BISMARCK, N.D. -- The Bismarck Tribune, the daily paper in North Dakota's capital, doesn't have a lot of competition encroaching on its turf.

"What news there is out there is generally found by us," says Editor Dave Bundy. He says his staff of 10 reporters and seven editors is by far the biggest in the area. A recent front-page article explored why remote lock devices attached to drivers' key chains weren't working in the parking lot of the new Kohl's department store. A popular feature is the Photo of the Day, often taken by readers. "People can email their photos to us and we'll run their cute kid or vacation pictures," Mr. Bundy says.

With a local focus and a near-monopoly on its market, the Bismarck Tribune has helped its publisher, Lee Enterprises Inc., produce revenue and profit growth admired by many in the newspaper industry. The paper is among a tier of papers with circulations of 50,000 or less that is proving relatively resilient in the face of a prolonged slump among larger papers.

While big newspaper companies are increasingly battling the Internet and other sources of information and advertising, small papers have been able to keep a hold on their markets, concentrating on local politics, sports and community events. Most rural areas don't yet have the same access to the Web that urban markets do, protecting small papers, for now, from the Web competition that has hurt major papers.

Circulation at many smaller papers is holding steady, even as their big-city brethren hemorrhage readers. In the latest six-month period reported, ended Sept. 30, circulation fell more than 16 percent at the San Francisco Chronicle, 6 percent at the Houston Chronicle and nearly 4 percent at the Los Angeles Times, according to the Audit Bureau of Circulations, an industry monitoring group. At the Bismarck Tribune, by comparison, circulation has held steady over the past two years, as it has at Lee papers in Casper, Wyo., and La Crosse, Wis.

Collectively, operating profit at Lee and 12 other big publicly traded newspaper publishing companies slipped 1.1 percent to $3.36 billion in the first nine months of 2005, according to industry analyst John Morton. Meanwhile, their stock prices fell 15 percent on average through Sept. 30. Knight Ridder Inc., which runs the nation's second-largest newspaper chain by circulation, acquiesced in November to pressure from its largest shareholders to put the company up for sale. It still is looking for a buyer.

Benefiting in this smaller-is-better environment is the Bismarck Tribune's publisher, Lee Enterprises of Davenport, Iowa. The publicly traded company publishes 58 daily newspapers in 23 states. Most are in towns like Baraboo, Wis., Beatrice, Neb., and Muscatine, Iowa. Average daily circulation: about 29,000.

That puts Lee squarely in the heart of the country's newspaper business. Of the nearly 1,500 daily papers coast to coast, 1,200 have a circulation of 50,000 or less, according to the Newspaper Association of America, a trade group in Vienna, Va.

With a 2004 profit margin of 20 percent, Lee's newspapers eclipsed media powerhouses whose newspaper profit margins were in the teens, including Washington Post Co., New York Times Co., and Tribune Co., publisher of the Los Angeles Times and the Chicago Tribune, according to Mr. Morton. He estimates Dow Jones & Co., publisher of The Wall Street Journal, had a newspaper operating profit margin in 2004 of slightly more than 9 percent.

Dow Jones's community newspapers division -- including Ottaway Newspapers, which publishes 15 daily newspapers and more than 30 weekly newspapers and free "shoppers" in smaller markets -- had an operating profit margin in 2004 of 26 percent.

Compared with large metropolitan areas, small towns are proving more promising for readership. They generally have larger proportions of English speakers, higher education rates and older, more rooted populations. In Bismarck, less than 2 percent of the population is foreign-born; in New York, it is 36 percent. In Bismarck, 88 percent of residents are high-school graduates. In Los Angeles, 67 percent are.

The small markets are limited enough that, for now, competitors are scarce. Bismarck, population 56,000, has had little incursion, for instance, from Craigslist, a free online advertising service. That service has devoured classified advertising in many of the more than 110 locations where it has set up shop, forcing some papers to offer many classified ads free. For Bismarck, the nearest other paper of any size is in Dickinson, a city of 16,000 people located 100 miles west. Bismarck also has only one "shopper," or free paper, in town -- and Lee owns it.

Founded in 1873, the paper had its first big story three years later, reporting on Custer's death at the battle of the Little Bighorn. One of its correspondents was killed in the fighting. The Bismarck Tribune has won one Pulitzer Prize, in 1938, for articles and editorials on the Dust Bowl.

Lee Enterprises was founded in 1890, and expanded steadily by sticking to small publications. Last year, in something of a deviation, it agreed to pay $1.46 billion for Pulitzer Inc., the company once run by the family that established the Pulitzer Prizes. That company has some 60 weekly papers and 13 small dailies, but its flagship is the St. Louis Post-Dispatch, a major metropolitan newspaper with a daily circulation of 279,000. Largely because of severance costs at the Post-Dispatch, Lee recently reported a profit decline of 16 percent to $22.8 million in the fiscal first quarter, ended Dec. 31.

Mary Junck, Lee's chairman and chief executive, says that while St. Louis is a much larger market, "it has the same characteristics" of other places where the company has papers. It is a Midwest hub for retail; residents have a high purchasing power; and the paper faces no daily newspaper competition in its market.

Ms. Junck, a former Times Mirror executive who joined Lee in 1999, says Lee tries to pick newspapers in cities that serve as regional economic hubs. Lee acquired a majority interest in the Bismarck paper in 1978 and bought the rest of the stock in 1985 -- just ahead of Bismarck's latest boom.

