If the newspaper goes belly-up, tough. I DO NOT WANT MY TAX DOLLARS FUNDING A .... "FREE" PRESS!
It wouldn't be free press though. It would be, as noted, beholden to the government rules regarding things like local reporting.
It's one of those tragedy of the commons issues. "Everybody" benefits from the local reporting, too many want it for free.
I will note that Clear Channel owning "most" radio stations has caused issues when there are local disasters, like when there was a big chemical spill in Minot, ND. It was big locally, not nationally, and the emergency services people couldn't get through to somebody to do some local emergency reporting, like where to stay the hell away from, in reasonable time. It cost some additional injuries.