Apr. 7--Newspapers that stick to their journalistic principles as they leap into cyberspace will be better equipped to differentiate themselves from telephone, cable, computer and on-line services that are entering the business of providing information, a new study found.

But the same study also found that many readers are frustrated with newspapers and believe that the medium often ignores the values they espouse by focusing on conflict and not the meaning or impact of an event.

The study identified core newspaper values as editorial judgment, balance, accuracy, community leadership, public access and credibility.

``Readers really want newspapers to get involved in new media because they place value on the characteristics of news organizations,'' said N. Christian Anderson III, publisher of The Gazette Telegraph in Colorado Springs, Colo.

``The other story is that we have to be better at practicing (these values) at newspapers right now,'' said Mr. Anderson, who is also the chairman of the New Media and Values Committee of the American Society of Newspaper Editors, which commissioned the study.

The report found that readers ``do not want newspapers merely to copy the chaotic, free-wheeling anything-goes cyberspace culture.'' It said consumers want information handled by professionals and presented differently than it is on Prodigy or America Online.

In addition, Microsoft announced in March that it plans to transmit information from wire services, trade publications and other news services on its Microsoft Network beginning in August. Newspaper executives expressed fears that Microsoft will move into gathering as well as distributing news.

The report, called ``Timeless Values: Staying True to Journalistic Principles in the Age of New Media,'' was released at the ASNE convention in Dallas and discussed Thursday by a panel moderated by writer Ken Auletta of The New Yorker.

Mr. Auletta posed several questions: Are journalists a filter or merely a source of data? Will customers prefer acting as their own editors? Can Microsoft Corp. do it better? How can you expand your market without losing your soul?

Panelists were L. John Haile, editor of the Orlando (Fla.) Sentinel; Richard C. Harwood, president of Harwood Group, a Bethesda, Md., company that conducted the study; James Cullen, president of Bell Atlantic; and Andrew S. Grove, president of Intel Corp., who spoke from San Jose, Calif., via video conference.

Mr. Harwood said the study showed that readers want newspapers to provide in-depth news, especially local news, and to put issues into perspective and context.

``They are asking newspapers to be more than megaphones for dissonance, `` said Mr. Harwood. ``It's by creating this kind of space that newspapers gain their brand identity.''

Mr. Grove urged newspapers to try the new technology or risk battling giant companies such as Microsoft that are entering the business. ``Get there, please, do it,'' he said.

Mr. Haile agreed and said, ``One of the real threats we have to deal with is whether (newspapers) will be content providers for someone else's business.''

Mr. Cullen, however, said Bell Atlantic has no plans to go into the news business and pointed out that radio and television did not put newspapers out of business. ``We frankly view (new media) as an extension of your business,'' he said.

Many editors agreed that values and local news are the two main advantages they have over nonnewspaper competitors.

Ray Call, executive editor of The Gazette Emporia in Emporia, Ill., said his 10,000-circulation, independent, family-owned newspaper is behind the curve on on-line services and is trying to figure where to get the money to start.

I see that (the newspaper's local content) as probably our only salvation,'' said Mr. Call, adding that the publication is the only source of community information. He also agreed that values is the ``one thing (journalists) can bring to this whole system.''

The Press Republican, a 24,000-circulation daily in Plattsburgh, N.Y., has an electronic mail service but nothing else yet, said editor James Dynko. He agreed that ``local news is our franchise.''

Edward Frede, editor of The News-Times, a 38,000-circulation newspaper in Danbury, Conn., has a computer bulletin board where readers can post messages. END!C&$7?DA-NEWSPAPER AP-NY-04-07-95 0910EDT This material is copyrighted and may not be republished without permission of the originating newspaper or wire service. NewsHound is a service of the San Jose Mercury News. For more information call 1-800-818-NEWS.