership declines, it will still be the largest voice.

That's because the demand will persist for the information newspapers offer readers. Though fewer may subscribe to the print editions, they'll continue looking, and increasing on the web and on newspaper web sites.
 
"Newspapers have a very strong brand name," says veteran newspaper industry analyst John Morton of Morton Research. "Even if half the people don't pick it up, they know its name and that has translated toward people wanting information gravitating
toward newspaper web sites."
 
But what newspapers have most going for themselves is their ability to reinvent themselves. It may seem hard to believe at times, yet papers are perhaps the most aggressive of all media in looking for new means to connect with their audiences. They're launching niche titles and trying all manner of things on the internet, looking for those new offerings that will connect.

"This is a new frontier and an opportunity to solve a whole lot of problems and create new audiences of people who are not going to use the newspaper," observes Stephen Gray, managing director of Newspaper Next, a project of the American Press Institute. "If newspapers get at it and keep moving, they have a good chance to be the go-to source in the communities they serve."