Yes, I think it can be. I feel the reason no one has yet been successful is that the cost to do so is likely very high, even using local volunteers. Many people try to solve local news, local events type problems. Even Google and Yahoo want to solve this as it really is something that can drive user engagement.
The problem is it takes significant man hours to make local news, events relevant daily. If you just look at your local news, cut out all the sensationalizing around each crime/victim, the news boils down to about 6-10 minutes of real news, 3-5 of which is your local weather, the other few minutes is usually something the local station is doing in the community or highlighting, like a local teacher etc. They repeat the same news cycle about every ~6 hours, usually 6am, noon, 6pm and 11pm. I believe they use this formula in part because the can centralize research and collection of news stories around the local police, jail and city/county daily publishings, and then hammer it home for a 24 hr cycle. The formula works too because a lot of people will watch that type of content and they are hitting different demographics with each time slot.
So IMO to properly solve this problem, it would take significant local presence to collect, and organize the happenings around the city/area, assuming you wanted to differentiate some from local news. Then you have to get it published in some meaningful way where people can search it, use it and receive value so they will return again. This takes significant production in a short window.
Also, as I think a lot of sites/people have found out, the build it and they will come just doesn't work. Volunteers just won't start adding their content to a site because it exists, there has to already be a following or there is no benefit. Same for companies willing to sponsor a persons time to do this, if there is no audience to sell to, why would they dedicate the dollars to do it. So it is up to a central group/company to create the local following first then it can expand with the aid of others, but initially it would require significant labor, time and money. Multiply this by the number of local areas and you start to see that while doable it is definitely a large problem to tackle.