While more than a few people have already written the obituary for the daily newspaper business, the ink classic stubbornly refuses to just fall over and die. True, companies like Knight Ridder (NYSE:KRI) are still seeing some tough times, but there aren't too many sectors out there that don't eventually experience a brush with irreversible irrelevance.

I'm a dyed-in-the-wool skeptic when it comes to using pro forma numbers, but I think they're actually important here in understanding Knight Ridder's quarter because there were quite a few moving parts. On that pro forma basis, operating revenue was down 0.2%, with advertising revenue down 0.2% and circulation revenue down about 1.2%.

We've already heard about the weakness in ad spending trends. Department stores like Federated (NYSE:FD) and Dillard's (NYSE:DDS) are spending less, and the auto ad business is weak, as well. On a happier note, there was better spending from clients like Target (NYSE:TGT) and Wal-Mart (NYSE:WMT). Maybe it's the first time some people are happy to see Wal-Mart get bigger.

Moving away from the top lines, reported operating income was down over 8% and income from continuing operations was down 14%. Mitigating some of that damage, share count reductions minimized the per-share decline to just one penny.

So what's ahead for Knight Ridder? Well, the Internet is helping it to some extent (ad revs up over 55%), and there's probably room for more cost-cutting, but only up to a point. And there's the fact that the company is clearly exploring "strategic alternatives." In other words, it's up for sale. Maybe one of Knight Ridder's CareerBuilder partners will step up (either Gannett (NYSE:GCI) or Tribune (NYSE:TRB)), or maybe a private equity buyer will emerge.

Either way, I'm not sure that Fools want to make a big bet on a juicy takeover here. The stock has already come up off its "things are utterly hopeless" lows, and even generous cash flow growth assumptions don't point toward huge potential gains. I'm certainly willing to grant that there's still hope for the industry, but I'm not going to pay any extra for that hope.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).