Senate Newspaper Hearings Only a Feel-Good Measure
The U.S. Senate, through the Senate Commerce Subcommittee on Communications, has been holding hearings -- Important Hearings -- on the fate and future of newspapers. And, according to committee chair John Kerry, Congress can help the industry. Unfortunately, that help is ultimately only going to be no more helpful than a sympathy card.
As Kerry said to Reuters, he wants "to encourage, to help the situation without stepping over any line." What are the Senate's ideas? Provide tax breaks or allow the organizations to operate as non-profits. But neither of those approaches will do much good for newspapers.
Start with tax breaks. That roughly translates into getting a special reduction in taxes for being a newspaper. But the problem that publishers have faced is operating in the red, and taxes take place on profits. The Tribune Co. had to go into bankruptcy. The New York Times came this close to shutting down the Boston Globe because of losses -- and even if you removed the Globe from the stable of the Times, it would likely still be leaking money the way a sieve holds water. Iowa-based Lee Enterprises lost $1.16 a share last quarter alone. Even News Corp. has announced a 97 percent drop in profits from its newspaper division. OK, so Rupert Murdoch could use a tax break, because it would lower taxes on the profitable parts of the business.
No profits largely mean no taxes. All that the newspapers would get is the sure knowledge that should they find a way to become profitable, they might keep a bit more in their corporate pockets.
As for getting permission to operate as non-profits -- and, please, let's refrain from the obvious "already non-profit" comments -- Congress cannot wave a magic wand and make that happen. Many of the newspaper companies are publicly-owned, and their boards of directors and shareholders would have to agree. So what would the Feds do? Offer money to buy out the shareholders? Granted, given stock prices, it would be cheap next to bailing out even a single big bank, but that gets back to an effective subsidy, and apparently We the People only do that for the financial industry.
That leaves us with the same answer as before. Either newspaper companies find ways to fuel profitable businesses, or they'll go under. And no amount of glad-handing or speechifying by senators will change that fact of life.
Newspaper image via stock.xchng user lusi, standard site license.