No Bailout For Newspapers

Copies of the final edition of the Rocky Mountain News sit in the Washington Street Printing Plant of the Denver Newspaper Agency in Denver on Thursday, Feb. 26, 2009. The Friday, Feb. 27 edition was the paper's last after 150 years of publication. AP Photo/David Zalubowski

First it was banks and insurance companies. Then it was Detroit. Now official Washington is abuzz with talk of bailing out newspapers.

A Senate hearing last week explored the topic. A bill to restructure newspapers has been introduced in the U.S. Congress. And President Obama announced last week that the disappearance of newspapers "is not an option for the United States of America."

Bailing out those other industries was unwise and lacks authority in the limited powers that the U.S. Constitution grants the federal government. It drew corporate America deeper into the federal government's firm embrace, and risks politicizing routine business decisions and making it more difficult for struggling firms to secure credit.

But at least those bailouts funneled taxpayer dollars to industries that will eventually rise from their sickbeds. Consumers may not adore General Motors' current lineup, but they'll continue to buy cars and trucks. Banks and insurance companies have not been deserted by their customers.

Not so with newspapers. Thanks to classified ad revenue nibbled away by the likes of Craigslist, eBay, Monster.com, and Autotrader.com, newspapers are on track to experience a dizzying 50 percent drop in advertising revenues over a three-year period. Google, Yahoo, Microsoft and other ad networks have meant more competition -- and more options for advertisers. Highly localized ads on cable TV have accelerated this trend.

Not helping is the sentiment that newspapers -- and, perhaps, much of the mainstream media -- have abandoned editorial neutrality in favor of political boosterism. The Pew Research Center's Project for Excellence in Journalism reports that 70 percent of Americans thought professional journalists wanted to see Barack Obama win the presidential election (Mr. Obama apparently agrees). Only 9 percent thought journalists were rooting for John McCain.

No wonder that Warren Buffet, whose Berkshire Hathaway holding company owns a large chunk of the Washington Post Company, said this month that he would not buy most newspapers today "at any price."

Some of the proposals to rescue the newspaper industry are reasonable. Antitrust law tends to be overreaching; an exemption similar to what Major League Baseball enjoys is overdue. Washington state's tax cut approved this week brings newspapers' rate down to what Boeing and the timber industry already pay.

Others aren't as sound. Democratic Sen. Benjamin Cardin's bill would allow newspapers to become non-profit organizations if the IRS deems them "necessary or valuable in achieving an educational purpose," a phrase that invites definitional mischief. President Nixon ordered the IRS to asked his friend, Treasury Secretary Henry Morgenthau, to attack adversaries -- including newspaper publisher William Randolph Hearst, Gov. Huey Long, and Rep. Hamilton Fish -- through politically-motivated investigations. Are today's politicians less likely to abuse the power to decide whether critical coverage is sufficiently "educational" or not?

A more troubling proposal comes from the Free Press advocacy group, which released a report on Tuesday titled "Saving the News: Toward a National Journalism Strategy." (Let's put aside for the moment the question of whether we need a clutch of lawyers in Washington concocting such ideas, any more than we need, say, a National Cell Phone Marketing Strategy or National PHP Software Development Five-Year Plan.)

Free Press offers a menu of bailout possibilities for local governments and the Obama administration: an "emergency stimulus for the next three years to buy time to transition to other models"; taxpayer dollars flowing to newspapers in the form of $45,000-per-reporter credits; ownership by "socially motivated parties" or municipalities; redirecting AmeriCorps jobs to fill newsrooms. "Now is the moment," it concludes, "to firmly establish a press that is autonomous, yet supported by public money and devoted to the public interest." Alas, we can't have both.

Those goals are at odds with one another, and have been ever since Nixon demanded, after learning that Robert MacNeil had been hired to work at PBS, that "all funds for public broadcasting be cut." History shows that the White House has used -- in truth, misused -- the now-defunct Fairness Doctrine to harass unfriendly radio stations through threats of license revocation.

It's fanciful to expect that government-funded newspapers, which would benefit from higher taxes, could report faithfully on the growing tax protest movement. Or that an already distrustful public would be reassured to know that reporters are, directly or indirectly, now on the government's payroll. (Far better to heed Thomas Jefferson's admonition "that to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical.")

As Clay Shirky, an NYU adjunct professor, recently wrote, society doesn't need newspapers. We need journalism. Funding may come from well-heeled investors of a certain political bent -- Adobe founder John Warnock has kept Salon.com alive, and Forbes reported yesterday that former Hollywood mogul David Geffen offered to buy a 19 percent stake in the New York Times.

It may come from subscriptions, micropayments, or advertising. Or it may come from collectives and local blog networks that are still being formed.

The process will be disruptive, but as long as the content that newspapers create is compelling enough, they'll survive without government interference. Unless, of course, our elected representatives in Washington prefer a future in which government-bankrolled newspapers eventually become as independent as Pravda was in the Soviet Union.



I encourage you to bookmark the home page for my Other People's Money column. An RSS feed is available too. If you have questions, feedback, or suggestions, please feel free to e-mail me at declan@cbsnews.com .


Declan McCullagh is the chief political correspondent for CBSNews.com. Previously, he was Wired's Washington bureau chief and a reporter for Time.com and Time magazine in Washington, D.C. He has taught journalism, public policy, and First Amendment law. He is an occasional programmer, analog and digital photographer, and lives with his wife in the San Francisco Bay area.
  • Declan McCullagh On Twitter»

    Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.

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