If you want to talk about profits at the U.S.’s top newspaper companies, you don’t need big numbers any more.

Tribune Publishing could count a bare $2.5 million in net income for the first three months of the year. That’s the combined net of eight metro papers, including the Los Angeles Times, Chicago Tribune, Baltimore Sun, Hartford Courant, and four other good-sized dailies. It’s not that these papers’ performance a year ago was that great; it made just $11.7 million in the first quarter of 2014. But a year-over-year drop of 75 percent in net is something you notice.

But this isn’t a Tribune problem — it’s a newspaper industry problem.

Take a look at the public newspaper company results for the quarter. (All are totals just for newspaper/publishing units, separated out from broadcast or other business lines for companies that have them.)

	Q1 2015	Q1 2014
A.H. Belo	$363,000	-$4 million
Gannett	$18.3 million	$44 million
McClatchy	-$1.1 million	-$4.6 million
New Media Investment (Gatehouse)	$2.6 million	-$3 million
New York Times Co.	-$11.1 million	$22.1 million
Scripps	$9 million	$8.5 million
Tribune	$2.5 million	$11.7 million

The numbers represent net operating income for these public companies, though the calculation of what constitutes the net does vary among them. Still, it’s a close enough comparison that displays how small newspaper profits are.

Among these large public newspaper companies — 7 of the country’s 10 largest — the total net comes to about $21 million. Those not included — Digital First Media, Advance, and Berkshire Hathaway Media — aren’t talking about any better results. Figure that the top 10 newspaper companies, public and private, took in no more than $50 million in net in the first quarter.

How do we measure that sum? In 2005, a single U.S. newspaper company, Gannett, produced $1.8 billion in net income.

Unfortunately, several of the top 10 companies tell me the second quarter could be worse than the first, itself usually a tepid quarter for the industry. Why? National advertising continues to weaken, preprints face pricing challenges and digital disruption takes an ever bigger bite of ad revenues overall.

This paltry performance drives the landscape we see today. With little in net, these companies have little to invest. They’re still paying off debt, issuing dividends, keeping up with pension obligations, and anticipating print ad results that can’t find a bottom. That makes it tough to invest in new products and to travel with the audience as it moves to mobile. And of course it’s bound to mean even more reductions in workforces, including newsrooms, which are already down by more than 20,000 in less than a decade.

Let’s tick off the impacts of these small numbers.

Valuations

We need look no further than today’s announcement (“Apollo withdraws from D.F.M. deal, Paton leaves; next step, ‘cluster’ sales”) that the Digital First Media sale to Apollo Global Management is off. What has torpedoed the deal is simply valuation. Apollo had made its rounds of the properties and gotten a good sense of what taking over the company whole might mean. It was prepared to move forward. What separated the parties: cold, hard cash.

Apollo wouldn’t meet DFM’s number. That’s in part due to this growing industry financial squeeze. Even with the stringent cost controls DFM chief operating officer Steve Rossi has put in place, especially over the last two years, the certainty of future cash flow has been reduced.

“We have so much cash on our balance sheets that we are debt-free,” Rossi told me this morning. “Our cash flow performance is really good, three years in a row of increasing cash flow.”

How long, though, could that performance continue, Apollo had to ask itself, especially in light of the new technology and other investments it believes are required? With news staff and content production serially cut, how could new cost efficiencies be found — going forward — without damaging the Apollo investment itself?

DFM faces the same sort of print ad losses and financial stresses as its peers — and now that the Apollo deal is off, it will proceed with new Q3/Q4 2015 company and corporate cuts.

Additionally, for Apollo, the complexity of DFM accountancy, which some in the industry believe harder to decipher than the average, just added to the uncertainty of financial projections.

So today, we’d have to say the deal is officially off — but still a possibility. Will DFM’s very public announcement that it feels great about exploring all of its strategic options convince Apollo that it is glad to walk away from what would be a single deal to unload the company’s properties — and bring it back for another round of bargaining?

Let’s recall this is a deal of the head, not the heart, for both the seller and the buyer. Both (Alden Global Capital as principal seller, Apollo as buyer) are private equity companies, known for their financial acumen. If dollars move, a deal could still be had.

These valuation uncertainties pervade recent transactions. How do you project future cash flow, given the multiple (and in some ways multiplying) pressures on the business?

Tribune Publishing pay a good price for its U-T San Diego acquisition (“Newsonomics: Tribune Publishing wraps its arms around San Diego — and all of Southern California”)? TPUB investors appear uncertain, as the share price has dropped since the announcement. Why can’t The Village Voice, once a jewel of the alternative press, find a buyer, as Voice Media offers it up for sale? Will anyone buy the storied New York Daily News, if only for $1?

Transformation

Every newspaper chain talks about getting digital faster. The plain truth is, that despite almost two decades of effort, most aren’t close to where they need to be. Even The New York Times can count only 28.2 percent of its ad revenue coming from digital; Tribune Publishing said last week that of its total revenues, 12 percent were digital. All these companies still find themselves more dependent on print than digital, and they haven’t weaned themselves off of it fast enough to absorb the now-brutal print losses.

Most CEOs offer reasonable plans for “transition” or “transformation,” but the financial impact of those strategies — if wholly successful — would still be a couple to several years away. And those plans require some investment. That’s where this meager net income trips up strategy. Public companies, especially, find themselves having to satisfy investors to some degree, and that certainly means, at a minimum, positive net income. But you can see how close almost all of them are to going negative.

Last week, Tribune Publishing CEO Jack Griffin, who took on his job just last August, reiterated for investors his five-point plan, which focuses on digital innovation, cost reduction, accretive acquisitions, revenue diversification, and new national ad strategies. This week, he named former New York Times digital and ad exec Denise Warren to lead the digital strategy. For Griffin, transformation first means catching up.

“We’re early days,” he told me Wednesday. “We’ve built common user interfaces, common e-commerce engines. The databases talk to each other now. We didn’t have those a short time ago.” He’s also playing catchup in digital subscriptions, which suffered from poor tech and decision-making in previous implementations. Today, TPUB can only count 67,000 digital-only subs among its eight metro properties — about the same number as regional digital-only leader, The Boston Globe. Griffin explains that his new digital sub leader has been “visiting with editors and publishers around the country. He’s trying to find the right permutation of the product for each market.”

Smartly, Griffin — an originator of modern content marketing at Meredith — is helping lead the local news industry in combining two related disciplines, digital marketing services and content marketing, and in the long term, those few millions in new revenue could blossom into tens of millions. His plans, in theory, stand out, as does the wider local marketing diversification in Dallas (“Jim Moroney’s digital-reaching Dallas Morning News”).

But TPUB illustrates this larger point about U.S. regional newspaper companies. They’re playing catchup (especially in technology and analytics) and testing revenue diversification strategies for meaningful scale — at the same time that they’re forced to pinch operating pennies.

Business model thinking for 2016-17

If stubbornly small profits seem here to stay, we have to ask what impact it’ll have on newspaper companies’ strategy going forward. With print ads continuing to fall, and cuts already so deep, what can they do as they plan for the next two years of publishing life?

One answer under consideration: cutting back to something less than daily print, much as Advance has done in cities like New Orleans, Portland, and Cleveland. Many publishers find themselves immediately (and understandably) allergic to the idea of going less-than-daily. However, day-cutting (“Why aren’t more newspapers cutting the number of days they print each week?”) may seem like a more reasonable strategy as other options fall by the wayside. Such cutting wouldn’t necessarily have to involve the same kind of newsroom cuts Advance instituted along with its reduction of print paper days.

By 2020, what may have seemed like a loony idea in 2012 will likely be more commonplace, one way or the other.