By Mike Waller

We've all been bombarded for months with the conventional wisdom that newspapers will soon go the way of the horse and plow. Like much conventional wisdom, this has more holes in it than Swiss cheese.

The evidence cited for the newspaper apocalypse includes this year's death of Denver's Rocky Mountain News and Seattle's Post-Intelligencer. Several newspaper companies - including the parent company of The Inquirer and Daily News, Chicago-based Tribune Co., and Minneapolis' Star-Tribune - have filed for bankruptcy protection. Others have cut home delivery to three days a week.

But the vast majority of newspapers are in fairly good financial shape. Of the 1,300 or so dailies in America, at least 80 percent are earning pretax profits of 10 to 20 percent. Even amid a recession and advertising decline, newspapers earn higher margins than 90 percent of the companies on the New York Stock Exchange - not bad for a dying business. They just aren't earning the 25 to 40 percent margins they grew accustomed to.

The country's medium and small dailies - more than half have circulations of 20,000 or less - are the lifeblood of their communities, providing the only substantive local news. Local television stations abandoned any pretense of reporting on serious local issues years ago, relying instead on coverage of crime, crashes, festivals, and weather to attract viewers.

Most local merchants still advertise in these newspapers for two simple reasons: They get results, and there are few other good options. This will continue into the foreseeable future, making it likely that these papers will be around long after we're all gone. Many of these successful dailies are also the top financial performers for large media companies.

The Internet has been a key factor in the decline of large newspapers, stealing some advertising revenue and readers, who get their news for free on the papers' Web sites. Ad revenue also has been hammered by the recession.

But another big factor in the decline of many large newspaper companies has been their own mismanagement. Some have accumulated huge debts and made questionable acquisitions.

Chicago mogul Sam Zell buried Tribune in $8.5 billion in debt when he acquired it from the Times Mirror Co. in 2007. At the time, Tribune was generating about $1.2 billion in cash flow - a lot of money, but not enough to service the debt. Then came the recession. Less than two years later, Tribune filed for bankruptcy. (Still, even this year, it will produce cash flow of at least $750 million.)

Making matters worse, Zell hired broadcast and marketing executives, who were as clueless as he was about the business, to make all the key decisions. Their solution to the recession was to cut out the heart of the company's newspapers by butchering news staffs, severely reducing substantive reporting.

Tribune's Hartford Courant, which had an editorial staff of 388 in 1994, has been whacked to about 125 journalists. Its Baltimore Sun has gone from a news staff of 425 to about 150 over the past decade. In addition, Tribune papers have severely reduced their ad-sales staffs, the main generators of revenue.

The pattern has been repeated in other big media companies, though most have better leadership than Tribune.

The country's largest dailies face a bigger challenge than small and medium papers, mainly because their advertisers have cheaper options. About 80 percent of their revenue comes from ads, with the rest coming from paid subscriptions and sales - a model that is not likely to work in the future. The San Francisco Chronicle has begun changing the model by doubling its subscription rates. The result has been 75,000 fewer subscribers, but much more circulation revenue.

To survive, large newspapers will have to quit giving away their content. Most Internet users expect free news, but if large papers make their Web content local, charge for it, and are willing to lose readers for a few years, they will wind up with fewer readers, but still thousands of loyal ones who are willing to pay for local news and commentary not available elsewhere.

That would be a big step toward keeping large newspapers alive, but it wouldn't cure all their problems. The bigger questions are how much ad revenue will return after the recession, and whether they restore some of their reporting capacity.

Many of these papers have lost 40 percent of their ad revenue since 2005. Perhaps 25 percent of their losses will return with the recovery. But without a reinvestment in reporting, the newspapers, and democracy itself, will continue to suffer.

Mike Waller has been the editor of the Kansas City Star and Times and the Hartford Courant, the publisher of the Baltimore Sun, and an executive at Times Mirror. He can be reached at mikeewaller@aol.com.