THE DAILY NEWS--the gritty, inky, legendary tabloid of New York City--is dying.

The demise has not yet been announced by the paper's owner, the Chicago Tribune Company, but the results of a five-year newspaper war in New York now seem clear. The Tribune company publicly put the News up for sale last month, and no takers have been forth-coming. The end of the Daily News would be a sad loss--its largely incorrect blood and guts reputation notwithstanding--and it would signal the direction of the newspaper business in the 1980s.

For a time in the '60s and '70s, some in the industry figured that television would destroy newspapers. The news, the prophets said, would come entirely from the tube--in part from expanded versions of television news shows and in part from text transmission over cable T.V. The demise of many an afternoon paper was directly linked to the rise of television, and some pundits figured it would only be a matter of time until the morning editions bit the dust as well.

But the doomsday scenario seems wildly off the mark today. Many papers all over the country are fat, happy and rich; they have not been replaced by television but rather have adjusted to it. True, television now serves as the main news source of most Americans, but the past few years have shown that there is more than enough room for other media as well. The era of television-newspaper competition has just about ended with print enduring more than a few casualties. But a new era began when newspaper realized their limits and started exploiting their strengths. And New York City offers a prime example of the shape of the newspaper business in the new era.

Few of the nation's dailies have prospered in the past decade as lustily as The New York Times. The great gray lady has adjusted to television with its reputation (and profitability) intact. The Times pulled this off by knowing its market and catering to it exquisitely. The ratio of white collar to blue collar workers in the American economy has shifted significantly toward the former in recent years, and the number of college-educated adults has never been higher. These people share a loyalty to the institution of the morning paper, the time to read one before work and an appealing (to the advertisers) level of disposable income. Also, by and large, they have the attention span and curiosity to seek out more in-depth coverage than television currently provides. Many in this group--particularly the upwardly mobile, increasingly suburban children of the baby boom--also gobble up consumer/fashion information, and papers like The Times have been happy to oblige. The papers find the arrangement congenial because that kind of "news"--called "Living" or "Weekend" in The Times, or "At Home" in the Boston Globe--generates considerable advertising revenue.

But the Times-style, high-brow model will not be the only type of newspaper to survive and prosper. Television has also prompted the growth of what might be called the celebrity industry. People magazine first capitalized on this development on a national level, and the effects are now trickling down to the more local media. "Gossip" is bigger than ever, thanks to television, because there are more people well-known than ever--actors, politicians, businessmen and especially athletes. Sports, in fact, has been the other major beneficiary of television's dominance. Professional and college sports have never enjoyed as much popularity as they do now, and not even television can satisfy all the demand for sports news. And newspapers can still add a dimension to sports coverage that television cannot provide--particularly regarding the increasingly important business side of sports. So the market is expanding for Sleaze 'n' Sports--or, in other words, the News York Post.

Rupert Murdoch, the Australian newspaper mogul, bought the afternoon Post in 1976 and knew exactly what he wanted to do. He moved it away from the traditional role of the afternoon paper--providing the day's developing news, with lots of commentary and business reporting--and turned to the stuff that neither television nor the more respectable print outlets were doing. The Post went heavily into crime ("Gutsy Hell Camp Victim Foils Thugs"--a story about a mugging of a concentration camp survivor in yesterday's edition), sentiment ("Medal for New York's bravest little girl...") and gossip (at least two pages worth every day). Then he packaged it in the most attention-grabbing manner, hired the most garish cartoonist in the United States, David (Rorshach Test) Rigby, and started pushing it in the morning as well as the afternoon.

And he added one more thing: sports. Sports now takes up a solid half of the Post and the section will probably expand even more. And the sports coverage is high quality, too, which helps keep hold on the Times readers who now buy the Post in the afternoon just for the sports. With stories like that of George Steinbrenner's tumultous reign over the New York Yankees--controversial, complicated and capable of generating more news and rumor than television could possibly cover--the Post carved a very comfortable niche for itself. The Murdoch formula quickly boosted circulation from 100,000 to 675,000 by 1977, and now--thanks largely to a cash giveaway contest called "Wingo"--he sells 910,000 every day.

ALL OF WHICH leads back to the Daily News. The News has a market too, and that it its biggest asset--and problem. The people who read the Daily News are, for the most part, the stable, ethnic families who live in New York's outer boroughs--the Bronx, Brooklyn, Queens and Staten Island. For years, this represented a solid constituency, and the News served it well, with pungent, readable prose, catchy headlines and cranky, right-wing editorials. And the public responded; "Da Nooz," as it is popularly known, achieved the largest circulation of any paper in American history, selling 2.3 million copies everyday in 1946.

But notice the date. The end of the war meant trouble for the News. Those outer borough families which could moved to the suburbs, where several dailies--particularly Long Island's Newsday--sprung up to serve them. Further, the expatriates were replaced mostly by Blacks and Hispanics, to whom the News did not appeal nearly as much. Or they were not replaced at all; the population of New York has declined by more than a million since its peak after the war.

And the News did not change with the times. It could never appeal to both its traditional audience in the boroughs and to more "sophisticated" Manhattanites and suburbanites. It tried last year with an afternoon edition called "Tonight"--edited by the father of New York Magazine, Clay Felker--and the result was an expensive bomb. The failure of "Tonight" epitomized the News's trouble. Felker's part of the paper focused on the arts, singles' bars, and the concerns of modern, "hip" New Yorkers, while the rest of the paper scarcely changed at all. Side by side were features on subjects like the best salad bars and the News's famous "Voice of the People" letter column. (A recent sample: "Instead of worrying about foreign affairs, our loud mayor should concentrate on the problems of New York City. That is his No. 1 project and that is what he is getting paid for by the citizens of this great city." From B. Mason of Queens.) The combination didn't work.

The News hasn't even been able to profit as much from the boom in sports coverage. Because it comes out in the morning, the paper is locked into a format that features mostly game stories rather than the analysis, inside dope and rumor-mongering that pervades the Post. The only big success the News has had recently is its rather pathetic imitation of the Post's "Wingo" called "Zingo." "Zingo" has added 100,000 to the circulation, putting the News back to 1,483,333 everyday, but that is still nearly 450,000 below the 1976 level.

So the future looks bleak for the News. current rumor has it that it would cost the Tribune company $85 million to close down the paper and pay off its employees, while it would take $60 million to renovate the product for the long haul. But those numbers distort the picture. The News is written for part of New York that, while still huge by almost any standard, is shrinking; and American business does not stay in the games when the prizes keep getting smaller. Sooner or later, and probably earlier than most expect, the Daily News will join the Brooklyn Dodgers, the third-avenue el and the nickel subway fare in the land of lost New York.