NEW YORK (AP) _ Spy magazine, known for its skewering of celebrities and its ''separated at birth'' photos, is ceasing publication after 7 1/2 years, the magazine announced Friday.

Tony Hendra, the editor in chief, said principal owner Jean Pigozzi closed Spy after failing to sell it.

''As I understand it, there was a buyer but the buyer was not prepared to invest in the magazine in sufficient time to meet the pressures that we're under,'' Hendra said.

The 78th and final issue of Spy will be on newsstands in New York on March 1 and nationally March 8, said advertising director Elaine Alimonti.

Pigozzi had no comment, his spokesman, Michael Simoff, said.

Alimonti said the closing comes despite increases of more than 20 percent in both advertising revenues and circulation in the past year. Circulation is at 200,000, an all-time high, she said.

Hendra called Spy's folding ''a tragedy.''

''Far beyond its size, the amount of noise that Spy makes is very considerable,'' he said. ''I think its voice will be very sorely missed in the media mix.''

Spy was founded in 1986 by Graydon Carter and Kurt Andersen. Pigozzi and his co-investors bought it in 1991, Hendra said.

The magazine prided itself on exposing the foibles of the rich and powerful.

In January 1993, its staffers called 20 freshmen congressmen and asked what the United States should do to stop ethnic cleansing in Fredonia, the name of a fictitious country in the Marx Brothers movie ''Duck Soup.''

Several fell for the ruse, giving answers ranging from ''Take action'' to ''It's a different situation than the Middle East.''

In 1992, Publisher Gerald Taylor called ousted White House Chief of Staff John Sununu and pretended to be a corporate headhunter feeling him out about future jobs. When asked what kind of money he was looking for, Sununu gave $3.5 million as a ballpark figure.

Spy also published parodies of Vanity Fair and The New Yorker magazines, with a fake nude photo of Editor Tina Brown gracing the latter.