Normally I would be inclined to agree, but where I live, in Ithaca NY, we have an all-volunteer online news source, The Ithaca Voice. It's probably more widely read than our two old papers. The Voice has been very diligent with reporting on crime, community developments, and as of late, the retrospectively obvious saturation of lead in our school water pipes.
So yes, while I agree that mainstream local news is broadly failing both itself and the general population, it is not an irreversible or geographically independent condition. Or maybe I'm full of shit and the only reason Ithacans read local news is because once you're here long enough you never leave, so you have some skin in the game.
You bring up a very good point. Towns with more long term residents are going to have a lot more people who feel the need/desire/interest to get involved. I live in New Jersey, and a lot of towns are filled with more transient folk. Partly because everything is on top of each other - if I move 5 miles away I might be 2 towns over.
The result is that I never planned on living in my current town for more than a few years and we just passed our 10th anniversary. Maybe it's time to get involved!
So yes, while I agree that mainstream local news is broadly failing both itself and the general population, it is not an irreversible or geographically independent condition. Or maybe I'm full of shit and the only reason Ithacans read local news is because once you're here long enough you never leave, so you have some skin in the game.