It's a vicious circle; the Star (or whatever paper and incident one wants to use as an example) doesn't report on this, which feeds the impression that it isn't worth my money to subscribe, which drops its readership (or rather keeps it low), which makes it more dependent on keeping its remaining readers and most especially its advertisers happy, which reinforces my feeling that the Star is not relevant enough to be worth my money.

It's hardly the only factor contributing to the problem, but it is a factor. And it's also worth spreading this information so that people who are subscribers hear about it, 'cause I bet some of them would be upset, too. My understanding is that the subscriber/non-subscriber divide runs more along age lines than any other factor like political orientation or race: they've failed signally to recruit a new generation of readers.

(I hear you about them being helpless; several of the online sources I read are actually maintained by people whose day jobs involve working for newspapers, which is where I get my understanding about the pervasive problems they face.)

There's only one thing I'd argue with:

It could lose sponsors publishing an even slightly inaccurate or biased story for any variety of reasons.

Inaccurate and biased stories happen all the time. The thing that will lose them sponsors is being inaccurate and biased in a way that offends the sponsors -- which is why depending so heavily on, say, advertising dollars from churches can really limit them. If their revenue base was broader and more diverse, offending any one group wouldn't hurt them as badly. But I say that "if" in the recognition that they're hardly doing this on purpose; they'd love to have a broader and more diverse base, if only they could manage it.