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ROBB AUSTIN'S TURN

Newspaper Bailout Fraught With Conflicts

September 22, 2009

Newspapers around the country relish the idea that they are stewards of truth for the American people and act as watchdogs over the government to ensure the privileged do not take undo advantage of the political process.

So it is ironic that we now hear such silence from this industry about a proposal that may benefit it - one put forth by U.S. Senator Benjamin Cardin (D-Md) to provide a taxpayer-funded financial bailout of the nation’s newspaper industry. The proposal is called the "Newspaper Revitalization Act", and has but one co-sponsor at the moment - Senator Barbara Mikulski (D) also of Maryland.

Essentially the proposal will allow private and publically-owned newspapers - which are now for-profit private companies - to restructure themselves as non-profits and receive an array of government tax breaks - including making advertising and subscription revenue tax exempt and allowing charitable contributions for operations and coverage to be tax deductible.

This would allow individuals to make sizeable contributions to a newspaper - receive a tax deduction for the contribution - and it would provide the contributor with inside access to the publication proportionate to his/her contribution.

This politicizes the newspaper industry - allowing newspapers to seek large contributions from individuals (and maybe corporations) in the same manner a politician seeks contributions when running for office – which would be nothing short of the selling of an industry.

It is well understood that the newspaper industry is struggling these days while both circulation and paid subscriptions continue to decline as people turn to other forms of media - including the Internet and 24-hour cable news - to get their daily news.

President Barrack Obama recently weighed in on the proposal - which elevates the dialogue - saying he is "happy to look at" legislation that will bail out the industry. The President further stated that he is worried about opinions and news content that can be seen over the Internet and in the blogosphere.

President Obama claims those outlets do less serious fact checking and sometimes fail to put a news story in the proper context. Never mind that individuals writing in the blogoshere have the same right to publish opinions and articles as do large media corporations.

But some believe that a government bailout for newspapers would simply make "official" what many believe already exists - a quasi state-run-media to promulgate the views of the current administration.

A federally funded bailout of newspapers might also be in violation of the First Amendment, which states in part, " Congress will make no law ... prohibiting ... freedom of the press". Federal bailout funds could have a chilling effect on reporters who might oppose such an idea - but not be allowed to take the position publically because it would be in direct conflict to the corporate ownership of the newspaper that employs them.

Throughout the years newspapers have brought their problems on themselves - and it didn’t happen overnight. The industry continues to subscribe to an outdated and failed business model and has financially mismanaged itself for years.

It was slow in finding new ways to deliver newspapers to a sprawling suburban demographic; it could not keep its labor and material costs under control; newspapers had a difficult time working with organized labor and was slow in shifting its production process from "hot metal" to modern "cold type" processes; and remains totally ineffective in maximizing the use of the Internet to its advantage.

Newspapers are cutting costs to the bone yet continue to lose advertising revenue and subscribers in droves. It may very well come down to the self-proclaimed government watchdogs (daily newspapers) taking billions in taxpayer funds to save the industry from evitable extinction - then be asked to report on the very government that gave them the money.

Won’t it be interesting to see how reporters cover that conflict of interest?