the Future of Journalism Chapter 6 of 10: Future of Government Subsidy By Gerry Storch

Posted on January 19, 2012


Chapter 6

Government bailout, poof … foundation money, maybe 

government bailout for newspapers

— The ProPublica Solution

— Dealing with the NPR/PBS Factor

— Help for the Business Side of Papers?


When federal government bailouts took shape in 2009, wishful thinking floated up and down the Internet for newspapers and other publications to get in on the action.

That didn’t happen, as there was little enthusiasm for it either inside the industry or outside.

“It’s a terrible idea,” OurBlook was told by Dr. Douglas Perret Starr, a professor of agricultural journalism at Texas A&M. “If government bails out newspapers, even with a blank check, government will control not only newspapers, but also every other news outlet — radio, television, World Wide Web, and whatever else the mind of man can invent.”

“Government should not control media,” says Mickey Alam Khan, editor in chief of Mobile Marketer, a trade publication in New York. “That’s what happens in Russia and Venezuela and other tinpot dictatorships. Newspapers will have to figure out their own business model. If they take government dollars, they will surrender the right to speak freely and without fear.”

In fact, there might have been problems even in reporting the terms of a bailout, as the papers themselves might have wanted to keep their financial information private and confidential. Talk about tying yourself in a knot …

“If the federal government opted to include loans to the media in a bailout plan, the issue of prior restraint could become problematic,” says Cailin Brown, Ph.D., assistant professor in the Department of Communications, The College of Saint Rose, Albany, N.Y. “How would the industry report about the deals? Would all of the information get included, would some get left out because of the proprietary nature of the industry?”

But the idea of a “foundation press” in the wake of widespread media cutbacks did gain a bit of a foothold, especially with the establishment of the ProPublica investigative reporting venture. It’s bankrolled primarily by San Francisco Bay Area billionaires Herbert and Marion Sandler. It has a staff of about 40, is headed by former Wall Street Journal managing editor Paul Steiger and does not only its own reports but also works jointly with newspapers.

Another example … a lot smaller one … is It’s a state government news bureau in Oklahoma City funded by the Oklahoma Council of Public Affairs..

“In the mid-1990s, nearly 1,000 reporters covered state capitols across the 50 states,” says CapitolBeatOK editor Pat McGuigan, who formerly ran the editorial page for the Oklahoman newspaper. “Today, capitol press corps numbers have shrunk to around 300 in all. In Oklahoma, falling advertising revenue and paid subscriptions have led publishers of many newspapers to reduce staff, causing cutbacks in both statehouse and investigative reporting.”

To fill the gap, the Oklahoma council “contracted with me to do journalistic research … to provide incisive news reporting from 23rd & Lincoln on areas of broad public interest.”

All this comes amidst concern about whether we as a nation and our concept of democracy would suffer if newspapers were to go out of business and disappear.


Public and/or Private:

So to help save them, we seem to have a public vs. private debate. But it’s a lot more complicated than that, and tough to figure. The fact is, the U.S. taxpayers have been bailing out two of the electronic media for years. They get federal dollars and lots of them … about $400 million worth a year, in fact.

“We have National Public Radio and the Public Broadcasting System as examples of direct government support, in tax money, for journalism,” says Prof. Charlotte Grimes, who holds the Knight Chair in Political Reporting at the Newhouse School, Syracuse University. “I’m not wild about how vulnerable that makes them to government pressure.”

Both NPR and PBS indeed have their legions of devoted fans and have earned a reputation for erudite, high-quality fare. While mistrusted or criticized by some conservatives for their news/political programming, it’s fair to say in the end that NPR and PBS enjoy substantial public support. To their credit, they work hard to gain other income from advertising and those ceaseless but apparently effective fundraising pledge drives.

So how could our society say yes to government funding of NPR/PBS and no to newspapers?

Well, for one thing, to a certain extent they are different situations. The airwaves have always had more government regulation and interference because of their limited spectrum availability than the press with its unlimited availability.

“The government ‘subsidy’ for broadcasters stretches much farther back than the introduction of public broadcasting; we note the governmental allocation of publicly owned broadcast frequencies to commercial interests for a revenue stream that empties only into a commercial pond,” says Bruce Austin, chair of the Department of Communication at the Rochester Institute of Technology.

“The application of public broadcasting’s method(s) of financial support to that of the printed daily newspaper or, for that matter, printed magazines (published at varying intervals) seems misplaced. It is a ‘solution’ for a single dimension to someone’s (newspaper publishers’) narrowly defined problem (an economic/revenue problem.”

