Now that we have come to the end, I think it important to share with you a few thoughts about how we got here.

First, in my view, there are no villains in this, the story of the fall of the Rocky Mountain News.

My purpose today is not to lay blame on any individuals. It is to tell you why Denver can't have two major newspapers.

To begin, it's crucial to note that newspapers across the country are being hit by a financial double whammy: a national economic meltdown and a dramatic shift in advertising spending. In Denver, the steep decline in classified advertising alone has meant the loss of more than $100 million in highly profitable categories like help wanted and real estate.

But there are some aspects of our situation that are unique.

Let's start with circulation. There are some who blame the Rocky's problems on declining circulation. But if you look at the combined reach of the two Denver newspapers, they have exceptionally high household penetration in their core, seven-county metro market, the area advertisers care about most. Together, on weekdays the papers reach roughly 36 percent of households, the second-highest level for major newspapers in the country. The Sunday penetration of 46 percent is also among the nation's highest for metro papers .

That said, it is true that the circulation of the two papers has dropped significantly. At the peak of the newspaper war, the combined Sunday circulation of Denver's dailies was more than 1.1 million. The papers then were dirt cheap. In 2001, when the Rocky and The Denver Post combined their business operations at the start of the Joint Operating Agreement, there were roughly 420,000 subscribers paying 1 cent a day. At the end of 2002, the first full year of the JOA, the papers delivered about 300,000 each on weekdays. Now they're each at about 210,000.

On Sunday, circulation dropped from about 800,000 to about 600,000. And on Saturday the number fell from about 600,000 to about 450,000.

But ultimately, where circulation has been a drag on Denver's newspapers isn't in readership, but in its effect on their finances.

Circulation is a contributor to the economic success of many newspapers. But here in Denver, subscription prices - despite what many think - are considerably below industry norms for newspapers in comparably sized markets. For example, the average subscription price in Denver for 52 weeks is about $120. In Chicago, it's $234. In Phoenix, $200. I could cite a long list of cities with prices far higher than Denver.

The owners subsidized circulation prices during the newspaper war to try to build an advantage they could sell advertisers and use to win the war. After it was over, they didn't raise prices to anywhere near the average for similar metropolitan areas, which meant that they left a lot of money on the table. Now whether they could have done so is another question. But the fact is that because they didn't, they had less money to pay their own bills than owners in comparable markets.

The result: One strike against the financial success of the Denver Newspaper Agency, the company owned 50-50 by the owners of the Rocky and Post that does everything for them from printing to delivery.

On the advertising side, the picture is even worse.

Just as they subsidized circulation rates during the newspaper war, the owners contributed to the commercial vitality of Denver by offering advertising at prices much cheaper than in comparable markets.

After the JOA went into effect, the agency tried to raise the rates. Some of you who were here at the time might remember how devoid of advertising those early papers were. Businesses resisted. And although rates ultimately were hiked, sometimes many times over their initial levels, once again the owners weren't able to get their charges to the levels of other cities.

In addition, in other markets newspapers diversified their revenue streams more successfully by adding specialty publications and growing their online businesses more rapidly.

Am I placing the blame for our failure on not being able to extract the circulation and advertising revenue this community should produce if it mirrored other markets? Yes, and no.

There's no question that the agency's inability to produce revenue at the levels of its peers was an important factor in the ultimate inability of the papers to succeed.

But there's plenty of fault to go around. It costs more to produce two newspapers than one, because you have to pay for two newsrooms. Also, producing two newspapers introduces more complexity to the daily operations of the agency and adds more costs to its operations. That might have been OK at a time when newspapers typically were highly profitable, but became an enormous challenge when they were not.

A JOA is an unwieldy bureaucratic structure not suited to success in today's rapidly changing media environment. A JOA has been a way for Congress to keep two voices alive in a community. For newspaper owners, historically JOAs have been the equivalent of annuities. They calmed a competitive situation and spun off cash on a predictable basis.

But not anymore.

Agency managers found ways to cut an enormous amount of expense to make up for declining revenues. But you know what they say, you can't cut your way to success. And a 50-50 ownership structure doesn't lend itself to taking decisive steps to build a business.

The economics have to work if a city is to have two newspapers. They don't anymore. So Colorado will lose a part of its lore, a part of its identity.

Why is the state losing the Rocky rather than The Post?

Contrary to a lot of what has been written, the Rocky is not struggling financially any more than The Post. But its owner, the E.W. Scripps Co., sees losses in Denver worsening and little prospect that the business can be turned around, even in a one-newspaper town. That's why they decided to leave Denver, after running newspapers here for more than 100 years.

If we had solved our circulation and advertising problems, perhaps Denver could have had two major newspapers for a while longer. But ultimately, it appears inevitable that there would just be one.

Colorado deserves a great major news organization. My only solace at this sad time is that perhaps the disappearance of the Rocky will help make that possible.

John Temple has been editor of the Rocky Mountain News since 1998. He was named publisher in 2001. He can be reached by e-mail at temple@RockyMountainNews.com.

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