With little competition, the Tribune sells nearly 28,000 papers -- or about one copy for every two people. By contrast, the Los Angeles Times, with a daily circulation of about 843,000, sells about one paper per four residents. The Chicago Tribune, with a daily circulation of about 586,000, sells one paper for every five.

"Everybody takes the Bismarck Tribune," says Dick Tschider, the former chief executive of the St. Alexius Medical Center, the largest hospital in town. As a boy, he says, he sold the paper himself, buying copies for three cents apiece and selling them for a nickel. Today, the cover price of the paper is 75 cents.

"Mass media still is 'mass' in rural America," says Pat Finken, president of Odney Advertising, based in Bismarck. Most of his business is in rural states like North Dakota, where there are fewer media options for residents and ad prices remain low. "You can buy full-color ads in the Tribune for two grand or less," he says. "You go to Minneapolis, Chicago, you're talking $25,000 to $30,000 for a similar ad."

From 1990 to 2000, the population of Bismarck increased 11 percent. As North Dakota's population has aged and small towns have died, Bismarck has thrived. Hospitals are a big magnet, drawing the elderly.

That, in turn, has increased the number of doctors, nurses and other medical workers. A registered nurse at one of Bismarck's major hospitals can fetch a starting salary of $45,000. This has boosted the buying power of residents. According to the U.S. Census, retail sales per person in Bismarck in 2000 were $14,800; in Los Angeles, they were $6,400.

"Two years ago, this was nothing but horse pasture," says Tribune publisher Brian Kroshus, cruising one recent day through the town's north side in his pickup truck. Now, there is a Kohl's, a Best Buy and a Lowe's, not to mention the Starbucks and two new Wal-Marts on the way. They are flanked by new housing developments featuring 5,000-square-foot homes going for more than $600,000.

"We carefully watched as the housing developments went up," says Julie Bechtel, former publisher of the Tribune who now is publisher at Lee's Quad-City Times in Davenport. As neighborhoods filled in, she says, the Tribune upgraded its delivery service -- promising papers directly on the porch, instead of at the end of the driveway, a nice benefit in North Dakota winters.

At 3 a.m., Cindy O'Hara drives her Chevy van to the edge of a subdivision. Most days, she has about 150 copies of the Bismarck Tribune to deliver by 5 a.m. This used to be a motor route, with newspapers tossed on driveways from car windows. Now, the 48-year-old grandmother jogs door to door in the frigid darkness, placing each copy right at the doorstep. One customer recently sent her a thank-you card for the special effort. "It just made my day," Ms. O'Hara says.

Still, all the growth in Bismarck ultimately may force the Tribune to cope with many of the same problems larger papers are facing.

"Big Box" retailers like Wal-Mart tend to do less advertising inside the paper. This type of advertising, the bread-and-butter of the industry, is called "run-of-press" advertising. Instead, the Big Boxes often prefer "preprints" -- circulars that are inserted inside the paper, frequently sealed in plastic pouches.

Circulars typically are less lucrative for newspapers because they often are produced by commercial printers, and papers get revenue only for distributing them. Since circulars also can be distributed in other ways, such as through the mail, that drives down the price that newspapers can charge.

The Bismarck paper is ambivalent about the biggest of the Big Boxes. Because the new Wal-Marts plan to sell food, "they're going to hurt our local grocery stores," says Kristin Wilson, the Tribune's advertising director, "and we're concerned about that." Local grocers like Dan's Supermarket are steady advertisers, placing standard run-of-press ads. "Good old-fashioned ROP advertisers are hard to find these days," she says, "so we like to hold on to the ones we have."

So far, the Tribune, along with other Lee papers, is holding on better than most. At Lee papers the company has owned for more than a year, ad-revenue growth of 4.7 percent in the period ended Sept. 30 outstripped the industry average of 2.4 percent. Lee won't release results from individual papers but says profit margins at Bismarck put it in the top 25 percent of the company's papers.

Still, Lee says it realizes that over time the Internet will play a larger role for its customers. A "priority card" carried by all Lee executives -- called a "prayer card" by some -- lists "accelerating online growth" as one of the company's top objectives.

There are questions about how long the small-town monopolies can hold up. High-speed Internet service generally isn't as widely available in rural communities as it is in big cities,but it is spreading. As more readers gain access to faster Web service, many are likely to spend more time reading and shopping on the Internet. And as readers go, so go advertisers.

The extent of Web usage in Bismarck isn't clear. Scarborough Research ranks San Francisco first among the top 100 cities, with 37 percent of residents having access to high-speed Internet; Roanoke/Lynchburg, Va., came in last on that list, with a 12 percent rate. Bismarck isn't big enough to be included on the list.

"One of the reasons that the newspapers out here hung on longer than most is that the people out here, because of our rural nature, were more reluctant to adapt to the Internet," says Steve Scheel, chairman and chief executive of Scheels All Sports Inc.

That is changing. Scheels, a family-run business based in Fargo with 22 sporting-goods stores, has about 3,000 employees, a little more than half of whom are 40 years old or younger. The company took a poll recently, Mr. Scheel says, and almost no one in that age range got the local paper at home. At the same time, the response rate to the company's newspaper ads is half of what it was 10 years ago, he says. So increasingly, Mr. Scheel is skipping newspaper ads and reaching out to customers directly through email.