American newspaper publishers headed home from their annual meeting with new ideas for gaining readers and advertisers - and hanging on to those they have - during a recession.

"Business is flat but we feel it has bottomed out, and we expect it to be very challenging the rest of the year," said David Jones, vice president and associate publisher of The News and Observer in Raleigh, N.C. "We're cautiously optimistic about 1992."The poor economy apparently contributed to low turnout at the three-day convention of the American Newspaper Publishers Assocation.

As of noon Tuesday, 1,384 people had registered, down from 2,176 in Los Angeles last year. The last time attendance was below 2,000 was in 1978.

The convention focused on ways to cope with the recession and changing markets. Speakers cited census figures showing aging baby boomers and rapidly growing minority populations.

Frank R.J. Whittaker, president and general manager of The Sacramento (Calif.) Bee, spoke Tuesday about how some newspapers are changing with the times:

The Knoxville (Tenn.) News-Sentinel prints an entertainment tabloid for college students; The Wenatchee (Wash.) World runs a special section in Spanish; The Cedar Rapids (Iowa) Gazette started a new publication for farmers; the Syracuse (N.Y.) Herald-Journal runs a tabloid section - filled with MTV-style graphics and color - aimed at 16- and 17-year-olds, and the Tampa (Fla.) Tribune prints a health-care guide, a list of restaurant menus and a monthly tabloid called "Upscale" that is mailed to neighborhoods where the median household income is $30,000 or more.

Whittaker's own paper created a weekly entertainment guide called "Ticket" aimed at younger readers. It's distributed at coffee houses, movie theaters, restaurants and health clubs.

"We can't continue to put something for everyone into bigger and bigger packages and expect readers to love us and want us. They won't," he said.

During another panel discussion Tuesday, Tina Brown, editor in chief of Vanity Fair magazine, said newspapers have been "softening up and downscaling" in the mistaken belief that that's what readers want.

"The competition you fear most is from television. It's a tired old fear and it's led you astray," Brown said.

Vanity Fair's circulation increased after it started running longer, more substantial stories, she said.

"It's a popular fallacy that people don't read anymore," she said.