With ad revenues down (again) and stock prices falling (again) newspapers and print media stocks are rethinking game plans that rely heavily on online strategies. The hope is that such moves will save slipping share prices at companies like The New York Times Co. (NYSE: NYT), Gannett Co. (NYSE: GCI) and others – and basically, save dying print media empires.

The future of newspapers has been foretold for years, though recently that fortune-telling has become less speculation and more painfully obvious fact.

Ad spending in U.S. newspapers  fell -5.6% in the second quarter of 2010, a consecutive decrease that shows strange hope for the industry after much deeper declines. After dropping -29% in the second quarter of 2009, the decline was -27.9% in the third quarter, and -23.7% in the fourth. The decline slowed considerably in the first quarter of 2010, to 9.7%. But just because you’re not failing as bad doesn’t mean you’re still not failing.

Last week at the WAN-IFRA 9th International Newsroom Summit in London, New York Times Publisher Arthur Sulzberger Jr. told attendees that, while he wouldn’t guess when the Times would stop printing, the day would eventually come. Sulzberger regurgitated the Times’ plan for the “metered” paywall in 2011, giving readers access to a certain number of free articles each month, then a pay system for more use. Such a move allows for information consumers to still give the Times’ its prized “page clicks” –used to charge online advertisers – and bring users to the site.

The Times’ and other newspapers’ online push comes at a sad time for newspaper companies across the U.S. Although the Times’ revenue in the second quarter rose +1.2% year over year to $589.6 million, the company recorded overall second-quarter net income of $31.8 million, down -19% from $39.1 million in the second quarter of 2009. NYT is down -32% year-to-date against the Dow and S&P.

As the largest U.S. newspaper publisher with USA Today and more than 80 other dailies, Gannett didn’t do well in its second quarter earnings. While net income more than doubled, it was largely due to cost cutting, advertising increases at its 23 TV stations and a gain from a recent company sale. There was a 2% decline in company revenue. And in the last six month GCI fell -14% and is down -8.9% year-to-date against the Dow and S&P 500. Gannett’s print ad revenue fell -6% and print advertising accounted for half of Gannett’s total revenues in that quarter.

McClatchy (NYSE: MNI) is down -11% year-to-date compared to the Dow and S&P. Despite an -83% drop in net income, ad revenue, fell by its lowest rate in more than three years, -8%. Still, stock has fallen nearly -38% in the last six months.

The results show that these companies still need newspaper advertising to bounce back to avoid further cutbacks. While online revenue is moving upward, it will be years and years before it replaces what print ads are bringing in.

Since the end of 2006, newspapers have been suffering harshly, as readership moved more toward online and the  worst recession since World War II caused marketing dollars to dry up. The downturn has also hurt the companies that are weighed down by heavy debt. During 2008 and 2009, a number of newspaper companies filed for bankruptcy, including Tribune Co. (PINK: TRBCQ), publisher of the Chicago Tribune, Los Angeles Times and other papers.

The Times’ “metered” experiment – if successful – will likely set a precedent for other papers to follow. And it’s fair to say that all eyes will be on New York come early next year, with many still remembering the now-defunct NYT TimesSelect pay experiment in 2007, which was deemed a massive failure.

If the pay strategy does bomb, another source of revenue many in the industry are hoping for will be dried up. And “hope” is really the only thing the industry has to bank on right now.

As of this writing, Burke Speaker did not own a position in any of the stocks named here.

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