Warren has a great post (and links) about the downfall of Canadian media over at his blog. He points to an article by John Honderich which talks about the quality of discourse and the challenges to democracy.
I would go a step further and add that the concentration of media in a few hands is fundamentally undemocratic. Smaller cities in "newer Canada" - the West in particular - suffer from a form of groupthink related to limited media diversity. The major dailies are owned by CanWest Global. The TV programming that most watch (US sit-coms and action shows/drama) is piped in via the Canadian versions of Fox (Global, etc.). The slant is distinctly conservative (small c).
While funding is an issue for papers, it is the almighty dollar pursuit which is killing journalism. The bottom line is more important that good journalism (or journalism at all, judging by the number of "info-torials" in papers these days). Few journalists are free to "investigate" anything that goes against the "general frame of thought" of their editors.
Freedom of the press is fleeting in this country, and is a sick beast about to be put down by an ignorant public.