USENET is definitely not dead. I wrote a search engine and aggregator for multipart articles posted to USENET binary groups over the course of a year and a half at the largest providor of USENET services in the world -- just a couple years ago. The data rates of incoming articles was just staggering...and growing by the day.
One of the members of my development team on the USENET binary search engine project had been a principal at UUNET, so I do have a pretty good idea what happened to that outfit, organisationally. The details are unimportant. I do not think that the closing of a service that's undergone multiple acquisitions by actual competitors is at all surprising. Did the closing of Alta Vista a couple years ago after its acquisition by Yahoo! spell the death of internet search? No.