The Great Newspaper Bailout

It's a maxim of journalism that newspapers are supposed to 'comfort the afflicted and afflict the comfortable.' Yet there are few industries more afflicted by problems than the news business, and some journalists and their supporters on the left are flexing political muscle to find more than a little comfort.

And they certainly do need comfort. Nearly everywhere they turn, the news is bad.

USA Today, one of the top circulation newspapers in the nation, is expected to show a loss of nearly 400,000 copies a day from this time last year. Confirmation of that 17-percent collapse is expected Oct. 26.

It is far from alone. Seven different newspaper chains have filed for Chapter 11 bankruptcy including the Tribune Co., which owns two of the most prominent papers in the country - The Los Angeles Times and Chicago Tribune. The Rocky Mountain News closed in December 2008 after nearly 150 years in print. Dailies have also closed in Baltimore and Tucson. Other dailies like the Seattle Post-Intelligencer and Christian Science Monitor switched to publishing online.

Things aren't much better for those that are still printing. The American Society of Newspaper Editors canceled its annual convention because of poor attendance. According to the American Journalism Review, 'in a further sign of the times, ASNE's members voted April 6 to change the group's name to the American Society of News Editors, dropping 'newspaper' from its title.'

Cuts in advertising have led to deep staff cuts, as well. Newspaper ad sales dropped 29 percent over last year, declining $2.8-billion just in the second quarter. To offset that, newspapers have shed staff. The blog Papercuts has tallied nearly 14,000 layoffs or cutbacks at U.S. newspapers in 2009 and almost 16,000 in 2008. That rate is roughly three times the rate of jobs lost in other fields, according a report by Unity: Journalists of Color, Inc.

Appropriately, the June/July 2009 issue of the American Journalism Review ran a story called 'Cities Without Newspapers,' warning that 'the notion of big cities without local dailies seems a real possibility.' Recent issues of media and policy magazines have been filled with similar think pieces on the future of journalism.

The media's friends in politics and on the left are paying attention. Some have seized on the future of the media as an opportunity to either influence journalism or institutionalize government support of media, costing tens or even hundreds of billions of dollars.

In the past few months both houses of Congress have held hearings on the future of newspapers. Sen. Ben Cardin, D-Md., proposed Senate bill 673, the 'Newspaper Revitalization Act,' to help some news outlets become nonprofits. The theory got a boost from President Obama recently. 'I haven't seen detailed proposals yet, but I'll be happy to look at them,' Obama said to the Pittsburgh Post-Gazette and Toledo Blade Sept. 20.

The latest congressional hearing took place Sept. 24, where Rep. Carolyn Maloney emphasized how she wanted to get involved in the news business. She proposed a House version of Cardin's bill. 'Last week, I introduced H.R. 3602, a bill which will enable local newspapers to take advantage of non-profit status as a way to preserve their place in communities nationwide,' she told the Joint Economic Committee.

John Sturm, president and CEO of the National Newspaper Association, made it clear his industry group didn't want special treatment from Congress. 'The newspaper industry is not seeking a financial 'bailout' or any other kind of special subsidy,' he told the committee. But many in the industry have been seeking exactly that - even in front of similar congressional hearings.

Denise Rolark Barnes, publisher of The Washington Informer, urged Congress at the very same hearing to give her paper congressional help. Barnes, whose paper has a long history serving D.C.'s black community, asked for special legislation to 'end discrimination' by advertising agencies. She also wanted Congress to ensure the 'decision-makers' were 'incentivized to do business with minority and ethnic-owned media.'

That was only the latest hearing. Before that, the Federal Communications Commission and Federal Trade Commission both started looking into the matter as well. The FTC 'is planning two days of workshops in December - titled 'From Town Criers to Bloggers: How Will Journalism Survive the Internet Age?'' - to examine the state of the news industry,' according to the Aug. 24, 2009 New York Times.

The problems facing the industry even have some of the biggest names in media working together with a wide range of liberal organizations. A journalism planning session at the Aspen Institute was filled with top media names like Marcus Brauchli, executive editor of The Washington Post, and Jon Leibowitz, chairman of the Federal Trade Commission. They worked hand-in-hand with big name liberals and left wing organizations, including Craig Newmark, founder of Craigslist, former Clinton Secretary of State Madeleine Albright, the Bill & Melinda Gates Foundation, NPR, Free Press, Salon, Google, ProPublica and American Public Media.

