Which really should be no great surprise. In addition to the long-term effects of media fragmentation combined with the short-term (we all hope) effects of the recession, which are clobbering the national media, local media are faced with the loss of much of their trade promotion spending as retailers and suppliers shift to in-store ads and promotion. A huge proportion of local media advertising has always been paid for with trade spending.
So the effect is that we see this:
The reality is worse, since this represents measured media, and does not include the money taken out of the media by stores. I suspect that if the chart did so, the "in-store" line would be rising almost as fast as the line for the internet. (Another note is that in one sense, the graph overstates the decline of newspapers, since much of the local internet spending is on newspaper websites).
But when you see a decline in market share from 35% to 20%, with no sign of slowing, you have to ask how much longer can things go on without a recognition that major changes must be made in the business model.