The rarely discussed problem with the newspaper industry is that many newspapers are still profitable, just not profitable enough — their owners and investors aren’t willing to accept a decline in profit margins as a tradeoff for long-term viability.

For evidence of this, consider Gannett, the uber-chain that owns USA Today. Its stock price falling as the economic downturn gets worse, Gannett plans to lay off about 3,000 employees. Thing is, the company’s still making profits that would be considered healthy in most other industries.

Former Gannett editor Jim Hopkins, who’s been blogging the carnage at his independent Gannett Blog, got hold of 2007 financial documents that list the sales and profit margins of each individual Gannett paper, information the company doesn’t like to reveal. While the numbers are a year old, they do tell us something about the financial bassakwardness of the media industry. One paper more than 42 percent profit.

The Asheville Citizen-Times, Gannett’s only North Carolina paper, made $20.6 million in ad sales and had a 23.49 percent profit margin in the first three quarters of 2007, according to Hopkins’ information. The Citizen-Times recently announced it will lay off 60 people.

Meanwhile, financial ratings firm Fitch Ratings warns newspaper companies are likely to default on their debt and go out of business next year, which will leave “several cities” with no daily newspaper. The McClatchy Company, which owns The N&O, is one of two companies whose debt Fitch rated as “junk,” according to Editor & Publisher.