Others on the left have been involved in this issue for some time. The founders of the left-wing media think tank Free Press urged government to get into the newsroom the next time a daily shuts down. Writing in the April 6, 2009, issue of the liberal magazine the Nation, John Nichols and Robert W. McChesney said 'if a regional daily like the San Francisco Chronicle fails this year, why not try a federally funded experiment: maintain the newsroom as a digital extension of the local public broadcasting system?'

The pair went on to compare the decline in newspapers to 'the threat of terrorism, pandemic, financial collapse or climate change.' Their solution was federal funding. 'All totaled, the suggestions we make here for subscription subsidies, postal reforms, youth media and investment in public broadcasting have a price tag in the range of $60 billion over the next three years,' they suggested.

Free Press has many deep connections with the Obama administration and helped him formulate his technology policies as a candidate. FCC Chairman Julius Genachowski 'tapped Free Press spokeswoman Jen Howard to be his press secretary,' according to Congress Daily.

At a Free Press meeting, ironically held at the D.C. Newseum, that group made the liberal position clear. 'Together, we can reshape the future of journalism, public media and the Internet,' it advertised.

It's not just a partisan debate. Some of the nation's most well-known or most respected current and former journalists have been asking for government action to 'save' the news media. More than two dozen have come out publicly in favor of increased government involvement including publishers and prominent academics. They include:

  • Geneva Overholser, director of the Annenberg School of Journalism at USC and former Washington Post ombudsman, who said 'the economic model' of news is 'broken.' She argued for postal-rate subsidies and changes in antitrust and copyright law.
  • James M. Moroney III, publisher and CEO of The Dallas Morning News and executive vice president of A.H. Belo Corp., asked Congress for tax relief, antitrust assistance and changes in rules preventing other news outlets from profiting from the scoops of others.
  • Steve Coll, former managing editor of The Washington Post and now president of New America Foundation, urged Congress to 'increase its investment' in public broadcasting 'substantially.'

From The New York Times to The Los Angeles Times, the nation's newspapers have been filling with opinion pieces from current and former journalists about how to 'save' the business. Paul Farhi, a reporter for The Washington Post, summed up the industry problem in a piece for the American Journalism Review. 'The still-unanswered question is whether there's a business model to sustain news online.'

The Managing Editor of the Columbia Journalism Review said the 'press needs a new mission.' Brent Cunningham recommended that the news media embrace an 'activist mission of public-service journalism' in the September/October 2009 issue.

Topics Discussed

Journalists met in August at the Aspen Institute to discuss the future of the media - including direct federal funding of the news.

Around the industry, small groups have been meeting or working to come up with solutions. The Knight Commission and the Aspen Institute pulled together top people to discuss 'Models for Preserving American Journalism.' A related report came out Oct. 2 and had two recommendations that could impact journalism and the public for years to come.

'Informing Communities' urged:

  • Increased 'support for public service media aimed at meeting community information needs';
  • The setting of 'ambitious standards for nationwide broadband availability'

The report made clear that meant money and government involvement including 'some public investments in the creation and distribution of information.' It went on to complain that the United States 'spends $1.35 per capita for public media, as compared to $22.48 per capita in Canada and $80.36 per capita in England.' The report urged a 'modest increase' in that funding. Financing public media at those levels would equate to $6.7 billion using the Canadian model or $24 billion with a British model.

A letter accompanying the report from Executive Director Peter Shane to the co-chairs of the commission gave a detailed list of 'initiatives likely at least to come under consideration within the report's various potential audiences.' That list mentioned universal broadband access; a 'federal tax credit for the support of investigative journalism'; changes in non-profit status for journalism; tax relief for media outlets and a postal subsidy for nonprofit print journalism.

The report didn't mention cost. The FCC has been drafting a new national broadband plan that should be released in early 2010. According to Reuters, that could cost 'in the range of $20 billion to $350 billion' for infrastructure improvements.

The annual 'State of the News Media' report, put out by the Pew Project for Excellence in Journalism, details several possible ways to fund journalism. It pointed out that 'no one source is a likely magic bullet.'

But one weapon consistently cited is government action.

Government Aid = Government Control

While some in the industry have decried government assistance, others have cheered for it - loudly. To many in the news media, every option is on the table - from a collection of tax and regulatory changes to direct government funding, to the return of the Depression era writers project.

Georgetown University Law professor Rosa Brooks summed up her plea for government support of media in an April 9, 2009, Los Angeles Times column: 'It's time for a government bailout of journalism.'

That recommendation has echoed through the media. Ezra Klein, a former associate editor of the liberal American Prospect, took a similar position. Klein, who now writes 'an opinionated blog on economic policy' for The Washington Post, described his 'long-held belief that newspapers should be funded by direct government subsidies,' in a July 2, 2009, column.

