IIvisited with the publisher of a leading U.S. newspaper Friday, and numbers and scenarios were flying.

With print-to-online models like the Christian Science Monitor, Seattle Post-Intelligencer, and Ann Arbor News as the backdrop, the publisher walked through how the economics of an online newsmedia company simply don’t support an adequate level of journalism – quality and quantity – for a major metropolitan market.

In short, he was willing to live with perpetually lower profit margins of 10% or less of a print-centric multi-media news organisation if it preserved a certain level of journalism – beyond which, in his words, “what’s the point?” He passionately defended the need for journalism which preserves and maximizes democracy.

The publisher worried aloud that while he could take another 25% revenue hit in 2009, the equation would get dire in 2010 if the revenue bottom wasn’t found. “By then, I will have run out of room to cut,” he said.

Two important points about saving journalism for newspapers.

First, in all of these talks, an important part of the equation was never mentioned: advertising.

It has become a fait accompli among U.S. publishers that advertising won’t return to newspapers. Not retail, not any of the classified categories, not the inserts. Nobody says it, but it’s the elephant in the room. As the publisher pointed out, the CPMs of an online audience beyond the wildest dreams of print newspapers are peanuts.

The focus is exclusively on the worst-case scenarios, not how to cast a wider net with sales forces locally and engage with the advertising community nationally either with national press associations or major metropolitan dailies banding together.

The broader industry needs to be talking about this lack of engagement, but isn't.

Second, as newsrooms shrink, editors and publishers of major market newspapers must become much more serious about the lack of editorial output. Everyone is going through the shell shock of their fellow employees being laid off, yet at some point newspapers will have to confront this.

It was appalling in the good times, even the butt of jokes. It’s no laughing matter today as lawmakers and public officials openly debate what society would lose if a major city were left without a newspaper. There are open discussions in the blogosphere about the eight local stories written per day in an unnamed metropolitan daily that employs more than 200 reporters.

Time to wake up. Time to focus. We’ve done enough lamenting.

Yes, focus on alternative business models. Yet if newspapers don’t get the basics of advertising and editorial output, we’re spinning our wheels about saving journalism.