Two of the major newspaper companies reported second-quarter earnings today. The New York Times (NYSE: NYT) reported EPS of $0.34 from continuing operations compared with $037 in the second quarter last year, before items. Tribune Company (NYSE: TRB) reported EPS from continuing operations of $0.17 compared with $0.53 in the second quarter of 2006. Those earnings were brought down by about $0.30 in one-time charges related to job cuts and write-offs.

Tribune is expecting to be acquired by mogul Sam Zell through a complex process where employees would own a large portion of the company but, according to the Associated Press, "Now the industry's accelerating decline has some Wall Street experts wondering whether the deal for the parent company of the Chicago Tribune, Los Angeles Times and Chicago Cubs could fall apart." Revenues decreased 7% in the quarter and while the company remains publicly confident in the deal's prospects, the stock will plunge if it doesn't go through.

Shares of the New York Times soared on the news of Rupert Murdoch's bid for Dow Jones (NYSE: DJ). It has since given up all those gains as investors realized that was a one-shot deal rather than a sign of some new paradigm where the newspaper industry is something other than a declining wreck.

Tribune's saving grace has been the fact that its non-newspaper properties are performing well, but the industry continues its free fall. Advertising revenues fell 5.7% at the New York Times.

The newspaper industry remains one of the ultimate contrarian bets and, if the industry does somehow stage a turnaround, believers will be richly-rewarded. But none of these stocks are for the faint of heart, and I'll be staying far away for now.