As exciting as any horse race you’d ever see at Churchill Downs or Saratoga, the Minneapolis Star Tribune and Tribune Co. are neck and neck in the much-hyped D.I.D. (Daily Insolvency Derby). The old-time Norris Division/’Black & Blue’ NFC Central rivals Chicago and Minneapolis have rounded the 4th turn and are heading down the stretch with only 23 days left to see which metro market will lose its daily newspaper first. Just last Friday, rumors circulated around the Twin Cities that Credit Suisse was preparing yank ownership of the Star Tribune away from Avista Capital Partners in what would amount to a controlled bankruptcy. While some thought that race might be over, reports have come out today that Tribune has hired Lazrd to oversee a bankruptcy proceeding that might begin as soon as this week. It’s anyone’s race at this point and we’re undoubtedly in for a photo finish.

In the October issue of Portfolio magazine, an article by Sheelah Kolhatkar covers at some length the recent investment in the New York Times by Harbinger Capital Management, a hedge fund founded by the Harbert family of Alabama. The article is fascinating for a variety of reasons, among which is the internal family issues surrounding the Harbert family and their wealth. But the article also provides interesting details about the way the fund is approaching their 20% stake in the Times’ class A shares (worth about $360 million).

One quote in particular caught my attention and made me chuckle out loud. It comes from Scott Galloway, a New York University marketing professor best known as the founder of internet retailer Red Envelope. Galloway and his company, Firebrand Partners, have acted as the public face of Harbinger’s investment in the Times in exchange for 10% of the profits. His investment thesis centers around his belief that the New York Times brand is grossly undervalued and that the company should be thought of as ‘Yahoo with content.’ But in describing the rest of the industry, Galloway states:

“Let me be clear: I think the [daily] newspaper business is a shitty business. The Sacramento Bee, the Chicago Tribune – I think a lot of those newspapers are fucked.”

A rather blunt yet accurate assessment and one with which I could not agree more.

For the past few months, I’ve assumed that the Major Metro Daily Death Match was primarily a contest between Chicago and Minneapolis to see which major U.S. metro market would lose its daily newspaper first. Of course, every daily newspaper is struggling to one degree or another (most quite severely) and dozens of papers are in desperate shape with heavy debt loads that are dragging them towards bankruptcy. But I didn’t think any were as close to complete insolvency as the Tribune and the Star Tribune. It turns out, however, that there is a 3rd horse in the race in the form of the Portland Press Herald.

The Portalnd Press Herald has followed the textbook path along the daily death spiral. Circulation has declined 13% over the past decade, and advertising revenue has dropped 19% from last year. To bring costs in closer alignment with a massively shrunken revenue base, the paper has initiated 4 rounds of layoffs this year and closed all of its out-state bureaus, including Augusta, the state capitol. In court documents filed last month related to an ongoing battle between the paper’s owners (Seattle Times Company) and its editorial union, the paper stated that it is bleeding cash so fast that it will have to shut down if it isn’t sold in the very near future.

Looks like it’s going to be anyone’s race, and more horses are sure to join the pack of front-runners. An exciting photo finish is almost a certainty. Mint juleps anyone?

My list of blog topics to write about has become exceedingly long, so I’m going to be lazy today and simply list a pile of links to the numerous stories in the past few weeks about the continuing death spiral of the daily newspaper industry.

1. A Durham lawyer is suing the News & Observer, to which he subscribes, for cutting staff and content from the paper.

2. In an effort to ‘right-size’ the paper, creating an equal balance of ad pages and content pages, the Chicago Tribune has cut more staff from the newsroom. They’ll eventually get their balance when both ad pages and content pages are zero.

3. The Guardian, which recently purchased Paidcontent for $30 million, has a great piece about the demise of the newspaper industry. This is a paper that appears to be bucking the trend and thriving these days, so their critique of other dailies is particulalrly poignant. Anyway, the best line of the article relates to management at most daily papers – “The core problem is that too many newspapers tend to be run by blockheads from the top down. This did not matter back in the days when the margins were fat and the competition weak. It is a problem now.”

4. The lanaguage in the coverage of the industry gets stronger and stronger every month. An article in MediaPost uses the word ‘collapse’ for the first time that I can remember.

5. Another article in MediaPost compares the fates of both daily newspapers and radio.

6. This is an old article from May, but the trials and tribulations of the Minneapolis Star Tribune have been noticed overseas, catching the attention of the Guardian.

7. MediaNews Group CEO Dean Singleton’s advice to newspaper execs – stop being so arrogant!

8. Gannett is writing down its assets by $2.8 billion.

9. McClatchy is also making draconian cuts.

10. As papers continue to approach a brutal death, their willingness to maintain high editorial standards and integrity in their business models will be put under increasing strain. While some might argue that a lack of integrity and editorial standards are not new to the industry, and others that cases of failure already abound, the likelihood is that daily newspapers will become even more aggressive in chasing revenue wherever they can get it. As Nick Corcodilos points out, advertorials are one such egregious example.

With the well-documented problems plaguing both Midwestern dailies, it’s a toss-up as to which metro market will lose its daily newspaper first, Minneapolis or Chicago. The Newsosaur Alan Mutter has another great post today on the vastly different approaches that Rupert Murdoch and Sam Zell have taken since both acquired their newspapers roughly 6 months ago, and the New York Times has also chimed in on the preposterous path that Sam Zell is taking in trying to save his business by slashing everything in sight. As Mutter rightly points out, what is even more shocking than Zell’s apparent lack of any cohesive plan he is following is the fact that his creditors loaned him more than $12 billion without asking about what he intended to do to fix a dteriorating business model. Everyone in this deal except the poor Tribune employees (who also happen to be owners) deserve exactly what they’re going to get in this deal – nothing but an obliterated business left in complete shambles after everything of value has been sold off piecemeal.