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Cardin Favors Help For Newspapers -- But No Bailouts Cardin Favors Help For Newspapers -- But No Bailouts

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Legacy Content / ONLINE EXCLUSIVE

Cardin Favors Help For Newspapers -- But No Bailouts

Maryland Senator Wants Government To Save Struggling Industry While Preserving Media Independence

May 14, 2009

A senator who has authored legislation to help the newspaper industry survive said Wednesday that he is opposed to a government bailout of newspapers, citing potential costs and the possibility for interfering with coverage.

"That would be a huge mistake for the government to come in and try to underwrite the newspaper industry," Sen. Ben Cardin, D-Md. told an audience at a New America Foundation and Washington Monthly event. He said "direct government support" would "compromise the independence of our newspapers."

Instead, Cardin made the case that his proposal to help newspapers become nonprofits would ensure objectivity while costing much less. "There is some loss of revenue because you are a nonprofit, and because you are nonprofit you don't pay taxes. But the newspapers aren't paying taxes today because you have to have a profit to pay taxes, and they're not making money. So this is not a matter of loss of federal funds."

 

The co-founders of Free Press, an organization focused on media reform, called for a government bailout of the newspaper industry in an article published by The Nation on March 18.

"Currently the government spends less than $450 million annually on public media," wrote authors John Nichols and Robert McChesney. "Based on what other highly democratic and free countries do, the allocation from the government should be closer to $10 billion."

Nichols and McChesney proposed that the government consider an immediate journalism economic stimulus that would include eliminating postal rates for periodicals that make less than 20 percent of their revenues from advertising and would give Americans an annual tax credit for the first $200 they spend on daily newspapers that meet certain guidelines. The authors said that these moves would buy time for old media newsrooms "to develop a plan to establish journalism in the digital era."

Adam Thierer, director of The Progress & Freedom Foundation's Center for Digital Media Freedom, said that "more government regulation or subsidization is not the answer," arguing that it "could put journalist integrity at risk."

To address concerns about state control of the media, Nichols and McChesney insisted that "the primary condition on media recipients of this stimulus subsidy would be a mild one: that they make at least 90 percent of their content immediately available free online."

Free Press executive director Josh Silver said at the time that his group was not endorsing Nichols' and McChesney's proposals. But on Tuesday, the group released a report calling for the development of a national journalism strategy and evaluating several new media model proposals, including the idea of nonprofit ownership and greater government involvement in journalism.

In March, Cardin filed his bill, S.673, which "would allow newspapers to operate as non-profits, if they choose, under 501(c)(3) status for educational purposes, similar to public broadcasting," according to a release from his office. "[N]ewspapers would not be allowed to make political endorsements, but would be allowed to freely report on all issues, including political campaigns. Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible."

Sen. Barbara Mikulski, D-Md., has co-sponsored Cardin's bill, which has been referred to the Senate Finance Committee.

Newspaper columnists and editorial boards regularly make pronouncements on political issues, but Cardin dismissed the importance of endorsements during his speech Wednesday. "The last time I checked, it didn't seem to slow down the churches very much," he said. "And I doubt if it would have a major impact on the major roles for newspapers in our country."

There has been increased attention by policy wonks on the troubled media landscape and the future of the institution. Susan Crawford of President Obama's National Economic Council and Acting Federal Communications Commission Chairman Michael Copps are scheduled to deliver speeches today at a Free Press summit on "Changing Media" being held at the Newseum in Washington.

Last week, the Senate Committee on Commerce, Science, and Transportation held a subcommittee hearing on the future of journalism. Chairman Jay Rockefeller said in a statement that "we must seek ways to make sure that our existing news entities find a firmer financial footing."

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