While most mainstream media outlets earned the scorn that has been heaped upon them for their stenographic reporting of the Bush Administration’s prewar claims about Iraqi weapons of mass destruction, one newspaper chain’s Washington bureau was consistently–and, it turns out, correctly–skeptical of the White House. Before the war began, Knight Ridder’s small but able team of reporters was the exception to a bad rule, producing a steady stream of now widely praised articles with headlines that referred to the “Failure to find weapons in Iraq” and “Troubling questions over justification for war in Iraq.”

But the war that might have been averted by more skeptical reporting from the rest of the media will outlast Knight Ridder. Pressed by investors who grumbled about the company’s putting too much money into journalism and returning too little profit, Knight Ridder sold out to the California-based McClatchy chain, which paid $4.5 billion and then announced it would auction off, by summer, a dozen Knight Ridder papers, including eight represented by the Newspaper Guild. The end of Knight Ridder, whose thirty-two newspapers–including the Philadelphia Inquirer, the Akron Beacon Journal and the San Jose Mercury News–had earned a combined eighty-four Pulitzer Prizes, illustrates the peril of practicing the craft of journalism in times like these. No conspiracy took Knight Ridder down; it was Wall Street’s line that profit margins of 19 or 20 percent–which the chain posted in recent years–no longer suffice.

Though McClatchy officials weren’t saying as much, the decision to sell off newly acquired papers in Philadelphia and San Jose, which are rated among the best in the country, was an admission that doing journalism right in some of the nation’s most diverse cities costs more than the new owners are ready to spend. And that makes this a scary moment for anyone who recognizes the role that strong daily newspapers still play in gathering news, promoting debate and–in the case of most of the editorial pages of Knight Ridder’s dailies that are for sale–challenging the new orthodoxies of the right. Who buys these papers will matter, not just to the communities where they are located but to the political and social fabric of the states where they publish and to the national discourse.

There may come a time when new media begin to produce a steady flow of quality reporting, but as of now, according to the latest report from the Project for Excellence in Journalism, while the number of media outlets is growing, fewer stories are being covered and in less depth. “The worry is not the wondrous addition of citizen media, but the decline of full-time, professional monitoring of powerful institutions,” the report argues. As the Project’s director, Tom Rosenstiel, warns, “The content has to come from somewhere, and as older news-gathering media decline, some of the strengths they offer in monitoring the powerful and verifying the facts may be weakening as well.”

What’s needed is a new model for old-media ownership, and it’s just possible that one could come out of the Knight Ridder debacle. A union-friendly private-equity firm, Yucaipa Companies, is bidding against several of the country’s more unsavory chains for the twelve papers, most of which are unionized. If it succeeds, newspaper employees could over time buy ownership of a new corporation set up to run the papers. “It will start off 100 percent owned by Yucaipa and then more and more by employees,” explains Newspaper Guild president Linda Foley. “We would like it to be majority-owned by employees, eventually 100 percent.”

McClatchy has erected barriers to the bid from Yucaipa, a firm run by billionaire Ronald Burkle. And even if Yucaipa overcomes those obstacles and buys all or most of the dailies, the papers will still have to struggle with the shifting realities of a newspaper business where circulation rates and advertising revenues are generally in decline, and where the costs of paying reporters, maintaining news bureaus and pursuing investigations keep going up. Even a model that frees newspapers from the pressures imposed by the greediest investors will not necessarily usher in an era of journalistic freedom and excellence. But the Yucaipa bid offers some hope that, while the Project for Excellence in Journalism is right that “the news industry is beginning to move into the next era,” newspaper journalists may still be able to earn a fair wage for asking tough questions of those in power.