Mashable has a fairly long report looking at the problems newspapers are having now. A rebound in advertising purchases that increased spending on the Internet, TV, and radio bypassed newspapers and magazines, whose ad revenues still fell.
As a result, newspapers have been losing money, and hence losing employees.
The problem lies not in a stubbornness to evolve and recognize value in digital media, but a lack of resources. As a result of cutting, newspapers now have fewer resources to take advantage of new opportunities, such as that of mobile distribution on smartphones and their content walled-off from the web, and some are concluding that the best application on the iPad is the browser itself.
As the resources fade, it may be that papers are going to do a lot more curation—gathering news from other sources like blogs do. They are going to have to find new ideas and innovate if they want to stay around.