The study's findings temper the optimistic view evinced by many publishers in smaller markets, who take pains to distinguish their properties from the big metro dailies.

Over five years ending in 2008, newspaper profitability fell across the board regardless of size, the Inland study found. This included large drops at newspapers with circulations of 25,000-50,000 -- one of the segments that was supposed to be faring better than the big metro dailies. If this trend continues, bankruptcy and sale or closure could follow for scores of newspapers, as the plague afflicting big metro dailies infects smaller markets.

Their fate will largely be determined by indebtedness, which has proved the bane of big publishers, especially with the global credit crunch. Like any other small business, small newspapers without a lot of debt will be in a much better position to weather an extended downturn than those that borrowed extensively to replace printing presses, buy real estate, or acquire other newspapers.

In the future, any discussion of the fortunes of small newspapers will have to specify how small.

While the 25,000-50,000 cohort may be suffering, newspapers with circulations under 15,000 did see revenue grow over the last five years -- albeit just 2.4%. While only a modest increase, that's a lot better than the newspaper business overall, which saw total revenues decline 22% from 2004-2008, according to the Newspaper Association of America.

Many small newspapers are on the auction block for record low prices, according to Cribb, Greene & Associates, a brokerage that handles mergers and acquisitions for daily and weekly publications. 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 few years ago, when prices equal to 10-14 times EBITDA were more typical. Cribb said ad revenues at smaller papers are typically down 10% to 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."

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