The Next Bailout? Newspapers?

Members of Congress can't seem to get enough of the bailout bug. The latest idea? Make newspapers nonprofits since they can't seem to turn a profit and they're going out of business all over the country or are being forced into becoming online-only ventures.

With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.

"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.

A Cardin spokesman said the bill had yet to attract any co-sponsors, but had sparked plenty of interest within the media, which has seen plunging revenues and many journalist layoffs.

Cardin's Newspaper Revitalization Act would allow newspapers to operate as nonprofits for educational purposes under the U.S. tax code, giving them a similar status to public broadcasting companies.

Under this arrangement, newspapers would still be free to report on all issues, including political campaigns. But they would be prohibited from making political endorsements.

Advertising and subscription revenue would be tax exempt, and contributions to support news coverage or operations could be tax deductible.

Because newspaper profits have been falling in recent years, "no substantial loss of federal revenue" was expected under the legislation, Cardin's office said in a statement.

Why is the government trying to hold back the clock on newspapers? What special right do newspapers have to being considered a nonprofit entity? Why should the tax code be altered so as to give companies like the New York Times, Fox, Gannett, or Newhouse a nonprofit status for their newspaper operations?

Newspapers are in the mess they're in for any number of reasons, not the least of which is that technologies have made paper newspapers seemingly obsolete, including the Internet by which you're actually reading this particular content. You can now access the same information online, and do so for free all while the papers have investments in publishing equipment, factories, and a distribution model that is labor intensive.

The need to squeeze every last drop of profit out of the operations has meant that the newspapers have cut the one area that they have an advantage over a blogger such as myself - dedicated reporters on the beat. They've closed foreign bureaus, consolidated local bureaus, or just straight out fired people and gone to online only ventures where the "paper" simply repackages content from other sources.

More to the point, this move increases government intrusion into industry - this time journalism, and hopes to prop them up. What do the taxpayers get in return? Cardin thinks the trade off of requiring the newspapers to be nonpartisan will be satisfactory, but that's total bunk since the editorial spin of the papers will continue in the way that they choose to cover the issues. It will still veer to the left.

Some folks are already printing the epitaphs for the newspaper industry. Because newspapers are so heavily reliant on advertising and classified ads for revenues, a drop in either can spell serious financial trouble. In the current environment, we're seeing both, not only because of the recession, but because newspapers have been circumvented on both classified and advertising - online outlets like Craiglist have trumped the once ubiquitous newspaper classified ad. Want ads are now carried by Monster.com, careerbuilder.com, etc. Why go to a newspaper for that information? More and more people are coming to that conclusion as well.

It's hard to argue with that, given that the newspaper industry has been suffering for years as Internet access to information has grown easier and content now includes more than just words or photos - you can now get streaming content on cellphones and portable devices, making the paper obsolete.


Vodkapundit seems to think that this is a quid pro quo for the incurious look at the porkfest that passed last month along with why no one made a serious examination of what was contained in the legislation that was signed without anyone in Congress or the White House reading the whole thing.

So, why is Cardin so intent on saving an industry that can't seem to change to adapt to the new technologies? What's in it for us?

Well, there is one thing that can be said for having multiple news sources - and that's verification of news reports rather than a centralized and solitary source of news that results in biased and agenda driven reporting (moreso than the current news is). Because there are multiple news outlets, there's a certain amount of accountability, which would be lost as more newspapers and media outlets go out of business. That's particularly true in areas that are serviced by a single newspaper. Local news would be especially hard hit, but Cardin's bill does not address the fact that people will still find other ways to find the news online - circumventing the newspapers altogether.