I was surprised by this answer. But I think the answer depends in large part on whether you approach the question from the supply side or the demand side.
If you were to poll 43 fanatical consumers of media and ask them whether journalism has been helped or hurt by the rise of the Internet, they would almost certainly give the opposite answer: it's been helped. The buffet of options -- and the ability to tailor the available options to your whims -- has been vastly expanded. Journalism is the information business, and it's far easier to consume information today than it was 10 or 20 years ago. That will remain true even in the most apocalyptic of the media doomsday/meltdown/chaos/implosion scenarios.
On the other hand, the experience is a horrendous one for the suppliers of print products. First, they are competing with a greater number organizations within the industry. It was plausible to have 100 newspapers review the same film when they all had a regional monopoly and a readership that was more-or-less fixed. But that regional readership now has access to every review in the country. Great for consumers. Terrible for 95 out of each one hundred reviewers.
Second, suppliers are competing for the first time with organizations outside of the industry. Regional monopolies meant little or no competition for advertising revenue. Now there is more competition for advertising revenue with places like Craiglist. Lots of outlets are losing the competition.
But there is little reason to think an increase in competition will leave consumers of information less satisfied. (As Michael Calderone points out, the number of readers heading online suggests otherwise.) Indeed, the results of the poll itself were a little ironic in this regard. 65% of the poll respondents were unhappy with the affect the Internet is having on journalism. But 71% were satisified with how the press is covering Obama. There are still lots of satisfied customers.
(I think this holds true even if you believe, as I do, that the changes in the American journalism industry coule impose a cost on American democracy. I see that more as an argument about whether it's better to be Socrates dissatisfied than a pig satisfied, and less as an argument about the satisfaction of consumers, broadly construed.)