I.e. your local paper may cater to a part of the community whose perspective you don't share, or they may be self-congratulatory snobs, or they may otherwise aggravate local polarization.
In other words, access to local news may help some people realize how little they connection feel towards their neighbors.
It cannot possibly be worse than localized social media like Nextdoor.
Local papers are usually both barely profitable and locally funded. Local businesses, similarly, are usually scraping by. A local paper that alienates a significant fraction of the community doesn't usually survive. Local reporting is usually straightforward and factual, therefore.
That's the other reason local reporting is important, because it can't afford biases. It's where journalists learn to be impartial.