Paper News ;

By Janice Castro.

The news in Baltimore last week was about the news. On Tuesday reporters for the afternoon News American, which traced its roots to a weekly founded in 1773, learned that they were working on their last edition. Its banner headline: SO LONG, BALTIMORE. Thus the News American, which liked to boast that it published the Declaration of Independence, was unable to report a story on Wednesday: its rival, A.S. Abell Co., owner of the Baltimore Sun, would be sold for $600 million to the Los Angeles-based Times Mirror Co.

That the Sun fetched such a hefty price just after its main competitor folded was coincidental. Times Mirror Chairman Robert Erburu noted that his acquisition of the Abell properties, which include the morning Sun (circ. 205,000) and the Evening Sun (circ. 152,000), as well as two television stations and two magazines, had been in the works since April. Said he: "We saw a good opportunity and went for it."

In any case, Erburu could have predicted the demise of the News American, which was owned by the New York-based Hearst Corp. Like many other afternoon dailies, the News American had suffered declining circulation for decades, from a peak of more than 200,000 in 1959 to some 100,000 this year. Many of its blue-collar readers were leaving Baltimore for the suburbs, while others were skipping the afternoon paper in favor of the evening television newscasts. Unprofitable for several years, the paper was losing an estimated $800,000 to $1 million a month at the end. When Hearst tried to sell it, most prospective buyers were interested only in the land under the paper's plant, which overlooks Baltimore's popular Harborplace development.

In contrast, the Sun has flourished by establishing a reputation for the sort of reporting on national politics and foreign affairs that is usually matched only by much larger papers. During the Mexican War, the Sun used a string of riders to bring the latest dispatches to Baltimore on horseback, scooping its competitors and even the White House. In 1925 the Sun assigned H.L. Mencken to write his famous series of articles on the historic Tennessee "monkey trial" of John Scopes, who stood accused of teaching evolution in public classrooms. Under the leadership of Reg Murphy, who has been publisher since 1981, the Sun has maintained a reputation for excellence. Last year its reporters won two Pulitzer Prizes.

The decision to fold the News American comes at a time when Hearst (estimated 1985 revenues: $1.5 billion) seems to be losing patience with papers that produce persistent losses. In 1982, Hearst, which still has 14 newspapers, including the San Francisco Examiner and the Seattle Post- Intelligencer, sold the struggling Boston Herald American to Publisher Rupert Murdoch, who has since revitalized the paper with a feisty new style.

Times Mirror, which had 1985 profits of $237 million on revenues of $2.96 billion, has been on a buying spree. Two days before the Sun deal, the company said that it was buying the National Journal (circ. 5,100), a prestigious Washington weekly. Once known mainly for its flagship paper, the Los Angeles Times, Times Mirror now draws about 40% of its revenues from its East Coast operations. One star performer: Newsday (circ. 582,388), a fast-growing Long Island daily that is ambitiously expanding its distribution in New York City.

The idea that Times Mirror should buy the Sun was first suggested to Murphy by Los Angeles Times Publisher Tom Johnson, an old friend and colleague from the Macon (Ga.) Telegraph and News. "It's a beautiful fit for us," said Johnson last week. The Sun's owners, the Abell family, said that the Times Mirror offer was simply too generous to refuse. Critics wondered whether the Times was paying too much for the Sun. "Prices for media properties have been running high," admitted Times Mirror Chairman Erburu. "But if you make the right acquisition and get a satisfactory return, it's O.K." Erburu, who has led his company to record revenues and earnings for three years in a row, should know a good buy when he sees one.

With reporting by Jonathan Lyons/Baltimore and Richard Woodbury/Los Angeles