First they lost classified ads
And that took them from profitable to neutral. Then they lost readership, as people who subscribed more for "news" in general than local news could get that news from other sources.
I used to skim through a couple local papers when I was living with my parents, when I grew up and moved out on my own I didn't think it was worth it for something I only spent about 20-30 minutes a day looking at. I watched network news, CNN and later the internet, and didn't really miss local news, though now I have an app from the local paper I spend about a couple minutes a day looking at to see if anything is happening in my city/state I should care about.
I wouldn't put all the blame on Google, but they certainly haven't helped.