Newspaper Industry Tells US Congress It Doesn’t Want a Bailout But Loads of Tax Breaks Would Be Nice – That’s Not A Bailout?

Philip M. Stone September 30, 2009 Follow on Twitter

The American newspaper industry and US Congress agree on one thing – no bailouts for newspapers – but that hasn’t stopped the industry from endorsing a slew of Congressional tax breaks that would be the next best thing.

But is Congress really interested in helping newspapers or was last week’s Joint Economic Committee hearing on “The future of Newspapers: The impact on the Economy and Democracy” just a convenient prestigious platform to get a load of favorable publicity on the plight facing newspapers and earn some public sympathy?  After all the committee has 20 members from the House and Senate but just three members turned up so the industry wasn’t really “talking to Congress” and that Congressional “body language” sends a resounding message to the industry that savings newspapers is not exactly a top Congressional priority.

But the news media covered the hearings en masse – loads of coverage in print and on the Internet with nary a mention of how few committee members showed up (at one time just two members were present as the chairwoman left for a House vote). Nevertheless, appearing in a Congressional hearing room was a great peg to make the industry’s pitch.

Chairwoman Democratic Representative Carolyn B. Maloney of New York was definitive about what was not on the table. “I want to be very clear. This is not about bailouts. No one’s talking about bailouts. We’re through with bailouts.”

Well, that was pretty clear and straight-forward. But we all know there is more than one way to skin a cat. So John F. Sturm, president of the Newspaper Association of America (NAA) agreed wholeheartedly that the newspaper industry didn’t want cash dollars paid up front -- “We don’t believe direct governmental financing is appropriate for an industry whose core mission is news gathering, analysis and dissemination, often involving that very same government” -- but a few tax breaks that translate into dollars on the bottom line, now that would be very nice, thank you very much.

For example, there are already House and Senate versions of legislation that would allow all businesses (not just newspapers) to carry back net operating losses for five years instead of the current two years. Sturm also urged legislation that would allow businesses to spread out future pension plan contributions. Currently, Sturm said, businesses must use cash to fund those plans. “Newspapers need cash now to preserve jobs next year. It’s really that simple,” he argued. 

Perhaps the most interesting legislation which even President Obama has said could be of interest is the Newspaper Revitalization Act that would permit newspapers to organize as non-profit entities while continuing to generate advertising income. But there is one aspect of that proposed legislation as it is now written that makes newspapers shy away – that such non-profit entities cannot make political endorsements.

Sturm told the hearing that he recognized the industry needs to get its own house in order. “The original reporting done by newspapers each and every day cannot be sustained over the long run if newspapers are not able to obtain fair a reasonable compensation for the content they produce,” he argued. “The industry is working on a variety of solutions to address this issue and make it convenient for users of newspaper-generated content to license and pay reasonable fees for such use. We expect these solutions will be in the marketplace next year.”

Not that Congress is not aware up-close of the problems hitting newspapers.  In July  two publications dedicated to covering the US Congress merged (Roll Call owned the British Economist Group bought Congressional Quarterly) and on the very day of the joint Congressional hearing on the vitality of the newspaper industry the combined new company fired 20% of its staff – some 44 jobs. Overall, the US newspaper industry since the summer of 2008 until the summer of 2009 has cast off about 15% of staff.

Princeton professor Paul Starr told the committee that all the editorial cutbacks over the past years have really adversely affected how newspapers cover their local and state governments. There just aren’t as many people to cover everything that needs to be covered. “Resources for traditional journalism at this level are disappearing far more quickly than they are being created online,” he warned.

So with all of this coverage on how Congress can help newspapers, it was somewhat startling to find this headline on Daniel Lyons’ Newsweek blog: “Don’t Bail Out Newspapers – Let Them Die And Get Out Of The Way”. He argues, “Nobody in their right mind believes the future of the news business involves paper and ink rather than pixels on a screen. We all know where the news business is headed, and what’s more we’ve known about it for at least a decade. So why on earth are people talking about a bailout for newspapers…it’s like introducing legislation to save horse-drawn carriages, or steam engines, or black-and-white TV. It’s stupid. It’s pointless. It won’t work.”

He says he has been a journalist for 27 years “and I love that romantic old notion of the newsroom as much as the next guy” but he concludes, “please, Congress – drop this crazy idea about saving newspapers. You can’t save them. They are going to die. All you can do is prolong their agony, and delay the shift to Internet. That doesn’t do any of us any good.”

Well for this writer who has been in the news business for some 47 years paper still wins out over Kindle and other digital delivery methods, but there can be no doubt that in the future the word “newspaper” will not mean just the news in print, but the news provided by that news organization on a multiplicity of platforms.

The hope is that the economics can make enough sense to keep one of those platforms as print.