Can Congress Rescue Newspapers?

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The woes of the newspaper industry are now front-page news. A shift in readership to free Internet sites and plummeting advertising revenue have forced venerable publications such as Denver's 150-year-old Rocky Mountain News and the 146-year-old Seattle Post-Intelligencer to close

[The Media Business]

Calling it a necessary pillar of democracy, a Senate subcommittee examined the state of American journalism Wednesday at a time when newspapers are being shuttered and downsized and network TV news audiences are declining.

"Newspapers and broadcasters have been a check on the excesses of government, business and individuals," said Sen. Jay Rockefeller, D-W.Va. "But what happens when our watchdog grows mute and can no longer bark? When newspapers slice their staff and slash their news operations? What happens is that we all suffer. ... The inevitable result is less reporting, less news, and less coverage of our communities and interests at home and abroad."

The woes of the newspaper industry are now front-page news. A shift in readership to free Internet sites and plummeting advertising revenue have forced venerable publications such as Denver's 150-year-old Rocky Mountain News and the 146-year-old Seattle Post-Intelligencer to close.

Surviving newspaper companies, including McClatchy Newspapers, are doing so through drastic budget cuts, downsizing, asset sales, layoffs, furloughs and salary and benefit cuts. During the past year, media companies have cut 41,000 jobs. Even so, some newspaper giants, such as Tribune, are in bankruptcy.

Now, members of Congress, who sometimes bristle at press coverage of them, are searching for ways to help buck up an industry that many Wall Street analysts think is well past its prime in the Internet age.

"Despite the 24/7 availability of news from print, broadcast and digital sources, there remains one clear fact: When it comes to original in-depth reporting that records and exposes actions, issues, and opportunities, nothing has replaced a newspaper," Sen. Benjamin Cardin, D-Md., told a Senate Commerce Communications subcommittee.

Cardin introduced a bill he calls the Newspaper Revitalization Act. It would allow newspapers to operate as educational nonprofit entities with a tax status similar to public broadcasters, churches and hospitals.

The papers' advertising and subscription revenue would be tax-exempt, and donations to the publications would be tax-deductible. The papers would lose a degree of independence under the bill: They'd no longer be able to endorse political candidates.

"It would not bring the end of the First Amendment and free speech," Cardin said. "Whether conservative, liberal, or middle-of-the-road, each newspaper would maintain its editorial voice and be able to clearly state its position on issues affecting their community — local and national."

Some newspaper executives question whether Cardin's idea is a cure. They also express unease about the perception of a potentially cozy a relationship between the press and the government, which the press is supposed to cover aggressively to fulfill its "watchdog" function as envisioned under the First Amendment, which guarantees a free press.

"The essential question is whether the current crisis in journalism has brought forward matters of public interest sufficient to warrant review and adjustment of those journalism-shaping policies that Congress already sees — and whether those reforms can be undertaken without reducing the distance between government and journalism," said Steve Coll, a former managing editor of The Washington Post.

Still, Coll said he viewed the nonprofit model as an interesting concept and suggested that Congress should reduce barriers in the tax code that could hinder such a shift.

James Moroney III, the publisher and chief executive of The Dallas Morning News, said that Congress can provide some relief to newspapers by passing legislation to extend the carryback period for net operating losses from two years to five years; give newspapers a limited antitrust exemption to "experiment with innovative content distribution and cost-saving arrangements"; and ensure that newspaper publishers have a mechanism to get reasonable compensation from Internet companies that reproduce or repackage their breaking news content for commercial gain.

"Newspapers also have been subject to intense and growing competition for consumers and advertising dollars from Internet companies," Moroney said. "... As a result, newspapers are in the midst of a secular shift that is posing a serious, long-term threat to the revenues that make their cost-intensive, public service-oriented journalism feasible."

Coll and Moroney questioned whether Internet sites could cover expensive news-gathering events such as wars and disasters over the long haul. Typically today, they do little original reporting and instead "link" to content produced by traditional news organizations, which they do not pay for using their content.

"Even the most optimistic practitioners of the new journalistic models tend to accept that a world in which Web-based publishers or aggregators could afford, for example, to simultaneously fund and operate professional journalism bureaus in Baghdad, Kabul, Islamabad, Europe and Asia is simply not foreseeable at present," Coll said.

Arianna Huffington, the co-founder and editor-in-chief of the Huffington Post, a liberal Web site, told the subcommittee that the newspaper industry has to shed the old paradigm and embrace the new Web world.

"But what won't work — what can't work — is to act like the last 15 years never happened, that we are still operating in the old content economy as opposed to the new link economy, and that the survival of the industry will be found by 'protecting' content behind walled gardens," she told the subcommittee. "No, the future is to be found elsewhere. It is a linked economy. It is search engines. It is online advertising. It is citizen journalism and foundation-supported investigative funds . ... And if you can't find your way to that, then you can't find your way."


(McClatchy-Tribune Information Services).


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