ANALYSIS

It's easy to be skeptical about the words that come out of a CEO's mouth, but who can doubt either Scripps' Rich Boehne or MediaNews Group's Dean Singleton when they say Denver can no longer support two newspapers?

Or would you prefer the two companies lose something on the order of $50 million this year to prove it to you?

Denver is both emblematic of the national newspaper meltdown and also is its own special basket case.

To review: bankruptcies in Minneapolis and Philadelphia, and of lesser-known companies like Journal-Register and marquee operators like Tribune. Second newspapers in Seattle and Tucson, Ariz., for sale, with threat of closure. The San Francisco Chronicle, the major paper in one of America's great cities, losing tens of millions of dollars each year.

Plenty of ex-readers will tell you it's liberal bias that's causing these problems, but there are far better culprits than that particular straw man. There's the evaporation of classified ad revenue, which often contributed 30 percent or more to a paper's top line. The disappearance of subscribers, many of whom chose to read stories for free on the Internet rather than pay for a pile of newsprint on the driveway.

The secular problems, as they are called, were clear before the current recession, which is angling to be the worst since the Great Depression. It's all added up to consecutive years of year-over-year newspaper revenue declines in the mid-teens, with no end in sight.

"This is nothing like anything any of us have ever experienced," Boehne said Thursday. "This industry is in serious, serious trouble."

In 2005, when the Denver partners planned for new printing presses, Scripps modeled Denver revenues going up 5 percent, staying flat, or declining 5 percent each year. It was reflective of Scripps' conservative view of the industry, Boehne said.

"There was nobody else in the industry running models down 5 percent," he said. "We were beaten up for being pessimistic, for not believing in newspapers. Well, shame on us for being pessimistic - we were too optimistic."

In Denver, more than $100 million of classified ad revenue has been lost in recent years, with total revenue likely down more than 30 percent since 2005.

And as much as Denver residents refuse to admit it, they've still been getting a bargain on ad and circulation rates, a hangover from the newspaper war.

Scripps Senior Vice President Mark Contreras says the company has papers with circulation one-tenth the size of Denver's that charge $250 for an annual subscription, compared with Denver rates in the $100 range.

And Singleton on Thursday described advertising rates in Denver as "very below average." Paper-by-paper revenue data at newspaper publisher McClatchy supports that view.

So, to review: There's a national newspaper crisis, plus a recession, and the Denver papers went into them with below-average revenue. And, most importantly to the bottom line, there are two newsrooms, not one, that are being supported.

Or not supported, actually. Scripps said newsroom expenses in 2008 were $16 million higher than the distributions it got from the Denver Newspaper Agency, its partnership with Denver Post owner MediaNews. If the Post's newsroom expenses are higher than the Rocky's, as is widely believed, they lost even more.

Ultimately, Scripps came to the conclusion that not only is there no value in owning one of two papers in Denver, there was little value in owning the only paper in town.

Singleton believes differently. He thinks the Post will retain "most" of the Rocky's notoriously loyal subscribers, and he has said he believes the newspaper industry's current problems are primarily cyclical economic issues, not secular.

He's so keen on the market he let Scripps walk away from Colorado without any cash payment to help with $130 million in agency debt. "They won't have the obligations, but they won't have the upside," he said.

Pay cuts from the agency workforce helped keep it out of bankruptcy, Singleton allowed Thursday. Coupled with concessions from the union that represents Post workers, MediaNews moves into the future with a plan for Denver profitability.

"I'm not just confident we will survive - we will survive," Singleton said Thursday.

A man in his position should say no other thing. But those particular words, that particular forecast? Be skeptical.