LOCAL NEWS DESERTS: Has Facebook killed off local newspapers through its advertising algorithms? This seems to me to be the crux:

Facebook in particular was meant to be part of the solution to the problem of sustaining hyperlocal publishers. The publishing tools and hosting services Facebook offers for free are compelling. But in sparse or poorer areas, they do not allow for the traditional civic bargain of the local press, wherein the businesses and individuals who can afford to advertise, in effect pay for the journalism that covers a community.

When you get down to it the problem was summed up by Terry Pratchett quite nicely in The Truth:

People like to be told what they already know. Remember that. They get uncomfortable when you tell them new things. New things…well, new things aren’t what they expect. They like to know that, say, a dog will bite a man. That is what dogs do. They don’t want to know that man bites a dog, because the world is not supposed to happen like that. In short, what people think they want is news, but what they really crave is olds…Not news but olds, telling people that what they think they already know is true.

Social media tends to provide the “olds” quite readily. Without the olds, a “news” paper is very thin – and who is willing to pay for that, civic bargain or no?