For another, one situation is national with NPR and PBS … and the other is local, as it is local papers that have emerged as the prime candidates for bailouts. The four big national papers … USA Today, the New York Times, the Washington Post and the Wall Street Journal … have thus far escaped bailout talk despite the economic woes of the first three.

“I suspect there’s more support for government spending on NPR/PBS than on straight newspaper bailouts because both NPR and PBS are national news operations,” Prof. Grimes says. “It’s easier for the government to support two national operations than all the local newspapers that need financial help.

“And it’s also actually easier to keep an eye on government intrusion or attempts at censorship when you only have to keep track of what government’s doing or trying to do to PBS or NPR. Who could keep a protective eye on all the newspapers that could be censored or influenced or pressured by government funders?”


Purely Economic Aid:

Of course, newspapers in a basic sense are merely economic products. Thus, there might be viable, legitimate government help for them if it was a part of something available to all businesses.

In other words, if the assistance had an economic purpose rather than ideological.

Newspapers as far back as the Postal Act of 1792 have enjoyed favorable postage rates. The Newspaper Preservation Act of 1970 fostered joint operating agreements in many metro areas … exempting papers from anti-trust laws so that they could share a common business operation while maintaining competitive newsrooms.

Those are two examples of government support. The first no one complains about. The second drew both praise and criticism for propping up the weaker of two papers, and in the end some of the papers failed anyway as with the recent demise of the Tucson Citizen while the Arizona Star survives.

“My instinct (on a bailout) is to say: Not on your life!” says Syracuse’s Prof. Grimes.

“But newspapers need some life support these days … government MIGHT … and I stress the MIGHT … be able to do some things like tax breaks for newspapers as they adapt to the digital revolution, tax breaks for start-ups of new news organizations … online or in print … or tax breaks for the wonderful brave souls willing to buy a going-out-of-business newspaper.”

The intricacies of the issue came to the fore last year in the state of Washington, where Gov. Christine Gregoire signed into law a 40 percent tax break in the state’s main business tax for newspapers and printers.

It had a plausible economic justification in that Boeing and the timber industry previously had gotten a similar break.

“If other businesses get preferred tax treatment, why not newspapers?” asks Prof. Grimes. “Surely newspapers contribute as much to the economy and far more to democracy than most businesses.”

On a smaller scale, the Carrboro, N.C., Citizen, a two-year-old weekly covering an area near Chapel Hill, obtained a $50,000 small business loan from an economic development fund after the town’s Board of Aldermen approved it.

There’s a twist to this one, though, because instead of being just another paper gasping its last breath, the Citizen actually wanted to expand its staff and headquarters and increase the press run from 6,000 to 10,000. The expansion aspect, rather than tossing a life-saving ring to a failure, made it less controversial.

One other idea to mention in this discussion – lifting the newspaper/broadcast cross-ownership ban.

This could “benefit both newspaper and radio industries,” says Michael Saffran, adjunct professor of communication at Rochester Institute of Technology.

“However, rather than serving as an open-ended gift to media conglomerates, repealing the ban should be tied to stricter radio ownership limits.

“According to an FCC study, newspaper/television station cross-ownership enhances the quantity and quality of TV news and public-affairs programming. Radio could similarly benefit from partnerships between broadcasters and publishers because most newspapers (with a few notable exceptions) are, much like radio, inherently local.

“Thus, the addition of print reporters to the small news staffs (if they exist at all) of cross-owned radio stations could enhance local-radio news … an area in which local radio is currently underperforming, according to many experts. Local newspapers (along with broadcast stations) could realize economies of scale, increased cross-promotional opportunities, and heightened visibility within local communities (as “faceless” newspaper bylines transform into “disembodied” radio voices, and vice versa).”

Freedom of the press fans will have to hope these efforts will help. Because if papers don’t make it …

To lose even one major paper “will diminish the intellectual lead that America has had over the rest of the world,” says Mickey Alam Khan. “A population that is not well-read will not think critically. Newspapers, be they in print or online or on mobile, offer edited, moderated and unbiased news and balanced opinion so necessary for debating between good choices and bad in personal life and at work.”

“The United States as we know it will disappear; it will no longer be a nation of life, liberty, and the pursuit of happiness,” adds Prof. Starr. “One by one, all of our freedoms will disappear; the Bill of Rights, of freedoms, will be meaningless because there will be no freedom of speech or of the press. Without a free press, there will be no one to keep an eye on the government and to tell the people what the government is doing and is planning to do.”