Local TV continues to be the dominant source of news, but a changing audience will likely require those stations to get creative with the content they produce and how they deliver it to remain the go-to outlet.

That is according to a new Knight Foundation report, Local TV News and the New Media Landscape.

The report found that local TV news was profitable--it is traditionally a station's top revenue generator--and "benefit from growing staffs and large audiences." It also found stations are going over the top with digital-only newscasts or online storytelling that extends the reach of their reporting.

So far, so great. But the report also predicted a challenging future given the elusiveness of the online revenues from that digital innovating, the decreasing news appetite of younger demos.

The report was based on survey date from hundreds of "local TV news leaders."

Among its top takeaways:

"State of the industry: Local TV news enjoys healthy revenues, and is a profit center for many stations thanks in part to political ad buys that increased in the wake of the Citizens United case."

But stations are challenged by audiences that increasingly seek out information online, and the fact that younger audiences consumer less news. And the number of newsrooms may shrink, as changes to regulations lead to more consolidation among local stations. [That is currently a hot-button issue in Washington given Sinclair's proposed merger with Tribune].

"Social media and innovation: While news broadcasts look much like they did 30 years ago, innovation is happening online - with 24-hour newsrooms producing reports for social media and over-the-top (OTT) platforms. A majority (63 percent) of local commercial stations are focused on strategies to find and reach younger audiences. Those efforts have most often involved social media platforms and mobile apps.

"Future of local news video: Linear TV, or local broadcast from a TV set and viewed in real time, is still an important medium, but may not be so in the coming decades. As a result, stations will increasingly shift to new ways to distribute their video, and look for the revenue models that will support it.

"Future of local TV news: In order to continue to engage audiences, TV news needs to move away from the crashes and crime stories that dominate their coverage to offer more value for viewers, by producing more enterprise and investigative pieces that are critical to people’s everyday lives.

The foundation is doing more than just talking about innovation. Last month, it announced it was handing out $2.6 million grants to five groups to help them promote innovation and excellence in local TV newsrooms.