OK, I did a quick read. It's actually pretty good. The reasoning could be made more precise.
First, the argument readily assumes that The Mercury’s circulation declined by 10000 readers due to the price of The Bugle over a span of five years.
Revise English, particularly "due to the price... over a span..."
What does "over a span of five years" modify? The price?
There is no evidence provided to show that this decline was not a sudden one. For instance, it may be the case that...
may have been the case?
Hence, reducing the price of newspaper is not going to help in increasing the circulation figures until it makes up for the loss in the distribution network.
Why? It may still help.
Clearly, the lack of good content in the newspaper is not going to help in increasing the circulation and enticing businesses to invest in ad space.
First of all, how do you know that Mercury lacks good content? Secondly, there are plenty of journals and newspapers that lack good content, but are very popular and successfully sell ad space. How about the Playboy?
Again, one cannot deny that competitive pricing of newspapers lures businesses to invest in ad space in any paper. The argument does not provide us any evidence to support the claim that increased circulation is the only criteria that makes business invest in ad space.
Of course, it is not the only criterion. So what?
While business may definitely consider investing in ad space based on the circulation figures, it may also consider the brand loyalty and goodwill of the newspaper. In fact, one of the major factors that can influence the decision to invest is also the pricing that the newspaper offers for the ad space.
Yes. How is this relevant, though?
It is not clear whether The Mercury offers competitive rates for advertising and hence, we cannot be certain that the increase in circulation is directly going to result in an increase in investment by businesses.
What if it does offer competitive rates? Can we then be certain that the increase in circulation will attract more business?
Without full knowledge of all the contributing factors it is hard to conclude the reasons for reduced circulation numbers.
We are not really interested in the reason for reduced circulation numbers as much as in deciding what to do.
Hence, the argument is weak and flawed.
How would you improve it?
Sergey Orshanskiy, Ph.D.
I tutor in NYC: http://www.wyzant.com/Tutors/NY/New-York/7948121/#ref=1RKFOZ