Several publishers, including James M. Moroney III, publisher and CEO of The Dallas Morning News, Brian Tierney, publisher of The Philadelphia Inquirer and Philadelphia Daily News, and Frank Blethen, the publisher/CEO of the Seattle Times Co., all have asked for government aid. Blethen, in testimony before the U.S. Senate, called for several types of assistance, including a '50 cent subsidy for each dollar a privately owned newspaper spends on journalists.' He also asked that Congress 'return the Post Office to its original mandate to help subsidize the creation and distribution of newspaper journalism.'

Even at the Poynter Institute, a 'school for journalists,' the call is for government intervention. Bill Mitchell, the head of Poynter's News Transformation initiative, said the easy answer was to do nothing about the decline of newspapers. He then countered his own argument, saying 'but these are risky times ill-served by easy or simple answers.' Mitchell then listed several ways Congress could help.

That nuance has been commonplace. Many journalists have criticized the idea of direct government funding, but still called for government assistance - lower taxes, special regulatory assistance and more. Essentially, they have asked for it both ways. They wanted the pretense of keeping government's hands off the media, while simultaneously inviting them in.

Los Angeles Times columnist Tim Rutten gave a perfect example of that conflict in a Feb. 4, 2009, piece. 'But a direct government bailout - whether at the state or federal level - is a wretched idea. The last thing we need is a government-funded National Public Newspaper,' wrote Rutten. But he wasn't exactly so clear on lesser government involvement. 'That's not to say there isn't something the federal government could do to help newspapers,' adding, 'Washington ought to extend to the newspaper industry the same sort of antitrust exemption that Major League Baseball has enjoyed since 1922.'

He followed that column up in August with another appeal for more government assistance. 'Congress needs to move quickly to grant the newspaper industry at least a temporary exemption from antitrust and price-fixing laws so that publishers and proprietors can, in essence, collude for survival,' wrote Rutten.

That has been typical for media types - to push for aid that doesn't make them look bad.

David Simon, a former Baltimore Sun reporter and author of the book 'Homicide,' was one of several journalists to testify about the news business in front of Congress in 2009. While Simon was very critical of the free market, he also knocked the idea of government financing, saying 'there can be no serious consideration of public funding for newspapers.'

But Simon, like many in the media, didn't stop there. He still called for government intervention, asking for a government push to create newspaper nonprofits. He also called on Congress 'to create financial or tax-based incentives for bankrupt and near-bankrupt newspaper chains to transfer or even donate unprofitable publications to locally-based non-profits.'

Conspicuously absent in the many pleas for funding or government intervention has been the potential downside. Journalists ignored the many potential negatives of federal aid - whether they were seeking it on Capitol Hill or writing in the opinion pages of top newspapers.

Government bailouts on Wall Street and in the insurance and auto industries provided excellent examples of how such intervention has gone wrong. The auto bailout was especially instructive. As soon as President Obama bailed out General Motors, he forced out Chairman and CEO Rick Wagoner. The White House also gave majority ownership in Chrysler (55 percent) to the UAW. The bailouts on Wall Street resulted in overnight government regulation - even salary controls.

Yet, desperate for a lifeline, journalists haven't addressed those issues. Government intervention in media would give Obama, and any other president, the opportunity to control the news. Seven major newspaper chains have gone into bankruptcy in recent months. Every one of those could have been a government bailout target. Using the same strategies Obama used for Detroit would have given the president control of major media outlets across the nation.

BBC or Pravda, Does It Matter?

One of the common themes in the discussion about the future of journalism is publicly financed media. Liberal supporters of government involvement argue the U.S. has always paid less for public media than other major nations.

Rick Edmonds, the business analyst for the Poynter Institute, made that very same claim in a May 2008 article entitled: 'Thinking About the Unthinkable: Subsidies.' Edmonds went on to explain the typical big government rationale.

'How about government subsidies for newspaper readership? Lest you dismiss me as wacko, I can stipulate that a number of perfectly sane European countries - Norway, Sweden, France and Austria - provide just that.'

That doesn't matter. Liberals have the issue exactly backward. One cannot have a successful democracy without a free press. In other words, the less government controls the media, the more free the people are. The goal should be to have the U.S. government pay nothing for public media.

That isn't what the left wants at all. Ben Scott, policy director for the liberal Free Press, called for Congress to create a 'National Journalism Plan' during congressional testimony. Free Press, which gets funding from both George Soros's Open Society Institute and Barbra Streisand's Streisand Foundation, is a leading proponent of government funding for media.

