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Now, this being Salon - it frames the arguement as why Republican radicals have gone off the edge, but it is written so as to argues both sides have suffered from this trend.
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For example, the LA Times was a very liberal paper (before those horrible people from the Chicago Trib purchased it). But they still did non-liberal investigations of Democrats (Clinton, Carter etc). On the other hand, The Orange County Register, a Republican rag in the olden days, actually endorsed Clinton over Bush 41 because of Bush's economic policies.
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But outside of Politics (with a capital P), newspapers also helped to define community standards. The national television press doesn't do that at all. MSNBC and Fox News don't even bother to be non-partial (albeit they don't admit it). So the loudest national voices get the attention. Local and state governments only get press when they are truly radical, otherwise they are barely covered in a meaningful way.
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The article talks about the loss of local papers in the Midwest particularly, and the reduction in local and state coverage everywhere. It also talks about how the only newspaper readers remianing (or the great majority of them) are old people that have always read newspapers.
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It is an argument that makes sense to me (again - both ways, Conservative and Liberal). Online we gravitate towards those sites that echo our beliefs already. The local newspaper, when it was the major news source delivered to your door, facilitated a discussion. Even if you cursed at the stupid authors - you read, you digested and sometimes had to admit the other side had a point.
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Anyway, interesting thought.