There's a pushback meme going around right now that argues the contrary:
The dominant institutions of the press...actually work to keep reality from us, whether it's the truth of money in politics, the social costs of 'free trade,' growing inequality, the resegregation of our public schools, or the devastating onward march of environmental deregulation.
[Bill Moyers quoted by Jack Shafer at Slate]
Or, at least, that they're not as essential as we think they are.
I don't have a particularly strong opinion about newspapers' function as the fabled Fourth Estate, though I do generally feel that in all aspects they are probably less important than we think they are, and that institutionalized investigative journalism is less important for any ability to puncture the powerful than it is for simply collecting information we mightn't get otherwise--the Baghdad Bureau function is hard to fulfill with volunteerist citizen journalism, for example. That is, I don't think that information is as powerful as we like to think it is.
The reason I think it's not super-important for democracy is related to some concepts that came up in Lisa Wedeen's class last quarter. We tend to assume that the way democracy developed in W. Europe, alongside the emergence of the nation-state, is the only way. Newspapers have been fairly convincingly linked to nation-building by Benedict Anderson in his classic work Imagined Communities (though I'd love to see some statistical research on that similar to Collier's and Fearon's work on civil conflict onset); whether they, or some analog, are necessary is not obvious to me. However, democratic practice need not coincide with liberal values; see Wedeen's book Peripheral Visions for examples of their decoupling in Yemen, for example. Democracy does not necessarily require a strong bourgeois middle class, intense property values, a Fourth Estate, humanist notions of the equal value of every human being, etc. Not all democracy is liberal, and not every democracy is European-style. To me, this is the strongest theoretical argument for why newspapers are not so essential as we think they are. For a more pragmatic argument, Shafer's piece also makes some good points:
Even an excellent newspaper carries only a few articles each day that could honestly be said to nurture the democratic way. [...]
On those occasions that newspapers do produce the sort of work that the worshippers of democracy crave, only rarely does the population flex its democratic might. How else to explain the ongoing political corruption in Illinois, which its press has covered admirably? Maybe an academic at Champaign-Urbana can prove that newspaper investigations of political corruption "damage" democracy by increasing the public's cynicism. Or that stellar newspaper coverage that increases participation in the political process stymies democracy by recruiting too many knuckleheads. Or that bad (but well-meaning) journalism—of which there is too much—cripples the democratic impulse.
The insistence on coupling newspapering to democracy irritates me not just because it overstates the quality and urgency of most of the work done by newspapers but because it inflates the capacity of newspapers to make us better citizens, wiser voters, and more enlightened taxpayers.