Scott's position ignored the downside of public media in other nations. Journalism in the old Soviet Union earned a laughable reputation. Izvestia, which means truth, was one of that nation's leading papers during the Cold War. But it notoriously repeated the party line on virtually every issue. Other autocratic nations from China to Venezuela have been reining in the free press.

Even Britain, which funds the well-known BBC, has had enormous problems of bias in its coverage. The network earned more than $7 billion in its most recent fiscal year. Most of that money comes from license fees paid by each household.

What that has meant was that the British were paying for left-wing media. A 2007 internal investigation of the BBC 'points to the danger of BBC programmes being undermined by the liberal culture of its staff,' according to Times Newspapers, LTD.

In other words, the British system combined the left-wing bias of the American news media with billions of dollars of mandatory taxpayer funding.

Left Wants a 'PBS on Steroids'

One way some liberals want to help journalism has nothing to do with newspapers, but it does boost government media. Rather than continue to fund print, backers of publicly funded news have thrown their support behind expanding PBS.

Speaking in front of a left-wing media group, FCC commissioner Michael J. Copps raised the idea of a major funding increase for public broadcasting. Copps told a May 14 Free Press summit: 'We'll need ways to address market failures in different ways. For example, should we find a way adequately to fund PBS or some other group that is actually interested in doing the job? Maybe PBSS - a Public Broadcasting System on Steroids.'

Steve Coll, a former Washington Post editor, said in congressional testimony that it was 'counterintuitive' for journalists to ask for help. But that's what he asked Congress to do - in a big way. As Coll explained, government was already involved in media in everything from tax code to allocating broadcast spectrum, as well as through the Corporation for Public Broadcasting. So the journalist and president of the New America Foundation urged Congress to 'increase its investment' in public broadcasting 'substantially.'

At a time of massive government growth and trillion-dollar deficits, liberal groups and journalists have been calling for a 'bridge' to the future of journalism. 'As other systems of subsidies are failing, we are left with a clear and present need, and the government has a key role to play,' wrote Free Press's Josh Stearns on the Web site.

Free Press founders have pushed for $60 billion over three years for everything from subscription subsidies to postal 'reforms.' Much of that funding would, of course, go to NPR and PBS. The Corporation for Public Broadcasting is slated to get $420 million in the 2010 budget. If all of the new money went to public broadcasting, that would be a more than 4,700 percent increase. The Knight Commission request could dwarf that number with up to $350 billion for broadband infrastructure alone.

NPR CEO Vivian Schiller, a former senior vice president and general manager of the, said traditional business solutions weren't going to work. She called the idea of paid online content saving the new industry 'mass delusion.' 'Frankly, if all the news organizations locked pinkies, and said we're all going to put up a big fat pay wall, you know what, more traffic for us. News is a commodity; I'm sorry to say,' she told Newsweek July 27, 2009.

Yet funding public media has always had huge problems. Conservatives have long complained about PBS and NPR. As if to underline that point, PBS limited religious programs showing on its stations during 2009. 'The Public Broadcasting Service agreed yesterday to ban its member stations from airing new religious TV programs, but permitted the handful of stations that already carry 'sectarian' shows to continue doing so,' according to The June 17, 2009, Washington Post.

NPR Ombudsman Alicia Shepard also criticized the network's campaign coverage soon after the election of President Barack Obama. While NPR did more stories on the McCain-Palin ticket, Obama-Biden got far more air time. 'But when we added up the amount of time, it was almost two hours more that was devoted to John McCain and Sarah Palin.,' she explained during a Nov. 12, 2008, 'Talk of the Nation' segment.


During one of the congressional hearings on journalism, Rep. Hank Johnson, D-Ga., warned 'if Congress does not act or if something does not change, a major city in the United States will be without a newspaper in the fairly near future,' according to April 22, 2009, Washington Post.

Once Congress intervenes, the question becomes: How far will it go? Government might only tweak existing regulations or it could directly fund even more journalism. Many in the media and on the left have repeatedly favored more governmental involvement - even direct subsides.

Prof. Theodore L. Glasser wrote about 'what a National Endowment for Journalism might look like' in a March 17, 2009, article. Glassner proposed devoting billions of dollars to the media in his Independent Arts & Media piece. 'One good place to begin would be by tapping into the billions of dollars the FCC brings in when it auctions off our airwaves, those natural resources, and those auctions are likely to continue, and they bring in billions of dollars, and there's no reason why that couldn't be used to begin to create and endowment for journalism.'

