That's a steep drop-off from the halcyon days of 2001, when newspapers hit their high-water mark of $53.4 billion in print-ad revenues, a point the firm's CEO Gordon Borrell says the industry will never see again. Borrell convincingly describes his firm's prediction as a "dead-cat bounce," but it's still a hopeful sign for a print medium that is routinely written off as being on life support, a leaky boat, a dinosaur, etc.

What gives the analysts their optimism? Newspapers will reinvent themselves with more of a niche focus, transitioning to something resembling a magazine-style format (longer articles, more graphics, less frequent publication schedule) that caters to a well-educated, high-income demographic, Atwood said.

Also, the industry is hardly a monolith. Borrell notes that the largest 150 or 200 papers, from the New York Times on down, have been hit the hardest by the drop-off in classified and retail advertising. But suburban and community publications have fared considerably better, and Borrell expects that their ad sales are headed into a period of growth as local advertisers look for the "de facto geographical targeting" opportunities those papers afford.

The firm also sees an opportunity in the rising costs and attendant decline of direct mail, with advertisers looking at newspaper circulars and inserts as a more appealing vehicle for reaching a local market.