NEW YORK (AP) – The state of journalism is bleak, but an annual study of the industry suggests all hope should not be lost.

While the business model of many news organizations appears to be fracturing, there’s little indication that consumers are losing interest in news, says the Project for Excellence in Journalism. Its sixth annual State of the News Media survey was released on Sunday.

Four newspaper companies have sought bankruptcy protection in recent months, and the Rocky Mountain News in Denver stopped publication.

Yet The New York Times and Washington Post have bigger audiences than ever, when online readership is taken into account, said Tom Rosenstiel, project director. Traffic to the top 50 online news sites rose by 27 percent in 2008, the report said.

“This is not an industry that is dying,” Rosenstiel said. “This is an industry that is in disorientation.”

Local television news also is in trouble. Revenues fell by 7 percent in 2008, which is eye-opening considering it was an election year and stations typically see an influx in political advertising.

Besides the Internet, cable news was a sector that flourished, due in large part to its focus on the presidential election, the report said.

Newspapers have failed to figure out how to make their Web sites profitable, Rosenstiel said. They’re slow to realize that people aren’t going to pay for content in the way they do for traditional newspapers.

But there are still things that can be tried, he said. They could try something modeled after the cable industry, where a fee to news producers is built into a customer’s monthly fee for Internet service. They could set up online “malls” for local merchants or create specialized services for information that some in their communities might pay for.

Partnerships have been born because of the tough financial times, such as local television affiliates of NBC and Fox sharing video for breaking news events, the report said.

With layoffs prevalent, power is shifting to individual journalists away from institutions.

“The news audience is out there and is in some way growing,” Rosenstiel said. “If the industry cannot find a way to monetize that, it may be that individual journalists and others will.”

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