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The Dominos Are Falling Fast

In "End Times" The Atlantic's Michael Hirschorn fancifully speculated the demise of the New York Times. While he made a few salient arguments, the fact remains that it's preposterous to think the Times would fold in 2009.

Not so, however, for a number of U.S. newspapers. At least a dozen major metro dailies are certain to close down this coming year, the question is only who'll be first.

The Seattle Post-Intelligencer is on life-support. With no buyer in sight, the paper could close as soon as March. Ditto for the Rocky Mountain News in Denver. You can add the Tucson Citizen to the list now as its parent company Gannett just announced that if no buyer is found, the paper will close on March 21.

Also Friday, the Minneapolis Star Tribune filed for bankruptcy, becoming the second newspaper publisher in as many months to do so, following the filing by the Tribune Co., owner of the Chicago Tribune and Los Angeles Times. But even with the Chapter 11 filing, the Star-Tribune might outlast its Twin Cities rival, the St. Paul Pioneer Press, who is apparently in worse financial straits.

Writing in his blog 24/7 Wall St., Douglas McIntyre listed five newspapers most likely to fold: The Miami Herald, Star-Tribune, San Francisco Chronicle, New York Daily News and New York Observer. Yes, the newspaper landscape is changing so fast that the P-I and Rocky Mountain News didn't even make the list.

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Next to go?

The Herald is at the top of McIntyre's list because of the combination of the failing health of its parent company McClatchy and the gloomy real estate market in South Florida:

The Miami Herald is already for sale. It is owned by McClatchy, a company which simply may not make it. McClatchy had operating income of $40 million last quarter, but its debt service was $34 million. In addition, McClatchy revenue dropped 16% for the quarter. Based on the figures the company has posted over the last several months, the top line is dropping more rapidly, especially at its Florida and California properties. Classified sales are down over 30% in these regions. For the six months ending last September, daily circulation at the Miami paper was down 11.8% to 240.000. A large daily newspaper operation that covers a huge metro area is simply too expensive to run with this enormous audience loss. The Herald won't be sold. There is too much risk here for a buyer. The most likely fate of the paper is that it will be merged with the Ft. Lauderdale paper or some other media in south Florida.

McClatchy, the nation's third-largest newspaper chain, made a questionable decision to purchase Knight Ridder in June 2006, one that could prove fatal. Its stock, valued at around $40 a share at the time of the acquisition, was at 81 cents when the markets closed on Friday. With 32 dailies, including the Fort Worth Star-Telegram, Kansas City Star and Sacramento Bee in its fold, a McClatchy collapse may bring a catastrophic meltdown to an industry already on thin ice.