A Google newspaper? Dream on, says CEO.

For months, rumormongers have wondered if Google was considering a bid for a major newspaper, such as the New York Times. (Also frequently mentioned as potential Times saviors are the music mogul David Geffen and Rupert Murdoch, who owns the Wall Street Journal, and the New York Post, among other papers.)

Why Google? Well, as Jeff Jarvis has written, Google has managed to perfect pretty everything else in the media business – the advertising, the aggregation, and the digital distribution. The next logical step is to dive headfirst into the reporting business. And Google has feinted in that direction.

This month, Howard Kurtz, the media critic for the Washington Post, reported that the Washington Post Company chief executive Donald Graham and Google chief executive Eric Schmidt "have been holding talks about a possible collaboration":

This could range from creating new Web pages to technological tools for journalists or readers. Hanging over the talks is the reality that the search giant, while funneling vital traffic to news sites, vacuums up their content without paying a dime.

No dice, buddy

But yesterday Google ruthlessly quashed the dreams of newsmen and women across the globe. (To paraphase Warren Buffet, now ain't the time to get into the business, bucko.) In an interview with the Financial Times, Schmidt said he wanted to stay on the distribution end of the news process.

"We’ve actually looked at this and we’re trying to avoid crossing the line between the infrastructure and technology that Google provides and the content that our partners provide," Schmidt said. "There is a line and we’re trying to stay on our side it."

Leaving the door open.... a crack

Still, Schmidt said that Google depended on "the production of very, very high-quality content. If the people who are producing that are getting laid off, it’s really a tragedy for both. So we need the high-quality content." He continued:

There’s a debate in the industry of exactly how to get it but, ultimately, the problem is not us taking money from some other pocket and subsidizing it, ultimately the solution is to build products that really are so good that we make enough money from advertising and subscriptions, to a degree, that they make sense and that there’s enough money to pay for the construction of this high-quality content.

Is there room for Google to help hammer out a partnership with some of those "high-quality content" providers? Schmidt didn't say.