New Jersey’s largest daily is “losing a battle to survive,” its publisher says.

The Star-Ledger, New Jersey’s largest newspaper, has to shrink its payroll by 200 jobs and retool two union contracts by October 1 or it will have to be sold, the Newark-based paper reports its publisher told staffers today.

Amid an historic disruption in the newspaper industry as advertisers and readers flock to the web and cable TV for information, the newspaper is “on life support,” publisher George Arwady is reported to have told a stunned meeting of employees this morning.

The paper, he said, is “losing a battle to survive.”

The paper has about 765 full-time employees and has offered a large-scale buyout in an effort to shrink that number by at least 200. In addition, Arwady said the paper will need givebacks from the unions representing drivers and mailers.

If both those criteria are not met by Oct. 1, the Sledger will be sold, Arwady is reported to have said.

Also facing sale is the Sledger’s sister paper, the Times of Trenton.

There’s been no mention so far that we’ve seen of the Jersey Journal, which, like the Sledger, is among the 11 daily papers across the U.S. owned by the Newhouse-family controlled Advance Publications. The Sledger is the largest of the chain, which also includes the Portland Oregonian, the New Orleans Times-Picayune and the Cleveland Plain-Dealer.

There’s also no mention yet of who might want to buy it, though the Associated Press reports that J.P. Morgan Chase has been retained to shop the property around.

Also from the AP:

The Star-Ledger is not threatening layoffs because of a pledge in the employee handbook that says as long as the paper is published daily, no nonunion employee will be fired for corporate financial reasons. The paper has about 300 non-represented newsroom staff.

Widely regarded as an effective watchdog on Trenton, the Sledger has also been an unabashed booster of all things Jersey, from Springsteen to the Giants to the Sopranos.

Here’s today’s entry of Ledger Live, the Sledger online video news service that debuted just last week: the segment leads with the story.

BTW, if host Brian Donohue looks familiar, he’s a Red Bank resident.

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