For those investors arguing that the traditional newspaper industry has no future on Wall Street in the digital age, February reports provided more ammunition.

Major newspaper publishers reported sharp revenue declines across the board for the month. Classified ads, the industry's cash cow, took a beating as economic conditions worsened where newspapers are particularly vulnerable.

"We really have a perfect storm developing in the classified categories," says Edward Atorino, analyst with Benchmark & Co. "The real estate bubble is collapsing and it's driving down real estate ads more than expected, which is also affecting jobs and help-wanted ads in areas that were once growth markets, like Florida and California. The U.S. auto industry is also in free fall, so there are severe conditions driving down classifieds."

Atorino believes the overall tough market conditions will extend well into the year. "Earnings numbers for 2007 are under a cloud," he says.

Late Tuesday,

New York Times

(NYT) - Get Report

reported that February revenue declined 3.6% from a year earlier.

The company, which publishes its namesake newspaper as well as

The Boston Globe

and a number of other dailies, said its overall ad sales from continuing operations dropped 6% for the month to $158.6 million. Its classified ad revenue was down 15% to $40.9 million.

New York Times said retail advertising decreased as softness in mass market and home furnishing store ads was partly offset by gains in fine arts and department store advertising.

Declines at New York Times continued to weigh most heavily in Boston, where former

General Electric

(GE) - Get Report

CEO Jack Welch last year expressed interest in acquiring the

Globe

. The company so far has rebuffed overtures for the property.

Shares of New York Times recently were down 61 cents, or 2.6%, to $23.20.

Reports from other major publishers echoed the Gray Lady.

Tribune

( TRB), which owns properties like the

Chicago Tribune

and the

Los Angeles Times

, on Wednesday reported a 3.4% revenue decline for the month.

Tribune has been exploring a company sale, which has attracted interest from Hollywood music mogul David Geffen, supermarket magnate Ron Burkle and Chicago real estate investor Sam Zell.

McClatchy's

(MNI) - Get Report

February revenue declined 5.1%, while

Gannett

(GCI) - Get Report

, publisher of

USA Today

, logged a 3.8% drop.

Elsewhere,

Media General

(MEG)

on Wednesday forecast a first-quarter loss after a weak February; Wall Street had predicted a profit of 20 cents a share for the quarter.

The company's February revenue, excluding four NBC television stations acquired last year, was down 2.9%. Shares were sliding $1.38, or 3.4%, to $38.96.

The industry continues to see growth in online revenue, but that category remains a minor factor in its overall results.

Media executives have cautioned investors that the pain will continue for the first half of 2007, but they're hoping for a reversal in the cyclical factors that are weighing on the industry in the back half of the year.

"Last year, real estate and help-wanted ads were very strong, with double-digit increases," says Atorino. "Now, those are going the other way, so I don't think this is any kind of a tipping point for this industry. It's just a very severe cyclical downturn. Comparisons become easier in the second half, and things should start to stabilize."