The pace of news about the decimation of the daily newspaper industry is accelerating, and the picture is getting uglier and uglier every week. Among the recent stories, McClatchy is freezing wages, Gannett is reducing headcount by 1,000, and JCPenney and Kohl’s both announced plans to drastically cut back their newspaper circular advertising. Cox Enterprises announced that it plans to sell the Austin American-Statesman and all of its stand-alone community newspapers in North Carolina, Colorado and Texas as well as its direct mail business ad business Valpak. This news comes on top of announcements that dailies in San Diego and Newark are up for sale. (No news yet either, by the way, on Landmark Communication’s efforts to unload all of its dailies and weeklies). For newspapers, the capital market mantra appears to be: buy high, sell low – but sell now because it’s going lower in a hurry.

Many have been pointing to rapid growth in newspaper web site ad revenue and readership as the only bright spot in the newspaper business, but that, too, has shown recent signs of weakness. Not only is the rate of ad revenue growth slowing to a crawl, but newspaper web traffic stats are being mocked around the industry. Newspapers who looked desperately to a lopsidedly unfavorable deal with Yahoo for traffic growth are just now beginning to realize that their hopes and aspirations were, at best, misplaced.

The poster child for daily newspaper industry carnage, Tribune Company, marched a step closer to bankruptcy and Sam Zell openly called his acquaition of the media behemoth “the deal from hell.” There is no conceivable way he can possibly turn that abomination around, even if the Cubs do win the series, but I’d still keep my money on Minneapolis to lose its daily first.

Steven Smith, Editor of Spokane’s Spokesman Review, has written perhaps, at least to this point in time, the definitive eulogy (or is it an elegy?) on the death of the newspaperman. Without a doubt, we’ll be seeing more of these in the months ahead.

Once again, my list of stories to write about has expanded too quickly to cover each with its own post, so I’ll resort to a list of interesting things I’ve seen in the last few weeks about the daily newspaper industry.

1. Two daily newspaper publishers, seeing the handwriting on the wall and sensing that the downturn for dailies is only going to get worse, have announced that they are selling their metro daily papers. Copley Press has placed Union-Tribune Publishing, publisher of the San Diego Union-Tribune, on the block and Advance Publications has announced it will sell the Newark Star-Ledger unless employees agree to a large-scale buyout.

2. Even the best of the best are being hammered by the downturn. The Washington Post Company announced Q2 financials and reported that newspaper publishing revenue declined by 13%. Luckily, educational services and cable revenue rose significantly, and total revenue for the company rose 6%. Looks like the recent decision to buy some Florida TV stations makes perfect sense. The company also announced that the growth in online advertising revenue was only 4% as compared to 11% in 2007.

3. Dailies are scrambling to capture their share of the local online advertising market, but are finding it exceedingly difficult to compete against newer, smarter, faster, more compelling competitors. Despite the fact that dailies across the country have added nearly 10,000 sales reps focused exclusively on local online ad sales, newspapers have seen their share of the local online advertising market drop from 36% in 2006 to 27% today, according to Borrell Associates.

4. Daily newspapers may be dying in the U.S., but they are thriving in other countries around the world.

5. No wonder the dailies are struggling so badly to maintain some semblance of competitiveness in the classified space. If this is the type of consultant that the dailies are hiring to figure out how to transform their business, they’re in even worse shape than I would have ever imagined.

6. The effort to cut costs through outsourcing has reached new heights with the Orange County Register’s decision to test outsourcing its copyediting functions to India. That’s a pretty desperate signal from what was once California’s 3rd largest daily newspaper.

7. Dailies are increasingly looking to each other to form alliances and partnerships to share expenses, create more favorable economies, and strengthen diminishing value propositions. Circling the wagons didn’t help Custer at Little Bighorn, and it won’t work here either.

Avista Capital Partners, owners of the Star Tribune, announced this morning that they did not make their quarterly interest payment on the $96 million in junior debt that accompanied the roughly $330 million in senior debt used to finance the $530 million purchase of the daily newspaper. While CEO Chris Harte reported that the company has sufficient cash to make the interest payment, he stated that they chose not to make the payments as the company works through renegotiations on the terms and structure of the debt and the entire balance sheet. While Harte’s comments may or may not be accurate, the daily is most certainly now in default on a meangful portion of its debt and is one step closer to insolvency.

In the race with Chicago to see which metro market loses its daily first, Minneapolis has clearly taken a sizeable lead. Interestingly, just as Tribune’s fate might depend on the success of the Cubs and the value that that franchise might fetch in the market with cash proceeds being used to pay down debt, the Star Tribune’s fate is similarly tied to the Minnesota Vikings who are eyeing the paper’s land holdings in downtown Minneapolis on which they are exploring building a new stadium. Who would have thought that the demise of two prominent dailies could be such a ’sporting’ event.