Another reason is that most local newspapers just take AP stories, cut them to fit around advertisements and then add the local sports scores and obituaries. There is very little original journalism in the typical local newspaper. If I get access to the original AP story from any source, then I really don't need to read the local paper.
Newspapers might as well wrap their ads with PRNewswire copy - the stuffs free... The original idea behind AP was good - kind of the equivalent of seeing a TV commercial created by whizzbang Madison Avenue firms rather than the local company with a fat used car dealer yelling 'buy from the Big Shade Tree dealer" or some such garbage. But it doesn't matter because it's all part of the same liberal elite groupthink. AP makes the 'sell' look better - just as Madison Ave does with ads - but not more truthful - and it's all from the same point of view.
There was a time when reporters came from blue collar backgrounds. They knew what was going on in the community because they lived there. Now it's highly educated elites writing for each other. For an in-house rag that would be fine - for a general circulation paper it's the kiss of death.
Your comment about local news is well taken - but again - local news that springs from the same elite liberal group-think isn't going to connect to many readers outside the circle of 'elites'. Yes, Virginia there are Tea Party members in YOUR community. Important stories are missed - and worse, stories the great unwashed know are bogus, are repeated endlessly.
For example, Newspapers support local United Ways. They support the charities involved - the missing children, homeless, abused women, blankets for bums - whatever. Now how truthful is that reporting? Does it reflect what commen people know as the truth? No. The 'missing children' scam disappeared without much comment after it turned out some of the statistics had been ginned up by saying a child who was returned from custodial visitation 10 minutes late was "missing' statistically. Newspapers didn't explain why that one was dropped - from papers or milk cartons. They should have - it would have made an interesting story.
Remember all the 'homeless' stories - with pictures of 'mom, dad, and two blue eyed children' - a sob story that would eat your heart out. Except that family was the exception - used to bleed money from the community but far from the truth. The mentally ill - the drug addicted and criminal wouldn't fit the liberal myth, but their story needs to be told so the problems can be dealt with. And why do so few street people use the 'charities' that are set up to 'serve' them? Reporters talk to their fellow liberal elites running the facilities - and strangely get the exact same story. Same with education. Papers back union teachers and their story gets told. And only their story. Local reporters ONLY add value to a paper if readers feel some truthful understanding is being offered by their writing...(Seriously - give me a topic and I'll tell you how a liberal reporter will cover it - it's that boring) Value doesn't come from elite groupthink rehashing the same stuff endless - from the same position - over and over and over etc etc. ( see how it feels?) For many papers, PRNewwire to wrap around their ads will do just fine.