If there's any good news about the businesses of newspapering these days, it can be found at the industry's littlest papers, which are doing well even as their bigger brothers founder.

The average daily circulation of all U.S. newspapers has declined since 1987. The smallest papers, however -- community weeklies and dailies with circulation of less than 50,000 -- have been a bright spot in a darkened industry. As the Internet dramatically transforms the largest papers in the business -- siphoning classified advertising and commoditizing national news -- many small papers are weathering the decline with relative ease, and some are even prospering.

Why? Small papers face less competition from other media outlets, are insulated from ad slumps that have hammered big papers, employ smaller staffs of lower-salaried journalists and have a zealous devotion to local news, both in print and online, industry experts agree. Also, there is less competition on the Web for local news.

"There is no question that newspapers under 50,000 have performed much better than large newspapers," said William Dean Singleton, chief executive of MediaNews Group, which owns about 100 papers, large and small.

The combined circulation of all U.S. newspapers in the six months ended Sept. 30 was down 2.8 percent from the comparable period in 2005, according to the Newspaper Association of America. By comparison, the combined circulation in the small-newspaper group was down 2.1 percent.

If that seems like cold comfort at best, consider this: Of the 413 papers in the small-newspaper group, 105 of them -- 25 percent -- gained circulation over the year, faring better than any other circulation group.

Lee Enterprises, based in Davenport, Iowa, for example, owns 56 daily papers -- including the Napa Valley Register -- and more than 300 small weeklies and other publications -- including the Weekly Calistogan, St. Helena Star and American Canyon Eagle.

Three of Lee's papers have a circulation of more than 100,000 -- including the St. Louis Post-Dispatch -- but the rest of its dailies are much smaller, averaging about 26,000 each.

Over the past five years, the circulation gains at Lee papers have outpaced the industry average; some of the gains came from acquisitions, but much came from the growth of the group's existing papers. Over the past two decades, the company's stock price has likewise gone in the opposite direction of large-newspaper stock, climbing steadily from less than $10 a share in 1988 to more than $30 a share today.

"We're largely in markets ... that have pretty good local economies, a strong sense of place and strong newspaper readership," said Mary Junck, Lee's chairman and chief executive. Another advantage: "Many of our markets are pretty homogenous and tight-knit," she said, making it easier to pin down and target readership.

The small-newspaper division of Irvine, Calif.-based Freedom Communications generated a 30 percent profit in 2006, up 5 percent from 2005. By comparison, a very successful large newspaper typically returns about 20 percent annually.

"In many of our smaller communities, we are the only game in town if you want to reach targeted households," said Freedom chief executive Scott Flanders.