Once again, several here head for the Rush Limbaugh/Randi Rhodes school of hyperbole...
McDonalds isn't the ONLY successful restaurant in town. In fact, it's not the MOST successful restaurant in town. Why? Different folks have different tastes at different times. You go to McDonalds when you want a quick burger, not a great steak. Sometimes you'll settle for hamburger. Sometimes you want steak.
There is a market for straight, no frills news. There is also a market for the mixture of news, public affairs, and public interest, and infotainment delivered by the major network newscasts. And yes, there is a market for pure infotainment offered by ET and shows of that ilk.
What's the highest rated of the bunch? Network news. Why? Because it presents the most relatable composite of all the other forms. Network news also spends considerable money to create content and present it in a slick, palatable fashion. The American public responds to an aggregator that can separate the important and interesting from the unimportant, and who can figure out how to relate complex concepts and issues in a manner understandable to those who AREN'T policy wonks or political insiders, but have an IQ that exceeds room temperature.
What's happening here is a seismic shift in the delivery of that content. Much of the content was derived from daily newspapers, which are in serious economic danger. Part of that is the cost of production. Part of the problem is the same demon lashing radio - corporate consolidators who bought properties at inflated prices, and who are unable to support their debt structure in a shrinking marketplace.
I don't believe that the public will condone a government subsidy for journalism. What will happen is that the delivery system will right itself. Large presses, antiquated delivery of ink and paper, along with the attendent personnel expenses of production and distribution are where the costs will be cut. You want a paper? Fire up your printer.
The hard question is how to pay for the rest of the expenses - writers, reporters, editors, and the people who produce the content. Once it hits the web, we have a generation who feels no compunction about plagiarizing another's work for their own purposes. That's not much different from radio & TV stations who rip, rewrite, and read the local paper and call it a newscast, or producers who scour the daily paper for talk show fodder. So, it's not a new problem.
What is a new problem is getting people to pay for that content. On-line ads ain't gonna get the job done for some of the premium content providers, and subscriptions are anathema to the current generation of web users. My guess? Somebody's going to start charging access providers who want to connect to their website. Access providers will simply add those access charges to their monthly service bill. Cable TV has already created the model. You'll pay a extra for "enhanced services" - higher speeds, access to a "premium tier" of "channels". The guys who command a premium will be the companies that serve multiple platforms - text, audio, and video - and created audience demand.
The bottom line for broadcasters is that they'd better be prepared to produce content that's not available elsewhere, or to aggregate and deliver the right mix of content in a slick, palatable fashion. It's going to be damn hard to compete with national talents who do that very well. So, what's the alternative? Find those local people who do it very well, and deliver locally-focussed content targeted to a local audience. They'll be able to get the national content by other means anyway. If you don't have something unique to offer, you're going to be in trouble.