Examination of Knight-Ridder's downfall offers lessons for newspaper companies

It is obvious that the newspaper industry is in a state of flux and nothing exemplifies the changes surrounding the industry more than the complete destruction of the once-powerful Knight-Ridder chain, which owned the Kansas City Star and numerous other large city daily newspapers.
The downfall of Knight-Ridder is explored in an article in today's New York Times and it offers a lesson to those who still own newspapers...unfortunately a lesson that will probably be ignored- you can't save newspapers by cutting them to the bone and reducing quality:

“Financial restructuring is not the answer to what ails the newspaper industry,” said Peter P. Appert, a newspaper industry analyst at Goldman Sachs, which advised Knight Ridder during the sale. “It’s not a panacea that’s going to create value from a shareholder point of view.”

All we have to do to see the effects of a penny-pinching newspaper chain is to look at what Community Newspaper Holdings has done to the Joplin Globe. Not only does the Globe work with a smaller staff than it used to, but it eliminated a great deal of its institutional memory through buyouts of experienced reporters (though that happened during the days the newspaper was owned by Dow Jones), and it has cannibalized its product by creating numerous useless niche publications, most of which have been miserable failures.