What's more, many of these smaller and mid-sized newspapers may actually be viable investments. Their revenue losses have been significantly smaller, on average, than big metro dailies.

Many such newspapers can currently be had for a price equal to somewhere between just four and eight times their earnings before income tax, depreciation and amortization (EBITDA), according to John Cribb, the brokerage's managing director. That's a big discount from just a couple of years ago, when prices equal to 10-14 times EBITDA were more typical.

The discount is especially steep because EBITDA itself has also fallen, in conjunction with the broader economic downturn.

However, small and mid-sized newspapers may actually find buyers, having fared better over the last couple of years than their big-city counterparts.

While it's hard to find reliable numbers for smaller newspapers (which are often privately owned), Cribb said ad revenues are typically only down 10%-15%, noting: "Certainly, these are ugly numbers compared to what newspapers are used to, but they are not disastrous. This is not the financial condition of an industry that is failing."

According to the Newspaper Association of America, total newspaper industry revenues fell 28.3% in the first quarter of 2009, following a full-year drop of 16.6% in 2008. But this fails to distinguish between bigger and smaller properties, whose fortunes have diverged markedly.

The relative vitality of small and mid-sized newspapers has been attributed to a number of factors.

On the editorial side, local news has not been commoditized like national and international news. Big metro dailies now find themselves competing with online news aggregators and other national news sites (including other big metro dailies) substantially reporting on the same events.

By contrast, small and mid-sized newspapers often enjoy a monopoly on local news. On the business side, publishers have cultivated and retained personal relationships with local advertisers, which are possible in smaller communities. Indeed, small newspaper publishers often complain that their businesses are unfairly lumped in with bigger newspapers, perpetuating an excessively negative view of their prospects.

Among big publishers, total publishing ad revenues fell 27% at The New York Times Co., 34.1% at Gannett, 29.5% at McClatchy, 24% at Lee Enterprises, 28.6% at E.W. Scripps, and 28.2% at A.H. Belo.

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