The last few years have had precious little good news for the newspaper business, but there may be some positive trends at last.

After hitting all-time lows earlier this year, newspaper stocks are rebounding -- slightly. While these small gains are no cause for celebration, they do confirm that the precipitous drop over the last couple of years was partly an effect of the cyclical economic downturn, rather than investors writing off newspaper stocks forever. The question is: how far will the rebound go?

There's no question that big newspaper publishers suffered a spectacular fall from grace beginning in the middle part of this decade. Between the second quarter of 2006 and the second quarter of 2009, total industry ad revenues fell 45%, from $12.36 billion to $6.82 billion.

Meanwhile, between April 2004 and April 2009, the New York Times Co.'s stock price fell from over $47 to under $7 -- and this was a relatively strong performance. Over the same period, Gannett Co.'s stock fell from $91 to under $4, McClatchy tumbled from almost $74 to under $1, and Media General fell from over $72 to just over $2.50.

Given this swift financial implosion, it's not surprising that some doomsayers predicted widespread decimation of the newspaper business, with multiple American cities going without a daily newspaper by the end of 2009.

It's true that a number of big newspaper publishers were forced to declare bankruptcy, and big newspapers have closed in some two-newspaper towns -- most notably Seattle and Denver. It's also clear that newspapers have been in the grip of a long-term secular decline: Revenues started falling in the third quarter of 2006, more than a year before the onset of the recession, and stock prices started falling even earlier than that.

However, the performance of newspaper stocks was so egregiously bad that it raised the question: Were newspapers gone for good, as far as the stock market was concerned? This question wasn't as alarmist as it might sound -- considering that a big publisher like Journal Register Co. was delisted because its stock fell below the minimum required value, and other publishers, like McClatchy, received warnings about possible delisting.

In this nightmare scenario, newspaper publishers would see their stock prices hover in the low single digits or simply get booted off the stock exchanges one by one, their penny stocks for sale "over the counter" or in the "pink sheets."

That's why publishers point with relief to the recent recovery in stock prices, however modest, even if they're not matched by revenue growth: Simply put, it means they're not dead yet. Since April, NYTCO's stock price has gone from $6.71 to $8.11, Gannett jumped from $3.81 to $12.50, McClatchy rose from $0.54 to $2.56, and Media General jumped from $2.54 to $8.86.

Indeed, there is reason for hope: newspaper publishers have amassed online real estate and huge audiences that could be major revenue producers, if they are able to figure out how to monetize online readership effectively.

If they solve this challenge, they may be able to expand their success by monetizing mobile distribution to smartphones and the new generation of e-readers, with similar strategies.

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