That said, I suspect there's more chance of local newspapers surviving in the UK than the US, if only because we tend to like tradition more over here and because local papers in many UK towns are well... locally owned. For instance, the main one in my town is (as far as I can tell) run by the community, written by regular people there and funded by ads almost entirely placed by local businesses. So there's less chance of a bean counter closing it down because the company's bottom line is at risk.
Overall though, they're also not doing so hot overall.