No demand or is it a lack of supply?
It’s vastly “easier” to network everything, and cheaper as you don’t have to pay local journo’s, on-air staff, copywriters, sales reps etc. Think back to the early 90’s when places like Ashburton (3ZE) had one full time station, manned from 6am to 6pm with all the roles listed above to now, where the descendant of that station today has one morning show mon-fri and a touch of weekend sports.
In that same time period they’ve had one community paper consolidate (a Fairfar one, so no surprises there), the local daily and the (Allied-Press owned) community paper both continue on.
Not that every market is the same as Ashburton (which has competition from Christchurch for both Newspaper and Radio), but you’ve got to ask, when it comes to networking radio is that really to do with lack of demand for local content/stories/updates?