Thanks to John Cook, who used to work for the PI but left last year to cofound TechFlash, which covers Seattle-area business news, for pointing this one out.

Here’s the paper’s own report on its impending demise:

The Seattle P-I is being put up for sale, and if after 60 days it has not sold, it will either be turned into a Web-only publication with a greatly reduced staff or discontinued entirely.

‘One thing is clear: at the end of the sale process, we do not see ourselves publishing in print,’ said Steven Swartz, president of the Hearst Corp.’s newspaper division.

Swartz addressed the P-I’s newsroom at about noon Friday, flanked by P-I editor and publisher Roger Oglesby and Lincoln Millstein, Hearst’s senior vice president for digital media.

Swartz said the reason for offering the paper for sale is purely economic.

‘Since 2000, the P-I has lost money each year, and the losses have escalated and continue to escalate in 2009,’ he said. ‘We have had to make a very tough decision. This is a business decision and it is no reflection on your work. The decision reflects our inability to see the losses turning around soon.’

In a release circulated shortly after Swartz finished speaking, Hearst said the P-I lost about $14 million in 2008.”

And here’s a reaction from John Cook, a P-I veteran who left the paper last year to start up TechFlash, a tech/biz blog he runs with fellow refugee Todd Bishop:

Could this be its final dance? It’s too early to say. The bigger questions are whether Hearst is doing some behind-the-scenes dealing, and whether the P-I could sustain itself as an online-only operation.

Obviously, we’re big believers in the power of online media. We know it is still an experiment in many ways, but given the rocky state of the daily newspaper business, we’ve always asked ourselves: ‘What’s to lose?’

Anyway, we don’t think the last chapter has been written in this story. The timing is truly bizarre. What the P-I needs now is a white knight to emerge from the Seattle tech community. A savior. Someone with gobs of money who doesn’t mind losing some of it.

What’s Paul Allen doing these days?”

To answer John’s question about the paper’s ability to sustain itself as an online-only offering: It can’t.

Quantcast pegs the paper’s traffic at 2.6 million uniques. That would keep a blog with a handful of writers and editors afloat–if it had a specific niche, like, say technology news. And if it had a national audience to sell to advertisers. But a generalized news site for a local audience? No one’s figured out how to do it yet, and a recession probably isn’t the time to solve that riddle.

It’s hard to see how the paper stays afloat without a white knight. And it’s hard to see how this won’t play out in cities across the country over the next few years.

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