I actually think their problems are much more profound than their ideological bias. The fact of the matter is the internet has killed traditional media, it's as simple as that. And, their problems have become increasingly exacerbated with these next-generation phones deliver content to the end user in ways never imagined just 15 years ago.
Young people don't watch television news, and don't read newspapers. But, they do surf the net, mostly on their laptops and increasingly on their phones. Until such a time that these content owners can figure out a successful revenue model for their virtual content, they're going to continue to suffer as their "paying" audiences dies off.
It is not simply the Internet but also the content of their broadcasts. If they had great content that the public wanted their ratings wouldn’t be nearly in the bucket as we are seeing now. Why do people choose Faux News over ABC, NBC, PMSNBC, or CBiaS?
... not to mention sites like Craig’s List have hollowed out the formerly lucrative classified section in most papers.
While I do not in anyway disagree with your premise, it does not and cannot explain the success of FOX.
The simple truth, is people will listen to what they want to hear. Where it comes from is irrelevant.
When i go through an airport, I rarely see any teenagers or twenty-somethings reading a newspaper--they are either talking or texting on a cell phone, using a laptop or playing with a game boy or other electronic toy.