When Morgan Stanley talks, the newspaper industry listens — just look what happened to Knight-Ridder and what is happening at the Tribune Co.

So, a new analysis by the Wall Street investment/brokerage firm should command attention.

“Newspaper companies stand to lose the most from the migration of advertising to the Web, but they also stand to gain the most — assuming they are active participants in online advertising,” said the report from Morgan Stanley Research, dated Oct. 13, 2006.

The report said newspapers “have not yet committed the resources and risk necessary to alter their business models so as to become major players in online advertising.”

The report said “companies with large-market exposure … are likely to under-perform given the higher Internet penetration in these markets and the lack of a proven profitable online strategy by newspapers in general.” Retail and classified advertising, which the report said accounted for 83 percent of newspaper revenue, “are most vulnerable to online migration.”

The report added: “Within classified, the migration of help-wanted advertising is more advanced… (while) real estate, auto and other (including personals) are still in early stages. Because newspapers were slow to react in help wanted, an outside, Monster, emerged as a dominant force in the space. However, we believe newspapers can still realize a significant share in these other classified categories in which no significant online player has emerged…”

The International Newspaper Marketing Association released a report Nov. 1 that said “newspapers will confront entrenched internal cultures in 2007 to reposition themselves as multi-media companies in a race to capture consumer attention across platforms.”

The INMA concludes that this transition is necessary — but painful for a “management culture hooked on high profit margins and an editorial culture unaccustomed to change and accountability.”

“This report boldly says what many newspaper executives only whisper about,” said Ross McPherson, president of INMA and managing director of McPherson Media Group in Australia. “As an industry, we are good at identifying where we are and where we will go. Clearly, multi-media is our future. But we hesitate to confront the transitional issues necessary to get to that multi-media future.”

All this comes as the nation’s second-biggest newspaper group, Tribune Co., analyzes take-over options. In its lead story Nov. 2, the Wall Street Journal reported that Tribune was considering the option of selling off its parts, rather than as a whole.

“The move raises the prospect that Tribune Co. could become the second large U.S. newspaper chain this year to drastically remake itself under investor pressure. The change signals tectonic shifts in newspaper ownership in an age when readership and advertising, threatened by the Internet and other new technologies, are under siege,” the Journal reported.

So come the warnings from multiple sources — investment research, the public press and a newspaper trade organization.

From the public press: Tectonic change is afoot. From Wall Street analysts: Newspapers need to change but few have “yet committed the resources and risk necessary to alter their business models so as to become major players in online advertising.” From a trade association: Needed transition is blocked or slowed by “a management culture hooked on high profit margins and an editorial culture unaccustomed to change…”

Can the message be clearer?

(Marc Wilson is ceo of TownNews.com and president of The Job Network. He is reachable at marcus@townnews.com.)