Naturally, Glassner suggested that money be spent on left-wing media outlets. 'So it would be alternative forms of journalism, journalism aimed at minority communities, journalism where communities are deemed to be demographically unattractive,' he wrote. And his comments ignore that those billions of dollars only exist because it is profitable to use the airwaves.

Even the biggest names in journalism haven't understood the ramifications of government involvement in the news. Former CBS anchor Dan Rather described the wretched state of the news in an Aug. 9, 2009, Washington Post opinion piece. 'If it's in trouble - and it surely is - this country is in trouble,' he wrote. Rather went on to call for President Obama to 'form a commission to address the perilous state of America's news media.'

He stressed that he was 'not calling for any sort of government bailout for media companies,' nor 'any form of government control over them.' But that's precisely what government involvement has always meant. And Rather, like many other well-known journalists, was ready for the government to come to the aid of the very people who cover it every day.

Rather should have known more than most that public attitudes toward journalism have plummeted. Christopher Connell, in 'Journalism's Crisis of Confidence,' pointed out that trust in the media has declined significantly in the past 30 years. He quoted Terry Hynes, dean of the University of Florida College of Journalism and Communications, saying, 'The notion of media integrity is no longer a concept shared by very much of the general public.'

The future of journalism isn't just about bias. Any look at bailouts for newspapers needs to be put in context. News outlets, especially newspapers, made huge amounts of money during flush times and invested little of it in innovation. David Carlson, former president of the Society of Professional Journalists, complained in 2006 that 'even in today's difficult climate, many newspapers turn an annual profit greater than 25 percent.' That wasn't even the top. 'One large national chain reportedly demands 30 percent profit from each of its newspapers,' he continued.

Yet, now that an industry downturn has occurred, media executives have been looking for help from all quarters - even government. Journalists remain divided about government intervention. Recent testimony in Congress and comments at journalism events make that clear. Many savvy reporters, editors and publishers justifiably fear direct government subsidies. So that is unlikely to be the first option chosen to address the future of the news media.

The numbers of those seeking aid changed when journalists asked for smaller scale federal help - regulatory changes, tax law changes, increased funding for public media and more. Those ideas garnered far more support. Yet journalists failed to see that those ideas also damage the relationship between news organizations and those they cover in government.

The mere fact that several prominent journalists went begging to Congress for some sort of intervention damaged the credibility of those news organizations they represent. How can that sort of cozy relationship be anything other than a conflict of interest? And even if the journalists in question were untainted, the contact still gives the perception of a conflict.

The Society of Professional Journalists Code of Ethics urges journalists to 'act independently. It adds that they should also:

  • 'Avoid conflicts of interest, real or perceived.
  • Remain free of associations and activities that may compromise integrity or damage credibility.'

That is impossible when sitting in a congressional hearing asking for help. The National Newspaper Association took the appropriate tack when CEO John Sturm told Congress 'the newspaper industry is not seeking a financial 'bailout' or any other kind of special subsidy''

That is the only way for the traditional media to remain independent and for Congress to remain true to the Constitution.


Increasing government involvement in the media is wrong-headed and dangerous. The government is already too involved in media. The 1st Amendment clearly states: 'Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press.' Getting government more involved in the media - either through regulations or outright funding - would have horrible long-term consequences.

The biases of the traditional media have been long established in numerous studies. Making journalists more beholden to the politicians and government officials they are supposed to cover would further undermine the Fourth Estate.

Instead, the Business & Media Institute has several recommendations on the future of journalism:

  • Just Say No: Journalists have to draw a clear line in the sand and say they neither want nor need help from government. This should include the overt help of direct subsidies and the more subtle forms of aid such as specific tax breaks and antitrust assistance.
  • Trust in the Marketplace: The future of journalism won't be exactly like anyone envisions it. It will depend on what people want, not what the media elites want, and wants change with time. Readers and viewers might not want news the way it has been traditionally delivered. News organizations need to first focus on ways to make money - online and off. Then, essential areas that aren't easily funded - such as foreign bureaus - can be aided through nonprofits and foundations.
  • The Media Are Not the Message: The reporting of a free press is essential to a thriving democracy. How that reporting reaches its audience - TV, radio, print, Internet or text message - is inconsequential. Journalists need to recognize that the day of print is changing. Secondary newspapers continue to fold as they have done for decades and some mismanaged larger outlets are closing as well. But just because newspapers die doesn't mean the news will. The print newspaper is just a vehicle. The information is what is important. Too many in the industry and in government are stuck on the old way of delivering information.