CQ TODAY PRINT EDITION
March 24, 2009 – 8:46 p.m.
Lifelines Sought for Flagging Newspaper Industry
By Bennett Roth, CQ Staff
Alarmed by the daily drumbeat of stories about the demise of newspapers in their hometowns, some members of Congress are proposing ways to help, from allowing media organizations to form as nonprofits to easing antitrust laws.
But the proposals have met with skepticism from some newspaper analysts who worry about the media’s ability to maintain its autonomy.
“Anytime you give the newspaper industry a break,” said John Morton, a Maryland-based newspaper analyst, “it raises the question about the independence of the press.”
Still, some lawmakers say they need to step in because the situation has become so dire, and they are being pressed by groups in their districts to do something to save local papers, which have been hit hard by a steep drop in advertising revenue, circulation losses and migration of readers to the Internet.
“We’re losing our local papers and it’s tragic. We need to look at a different model to save local newspapers,” said Sen. Benjamin L. Cardin , D-Md.
Cardin introduced a bill Tuesday that would permit newspapers to operate as nonprofits, or 501(c)3 corporations, much as public broadcasting now does.
Under this arrangement, advertising and subscription revenue would be tax-exempt, and contributions to support coverage or operations could be tax-deductible.
Such a structure would require at least one significant change for most newspapers: They would not be allowed to make political endorsements, a staple of many editorial pages.
Cardin cited the plight of a number of newspapers — including The Baltimore Sun, whose parent company, The Tribune Co., recently filed for bankruptcy — as justification for the need for Congress to step in and give newspapers the nonprofit option. The senator said he had been approached by various groups interested in the arrangement but declined to say who they were.
Ted Venetoulis, part of a group that has been interested in buying The Sun, told a local radio station that his group of investors would look at the possibility of operating the newspaper as a nonprofit, The Sun reported on its Web site Tuesday.
Congressional Quarterly is a unit of the Times Publishing Co., which operates the St. Petersburg Times and is owned by the Poynter Institute for Media Studies, a nonprofit educational institution. Times Publishing Co. recently announced that it is selling CQ, in part because of financial woes at the Florida newspaper.
Antitrust Considerations
Cardin’s action comes on the heels of a request by House Speaker Nancy Pelosi , D-Calif, to Attorney General Eric H. Holder Jr. to consider threats to the newspaper industry when applying antitrust laws in any assessment of proposed mergers of newspapers in the San Francisco area, home to Pelosi’s district.
The owner of the San Francisco Chronicle, the Hearst Corp., has been threatening to close the paper if it cannot reduce costs. Holder recently said he was open to the idea of reevaluating the antitrust laws to keep newspapers from dying.
“I think it is important for this nation to maintain a healthy newspaper industry,” he said. “So, to the extent that we have to look at our enforcement policies and conform them to the reality that that industry faces, you know, that’s something that I’m going to be willing to do.”
The issue of whether antitrust laws should be loosened also will be the subject of a hearing by the House Judiciary Subcommittee on Courts and Competition Policy.
The subcommittee’s chairman, Rep. Hank Johnson , D-Ga., said he had not decided whether the government should step in and help newspapers by changing laws meant to stimulate competition.
“My initial instinct is we should support and promote competition,” Johnson said. “Most people understand [the newspaper] is a dying breed. Whether or not we should do anything to keep it from dying is really the question.” He said the hearing will be held before Congress leaves for the spring recess and will include panelists from the West Coast.
Rep. Jason Chaffetz , R-Utah, who also sits on the Judiciary subcommittee, said he was worried about Congress protecting newspapers from competition. He also said he would oppose any taxpayer bailout of newspapers, something that has been raised by a few lawmakers in light of the government bailout of the banking and auto industries. There is little appetite on Capitol Hill, however, for directly bailing out newspapers.
However, Chaffetz said he might be open to allowing newspapers to form nonprofits. And he joked that a side benefit would be the ban on political endorsements. “I’m all for that. Hallelujah!” he said. “That’s something I could live with.”
Nonprofit status, however, could bring headaches for news organizations, particularly if federal officials or others start questioning whether reporting was ideologically slanted, much as has occurred in the past with the Public Broadcasting Service, said Amy Mitchell, deputy director of the Pew Research Center’s Project for Excellence in Journalism.
Mitchell said questions would also be raised about the political leanings of donors to such nonprofit newspaper groups.
While Mitchell said that all options should be examined, she said there is not enough money in the nonprofit sector to sustain newspapers as they operate now.
Congress has stepped in before to try and save newspapers: The Newspaper Preservation Act of 1970, signed by President Nixon, allowed newspapers in the same market to enter into joint operating agreements.
While these agreements may have extended the life of some newspapers for awhile, Morton said, they have not saved all of these papers in the long run.
One example is the Seattle Post-Intelligencer, which was in a joint operating agreement with the Seattle Times. This month the Seattle Post-Intelligencer’s owner, the Hearst Corp., shut down the print edition of the newspaper and now only publishes an on-line version.
Sen. Patty Murray , D-Wash., recently made a speech on the Senate floor decrying the loss of the Post-Intelligencer, where her brother worked as a sportswriter.
“At the end of the day, newspapers aren’t just another business,” she said. “And if more close and there’s nothing left to replace them, our democracy will be weaker as a result.”
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