What's wrong with this picture:
Mainstream media lays off reporters (and others) left and right, because New Media appeals to a large segment of news consumers.
New Media realizes local news draws more audience, so numerous hyper-local approaches are tried. Most national attempts fail, because they don't have reporters.
AOL's wholly-owned subsidiary, Patch, thinks it can fill the local gap by hiring local journalists who generally are good at aggregating (see story on London lecture by former Washington Post Executive Editor Len Downie on news aggregators, such as the Huffington Post who he says are “parasites living off journalism produced by others”.)
Now the Patch Media Corporation has gone one step further, developing a concept called PatchU, whereby it will collaborate with journalism schools to provide students with internships that will accrue course credits.