Well, if people were willing to pay $50 a copy for their local newspaper, then things might be different. We would be providing content directly to the readers, and that would be the service we provide. But people often aren't willing to pay $50. But it costs a lot more than 50¢ to put together a paper when you take into account the cost of the paper, ink, payroll, electricity, Associated Press subscription fees, and so forth. That's where advertisers come into play. If you've ever tried to buy a half-page ad in the paper, you know what kind of money that takes. It's advertisers that make the checks not bounce. They provide a lot more money than the readers, and because of that, the service papers provide isn't news to readers; it's readers to advertisers. The more people that read the paper, the more people see the ad, and the more money the advertisers are willing to part with. Bloody, sensationalistic stories generate more interest from the public, which is why the saying came about that, "if it bleeds it leads." I've used newspapers as an example, but it's the same principle for TV news as well, although in that case they get no money from viewers and therefore every dime they get is from advertisers.
It's interesting how much people complain about bad news going first, and yet how much they tune in.
Of course, the alternative to corporate-financed media is government-financed media. Instead of having an advertiser threatening to pull an ad if the news agency says somethign bad about the company, resulting in the loss of a chunk of revenue, the government can threaten to shut down the paper altogether if it says something the government doesn't like.