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Friday, 25 September 2009

Government-owned newspapers, anyone?

Government bailouts of US banks and auto companies have been broadly signalled, with Australian news consumers well aware of some post-GFC decisions. I guess it's not strange that the plan to restructure parts of the US media industry using a legal instrument called the Newspaper Revitalization Act of 2009 has received less media coverage here. None, in fact.

But the ramifications of the bill, which would allow news companies to become non-profits with tax rules that would relieve some of the pressure the media industry is currently feeling, are significant.

The bill was initially promulgated through the press in March. But it had no "co-sponsor" (apparently a requirement if a bill is to progress in the political system).

Now it has. The originator of the bill, Sen. Benjamin L. Cardin, a Maryland Democrat, now has on-side Democrat Rep. Carolyn B. Maloney of New York. With her, he is pushing to have the issues debated.

But the Joint Economic Committee is suffering from some poor attendance. The Washington Post reports that

Just three of 20 House and Senate members showed up for the hearing, in which the Democratic chairwoman left early to vote on a House bill, leaving the ranking Republican in charge.

Maybe they had other things to do? The hearing is titled, grandly, "The Future of Newspapers: The Impact on the Economy and Democracy", but that doesn't seem to have impressed those who would decide that future, or given them reason to delay other committments.

But what does the bill mean, in detail, and how could a similar scheme play out in Australia? According to The Deal:

What would the Newspaper Revitalization Act provide for? The Act would allow advertising and subscription to be tax exempt, and contributions to support the news operation could be tax deductible. Newspapers would also be allowed to operate as nonprofits for educational purposes under the U.S. tax code, like public broadcasting companies.

And Reuters had this, also in March:

"This may not be the optimal choice for some major newspapers or corporate media chains but it should be an option for many newspapers that are struggling to stay afloat," said Senator Benjamin Cardin.

Under the new law, newspapers would be able to report as they currently do, but would be prohibited from making political endorsements.

"We are losing our newspaper industry," Cardin said. "The economy has caused an immediate problem, but the business model for newspapers, based on circulation and advertising revenue, is broken, and that is a real tragedy for communities across the nation and for our democracy."

Newspaper subscriptions and advertising have shrunk dramatically in the past few years as Americans have turned more and more to the Internet or television for information.

Because of the nature of government interventions in other industries, it seems, the bill's promoting lawmakers have been forced to deny any desire for emergency funding to prop up an ailing industry. Maloney said, among other things:

"I want to be very clear: This is not about bailouts. No one's talking about bailouts. We're through with bailouts."

In any case, the news industry says that it doesn't want to be saved from dissolution by any government, regardless of its purported sympathies with one side or the other.

"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," John Sturm, president of the Newspaper Association of America, said at Thursday's hearing.

As a media watcher, I personally have read in other places about interest in converting some media outlets to non-profit status under US law. But this is the first time (via Twitter, ironically) that I've heard of this bill. And the Australian media has been eerily silent on the issue. There has been no broadsheet coverage of it at all.

It is a deafening silence.

But it may be because Australia's newspaper industry is very narrowly-held, with two main companies fighting in most areas. News Ltd and Fairfax own a staggering number of local town papers, as well as the major metropolitan dailies. The Cardin-Maloney bill is mainly targeting "community and metropolitan papers" in an American market with very different characteristics from ours.

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