It's gotten to the point where publishers can't make money even from sensational stories.

Last year, people snapped up copies of The Philadelphia Inquirer and Daily News in droves to commemorate the Philadelphia Phillies winning the World Series. Readers also flocked to the papers' website for news about the closely watched presidential election in the key battleground state of Pennsylvania.

Over in Minnesota, residents have followed the never-ending soap opera surrounding the senate election between incumbent Norm Coleman and challenger Al Franken. For sports-mad Bostonians, the Boston Globe is an essential source of information about the Red Sox and New England Patriots. And let's not forget that the accused Craigslist Killer Phillip Markoff is from the Boston area.

Sports fans in Chicago are devoted readers of both the Chicago Tribune and Sun-Times. The papers are also the favored outlet for following the antics of Rod Blagojevich, the latest torch bearer for the city's rich tradition of ethically challenged behavior. The ousted Illinois governor and wannabe reality TV star is due to stand trial on corruption charges.

In theory, the papers in Philadelphia, Minneapolis, Boston and Chicago should be benefiting from increased demand for their products. The reality, though, could not be more different.

Philadelphia Newspapers L.L.C, the parent of the Inquirer, Daily News and associated websites, filed for Chapter 11 bankruptcy protection in February. The company is locked in heated legal battle with its creditors over allegations that meetings were improperly taped.

The Star Tribune, Minnesota's largest paper, went bankrupt in January, less than two years after it was acquired by Avista Corp. for $530 million. Like other newspapers that have experienced hard times, the Star Tribune is telling its reader and advertisers that business will proceed as normal.

Chicago was one of the few cities left with competing newspapers. Unfortunately, the owners of both the Chicago Sun-Times and Chicago Tribune are both in Chapter 11 bankruptcy. I would be surprised if both survive.

Meanwhile, the Boston Globe continues to flounder. Owner New York Times Co. (NYT) threatened to shut New England's largest paper unless unions would give $20 million in concessions. It looks like the threat worked: According to the Globe, the Times and Newspaper Guild reached an agreement at 3 a.m. this morning. Still, the Globe reportedly is on track to lose $85 million. The Times also is planning to raise newsstand prices on its flagship paper for the third time in less than two years.

The papers are all victims of the economic downturn and the accompanying decline in advertising and circulation revenue. But what's really killing these companies is that they were acquired for vastly more money than they were worth. And for years they foolishly decided to give their content away for free. Why should readers buy the cow if they get the milk for free? McDonald's Corp. (MCD) would go bankrupt, too, if no one paid for a Big Mac no matter how much they might like its artery-clogging goodness.


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