Matt Houston/AP
Senator Ben Cardin

Is Nonprofit Status the Future of Newspapers?

March 26, 2009 02:00 PM
by Liz Colville
Senator Ben Cardin, a Democrat from Maryland, has proposed a bill, the Newspaper Revitalization Act, that would grant 501(c)(3) status to newspapers.

Cardin Proposes Newspaper Revitalization Act

Under the proposed Newspaper Revitalization Act, newspapers would get 501(c)(3) status, making their advertising and circulation revenue tax-exempt. The status would also prohibit newspapers from making political endorsements.

"The economy has caused an immediate problem," Cardin said in a statement, "but the business model for newspapers, based on circulation and advertising revenue, is broken."

The proposal "doesn’t apply to radio or other media," according to a Bloomberg article, but "is really aimed at community newspapers," said Cardin spokeswoman Susan Sullam. “The Baltimore Sun is in our district and is part of Tribune, which declared bankruptcy last year, so it’s close to home.”

The bill has been submitted to the Senate Finance Committee but a hearing date has not yet been scheduled.

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On March 16, House Speaker Nancy Pelosi "urged the Justice Department Monday to consider giving Bay Area papers more leeway to merge or consolidate business operations to stay afloat," the San Francisco Chronicle reported. "We must ensure that our policies enable our news organizations to survive and to engage in the news gathering and analysis that the American people expect," Pelosi wrote in a letter to Attorney General Eric Holder.

In France, President Nicholas Sarkozy recently proposed a 600 million euro (about $765 million) bailout for newspapers.

Opinion & Analysis: Could nonprofit newspapers work?

Steve Coll, a veteran journalist of The Washington Post who is now a New Yorker staff writer, proposed in his New Yorker blog Think Tank that nonprofit will and should be in the future of newspapers because it will foster "the professional, civil-service-style, relentless independent thinking, reporting, and observation that developed in big newsrooms between the Second World War and whenever it was that the end began—about 2005 or so. And those qualities arose from the scale of those newsrooms, and the way the quasi-monopoly business model and high-quality family owners shielded them from political or commercial pressure—not perfectly, but largely."

A new, Web-based nonprofit news venture that could serve as a model is ProPublica, an investigative journalism project founded by Paul Steiger, a distinguished journalist and former editor of The Wall Street Journal. ProPublica describes itself as "an independent, non-profit newsroom that produces investigative journalism in the public interest. Our work focuses exclusively on truly important stories, stories with 'moral force.'"

In an interview with MediaBistro, Steiger described ProPublica as "operating in an environment where this [is] precisely the kind of journalism—one of two categories, along with foreign coverage—most hurt by the destruction of the business models of, in particular, big metro newspapers."

But some disagree with the model adopted by the likes of ProPublica and older organizations like NPR and PBS. Making newspapers nonprofit would mean "taking the model the federal government has used for the financial industry as of late and applying it to newspapers," writes Matt Bandyk in the U.S. News & World Report blog Risky Business. "We'll offer you money (in this case, generous tax subsidies) in exchange for a semi-nationalization of your business."

Commenting on President Sarkozy's proposed bailout of French newspapers, Adam Ross writes in The Washington Post that "reliance on government subsidies undermines the independence that gives media organizations their authority. Readers aren't likely to trust a newspaper that seems to be in bed with the government."

Meanwhile, Newspaper Association of America CEO John Sturm told Bloomberg that Cardin's bill was "an interesting step in the right direction," though the NAA has not yet endorsed the bill.

Background: Newspapers fold, downsize or go exclusively online

The past few months have seen some of the country’s most respected newspapers close, digitize their offerings or downsize.

In a pioneering move, The Christian Science Monitor announced in October that it would become an exclusively online newspaper by April 2009.

In December, the Tribune Company, which owns the Los Angeles Times, the Chicago Tribune, the Minneapolis Star-Tribune and others, filed for bankruptcy.

In early February, three Ohio newspapers announced that they would be eliminating their Tuesday issues in a cost-cutting effort.

On March 6, the Seattle Post-Intelligencer, owned by Hearst, announced that it would be following The Christian Science Monitor by going online-only, reports Paid Content. The P-I was put up for sale in January but has been unable to find a buyer.

McClatchy Newspapers, which owns The Miami Herald, Anchorage Daily News and Sacramento Bee, announced it would be cutting 1,600 jobs on March 9. This is McClatchy’s third round of job cuts since June 2008, reports the Reuters blog MediaFile.

Hearst announced on March 25 that it would be forced to sell or close The San Francisco Chronicle if it could not "push through more job cuts," Bloomberg reported.

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