By Lawrence Meyers

Last week I had lunch with a fellow who's been a journalist for a very long time. He knows the business, he knows everyone in the business and he knows the dirty secrets of the business. He thinks Warren Buffett was crazy to buy Media General (MEG). He also thinks, as I do, that newspapers are toast and you'd be crazy to be buying those stocks right now.

He believes two primary factors are behind plummeting circulation. The first is the plethora of news offered for free all over the Internet -- newspapers don't offer anything unique or original. If you want news, you pull up Google (GOOG) News, and you get the same content. There are no great writers at the newspapers anymore, so why bother? Substantive analysis is in the blogosphere now.

The other reason is that America is a center-right nation politically and, right or wrong, the vast majority of newspapers are seen as having a left-wing bias. With so many alternatives available, Americans don't have to put up with that anymore if they perceive such a bias.

The only thing keeping newspapers afloat, amidst severe declines in advertising revenue, are those inserts you see from your local businesses. Those Staples (SPLS), Office Depot (ODP) and OfficeMax (OMX) inserts, and the coupons from Kroger (KR) and Safeway (SWY) are all newspapers are left holding onto -- that and maybe some movie ads.

These big companies are still scared to pull those ads. They aren't completely sold yet on other forms of advertising. This journalist, however, is absolutely convinced that such a day will come. And when it arrives, the first company to yank its ads will open the floodgates.

Everyone will follow, and that will spell final doom for the newspaper industry. These businesses will realize that declining circulation isn't good for advertising their wares. The day you hear the first of these folks are abandoning newspapers is the day to short the sector, if you haven't already.

I'd short New York Times Co. (NYT), and while Washington Post Co. (WPO) and Gannett (GCI) aren't in imminent danger, their time is coming.

Lawrence Meyers does not own shares in any company mentioned. He's president of PDL Capital, Inc., which brokers secure high-yield investments. You can read his stock market commentary at SeekingAlpha.com. He also has written two books and blogs.

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