A case study in nonprofit news sustainability: One of the more prominent of the wave of nonprofit news startups to launch over the past several years is effectively shutting down. As the Chicago Reader first reported, the Chicago News Cooperative will stop maintaining its website and producing content for The New York Times this weekend. By far the best account of the situation is in this Storify by Free Press’ Josh Stearns, but I’ll provide a short version here for those not interested in the gory details.

As the Reader reported, CNC is shutting down because it couldn’t get a grant it had expected from the MacArthur Foundation, its largest funder. CNC had applied to be classified as a 501(c)(3) nonprofit, but it was awaiting IRS approval on whether news orgs could be classified as such, and MacArthur essentially ran out of time waiting for the IRS to make a decision. CNC also asked the Times, which has run its stories since the organization’s founding in 2009, to pay more for the service, but the Times wouldn’t do that. The group’s CEO, James O’Shea, said it’ll cease operations as it tries to find an alternative funding option.

Geoff Dougherty, who founded another short-lived Chicago nonprofit news outfit in the Chi-Town Daily News, didn’t buy the MacArthur explanation and accused the foundation of playing city hall politics (something both O’Shea and MacArthur denied to Romenesko). Chicago, Dougherty said, just isn’t committing to funding quality journalism in the way that other cities with successful nonprofit news orgs are. The Columbia Journalism Review’s Ryan Chittum, meanwhile, urged the IRS to finally give news orgs some clarity on their 501(c)(3) eligibility.

Others said the problem lay more with CNC itself. Time Out Chicago’s Robert Feder said he never bought into CNC’s vague business plan,  declaring that “no matter how noble the effort nor how worthy the product, journalism can’t succeed as a charity case.” Dan Sinker of the Knight-Mozilla News Technology Partnership detailed CNC’s lackluster online efforts, concluding that the organization’s decision to treat the web as an afterthought was what brought it down.

J-prof Jeff Jarvis chastised journalists for not knowing more about the business side of their field, citing CNC as “evidence that the siren call of not-for-profit journalism seduces news organizations away from sustainability, survival, and success.” In contrast, Jarvis held up a speech last week by Digital First CEO John Paton of the Journal Register Co. and MediaNews Group, who said that “crappy newspaper executives” are a greater threat to the business than any technological change.

Philadelphia journalism and political influence: After reports over the past couple of weeks that the Philadelphia Media Network — which owns the Philadelphia Inquirer and Daily News — had spiked stories in both papers about the company’s impending sale, the papers’ journalists released a statement condemning the interference late last week. This week, former Philly mayor and Pennsylvania Governor Ed Rendell said he’d consider putting up a firewall between ownership and the newsrooms if his investing group bought the company.

There was speculation all week about how likely ownership by the Rendell group would be: After a report over the weekend by Naked Philadelphian that Rendell wouldn’t be buying the papers, Rendell responded that the bid was still on and countered the critics who questioned such a powerful political figure owning the papers. At the Lab, Danish j-prof Rasmus Kleis Nielsen posited that Rendell’s potential ownership might represent a model for the future of media: Political interests running struggling news orgs not as profitable enterprises, but as political instruments. “This is not a situation in which journalism is simply on a diet and being supplemented by various new ventures. It is a scenario where it is more directly intertwined with outside political and business interests than it has been for years,” he wrote.

That didn’t sound like such a terrible idea to Reuters’ Jack Shafer, who noted that it’s served our country’s press for the better part of its history. Daily News blogger Will Bunch urged the next owners not to go that route, but to listen to and partner with the people in running the papers. He also said the new owners need a lot more than a sense of civic duty — like, an actual plan — to keep the papers viable and made a strong case for keeping the Daily News alive. Poynter’s Rick Edmonds explained why the Daily News has survived so long, but also why it may not last much longer.

Elsewhere in the Philly journalism ecosystem, Neil Budde, a veteran of Yahoo News, the Wall Street Journal, and the DailyMe, was named CEO of the new Philadelphia Public Interest Information Network, a nonprofit journalism initiative based at Temple.

News Corp. taking back Sunday: Rupert Murdoch is making a major bid this week to show the world that News Corp. is down but not out, launching the Sun on Sunday, a new weekly edition of its weekday tabloid. The move fills the void left by last summer’s closing of the Sunday tabloid News of the World — and was widely expected back then. Murdoch also lifted the suspensions of the paper’s recently arrested journalists, though he did say in his email to staff that he’s obligated to keep turning over all potential phone hacking evidence to police (which, as the Guardian pointed out, wasn’t true).

In two Guardian pieces, British j-prof Roy Greenslade praised Murdoch for preventing a mutiny at the Sun and for showing the “strength of buccaneers running papers rather than corporations,” while Forbes’ Jeff Bercovici cited analysts who said Murdoch waited too long to replace News of the World. Then, early this week, a mysterious Twitter account purportedly belonging to an ex-NOTW journalist reported on staff unhappiness and reluctant advertisers for the Sun on Sunday, which produces its first issue this Sunday. Murdoch assured the world via Twitter that everything was fine.

Reading roundup: It was pretty quiet overall this week, but there were a few smaller conversations worth keeping an eyeing on:

— For the second week in a row, we’re mourning the death of beloved journalists in Syria. Marie Colvin, an American working for the Sunday Times of London, and French photographer Rémi Ochlik were killed Wednesday in an attack that’s believed to be deliberate.

After the killings, Syria asked foreign journalists to report to the government, wounded journalists pleaded to leave the country, Britain summoned its Syrian ambassador in protest, and friends wrote remembrances of the journalists’ courage and devotion.

— Forbes’ Jeff Bercovici reported that Gannett, the U.S.’ largest newspaper chain, announced plans to implement paywalls (the in-vogue metered model) at all of its 80 papers except its largest, USA Today. PaidContent’s Jeff Roberts evaluated the plan’s chances of success.

— The “original reporting vs. aggregation” debate went another round this week when blogger/entrepreneur Nick O’Neill wrote about how a Forbes writer quickly re-wrote a New York Times feature and got a truckload of traffic out of it. Jim Romenesko got responses from everyone involved, and the Times reporter said he wasn’t worried about his work being aggregated, but that “every hour spent summarizing is an hour not spent reporting.” GigaOM’s Mathew Ingram said both reporting and aggregation have real value for readers.

— Per the tech blogging debate of the last couple of weeks, The Los Angeles Times asked whether tech bloggers’ lack of objectivity is undermining their credibility. It led to a fascinating Twitter discussion about transparency, objectivity, and credibility, which Josh Stearns helpfully Storified.

— The Atlantic reposted a manifesto for young people who have grown up on the Internet by a Polish writer named Piotr Czerski. It’s a well-written glimpse at the values cultivated by a life shaped by the web.