Lanny Morgnanesi

is the former editor of the

Intelligencer in Doylestown

On a day when more than 11 million Americans were out of work, I found a job. Considering the economy, it was a crowning achievement. But, sadly, it meant leaving my longtime profession, newspaper journalism.

Still, I was ready - and so was it. What had once been a worthy and satisfying business was in eclipse. My departure meant a slight but welcome improvement to a woeful bottom line. I did not work for the paper you are now reading, but it and all papers are facing similar fiscal trials.

A typical reaction is: "Well, I guess people just aren't reading the paper anymore." That's not quite it, though.

The decline and likely death of newspapers began at a time when industry executives struggled to understand anything that didn't involve putting ink on paper. They were blinded by perceptions and assumptions that were losing their basis in reality.

About 10 years ago, at a retreat for newspaper executives, I took part in a demonstration designed to drive home this point. Our speaker asked us to watch a deck of cards as each card was turned up. Did we see anything unusual? We did not.

The experiment was repeated, with the same results.

But the deck had been altered. Instead of black clubs and spades, and red hearts and diamonds, the deck had red clubs and spades, and black hearts and diamonds. But we saw only what we expected to see. We could not perceive or anticipate that the fundamental properties of a deck of cards could change.

It was a trick, but a symbolic and telling one. It spoke to the mess newspapers were about to get into.

Around the same time, the CEO of my company asked me if we should buy a new press. I remembered the funny deck and told him no. He bought it anyway and built a 64,000-square-foot plant around it.

He was ignoring the fact that, every minute of every day, thousands of Internet sites were distributing news and information without the costly burden of presses, ink, paper, trucks, drivers, gasoline, and warehouses. Someone had switched decks on him, and he hadn't noticed.

Perhaps he would argue that Internet companies could deliver the news, but they really didn't know how to gather it. They weren't beacons of light probing the shadows for threats to our democracy. Newspapers would be fine, because the Internet companies didn't know how to do journalism.

Well, they didn't have to. They simply scraped up our news and used it themselves. Yet another savings!

There were further complications. As my old company and others charged up the unlevel playing field, they made poorly timed purchases of other media properties - traditional media properties. They did so at what now seems like the height of the market. Shortly afterward, the recession kicked in and the value of their holdings plummeted.

Suddenly, many American newspaper barons - who once felt cheated if profit margins didn't approach 40 percent - owed more money than their properties were worth. That's when I learned a new definition of covenant.

When newspapers borrow money from banks, the loans go beyond a simple home mortgage. There are covenants that say, in effect: If your profits drop, the terms of the loan change. The interest rate might go up, or you'll be forced to pay off the loan faster, or both. And if things don't improve, we'll place a banker on your board to help run the company.

Layoffs help satisfy these bankers. Bankruptcy makes them go away, at least for a time. So a lot of what is happening at newspapers today is because of loan covenants, not because fewer people are reading - although it's true that fewer people are reading.

And fewer people are advertising. Classified ads, in particular, work so much better on the Internet. Everyone knows that. But newspaper executives were the last to acknowledge it.

Only now are a few publishers taking off the blinders and thinking about abandoning print. They never would have before, because print advertising, even when it's declining, brings in significantly more revenue than online ads. That was the glue that kept the blinders fixed.

Ads on Google, the incredibly successful search engine, are relatively cheap. Google makes money not from the price of its ads, but from their astonishingly high volume. The online operations of newspapers could never, ever approach that volume.

But with bankers screaming for cuts, classified ads disappearing, and staffs cut to the bone, the only option is to shut down presses - even new presses.

My old paper now prints six days a week instead of seven. Others have cut more than a day. A few small operations now appear only on the Web.

And so the incredible shrinking newspaper is becoming invisible. Its reappearance, while unpredictable, is inevitable. But it won't happen in bankruptcy courts or board rooms. It will happen in places not known and in ways not measurable.

It will seem sudden, while being incremental. There will be no 40 percent profit margin. But there will be news, and a light shining on things that need illumination.

The big question is: Who will pay for it, and how? The answer will come from those with vision, clarity, freshness, intelligence, and luck - the ones who can look at a rigged deck of cards and see a black diamond.