Indeed, conflating local news with local newspapers is a mistake. They were able to support news gathering by monopolizing print advertising. They were also overly dependent on the municipal government and police for access, and were therefore often timid on certain subjects.
I very deliberately did not say that local news is now better, just back in the day when it was supported by an ad monopoly, it still had big problems. There was a lot of access journalism dependent on staying on the good side of the police, and on not annoying the car dealers running full page ads, for example.
Citizen journalism has issues, too. Many of them are resource issues, so supporting things like a cap on fees and short deadlines on FOIA requests, would help a lot.