Tax breaks (not bailouts) for newspapers

January 2, 2009

I ran a story on New Year’s Eve about the opportunities and perils that could face struggling newspapers if they end up surviving because of government help. I opened the story with the tale of Connecticut state lawmakers and a state commissioner who are trying to find someone to buy two Journal Register-owned dailies and several weeklies that are going to be shut down in January if they can’t be saved. From there, I explored the ramifications of government aid to newspapers.

The story got plenty of attention, though it looks like misinterpretation was rife. Many bloggers and news sources portrayed the Connecticut situation as a bailout, leading to plenty of ire directed at the lawmakers and the story. (Some conservative bloggers hinted that we deliberately omitted the lawmakers’ affiliation. For the record — they are Democrats. Also for the record: I had that in there, then deleted it, intending to put it somewhere else in the story. Then I plum forgot. No hidden agenda.)

So here’s what I’m expecting next and here’s what I still don’t know or understand. I’m eager to hear from folks who care about the future of newspapers in the United States to add their thoughts in the comments section.

  • My sources in the journalism world tell me that the U.S. newspaper business won’t be pushing federal lawmakers for a bailout like the auto and finance industries. Why? They don’t like the idea of having the government as a shareholder when their job is to expose what the government does as a way of keeping it honest. Still, the story might change. If anyone hears about something like that in the works, please tell me. I’m anxious to find out.
  • Will the situation in Connecticut be replicated elsewhere around the country? I wonder.
  • The politicians whom I spoke to emphasized that this is not a bailout, but an attempt to lure business with tax breaks, the same way other businesses get courted. Still, I wonder: If you award tax breaks as a way to get publishers to keep a newspaper from dying, isn’t that shifting the tax burden to others? And if that is so, then how is that different from essentially handing over money? I don’t know, but I’m curious.

Folks, this may be a big culling year for U.S. newspapers. Debt is heavy, ad revenue is down and it may be the end of the line for newspaper journalism in this country as we know it. It’ll be an often depressing story to cover, but it also will be exciting and strange. If you’re an employee of a U.S. newspaper and you hear that something is going on, we want to know about it. Drop us a line. Thanks and “Happy” New Year.

PS – Journal Register has gone stone cold silent about its restructuring, its newspapers and any attempts to survive. And the whole company is still worth less than my little house in Jersey City.

(Photo: Reuters)

14 comments

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I think you’re lying that you forgot to add the party affiliations of the lawmakers pushing for this bailout.

Posted by Mark | Report as abusive

If I lie in my reporting, I lose my job. My reputation rests on telling the truth. So, what can I say other than: I’m not lying. Thanks for your opinion.

Posted by Robert MacMillan | Report as abusive

As a former editor of a JRC newspaper that closed its doors in November, I have two thoughts. First, anyone working for that company saw the writing on the wall years ago and should have got out then. The policy of gutting JRC newspapers started in the 1990′s; it’s nothing new. Many of us left when staff was severely cut followed by the natural drop in advertising. It was a cost-cutting blunder by management who took their bonuses and retired.

Secondly, the state of Connecticut is trying to save two dailies that are a shell of what they used to be. I don’t mean to sound cold, but there are more pressing matters in this state. Lawmakers are wasting time in their futile attempt to find a buyer for these two rags. Even the Hartford Courant (owned by the Tribune Co.) is undergoing a slow death. Such is the newspaper business. Things change.

Do they even teach Newspaper Writing 101 in college anymore?

Posted by Brian | Report as abusive

1) Government ownership is a Faustian pact. No newspaper ought to be in such a position. But many are.

2) Cars and properties are not selling – and many local newspapers rely on these sectors for their advertisement revenue. Also a large number of ads for services (cleaning, construction etc.) will go because there won’t be many looking for such services. Local papers’ strength depends on concentrating a large number of local products and services advertised – if the local economy has gone to the dogs, then they are toast.

3) It is giving money: well, not taking what is owed. The question is whether the newspapers’ public function and their value as public good permit such a tax break.

What will happen to Reuters and other agencies when newspapers go?

Posted by MW | Report as abusive

I was one of those “misinformed” who ran a story on my blog about the mulling of a “bailout” for these two failing newspaper operations. But the objection to the use of the word “bailout” is an objection to a word with a an inherent lack of specificity that reflects the dearth of rules that we have in our presumably market economy. It is not irresponsible as a preemptive measure to pose that Connecticut lawmakers were indeed pondering a “bailout,” whether that entails tax incentives or otherwise. The article was a good springboard for the “don’t try it, don’t even think about it” message to the newspapers. As far as it being a “bailout” or any conceivable form of preferential treatment, I don’t see any substantive difference. It is all using the intrinsically coercive power of government to pick the winners and losers in the economy, instead of the citizens themselves with their “powers of the purse.” The citizens had already spoken that they either do not need or want the news the local papers provide, or they are finding what they want elsewhere. They are not willing to “put their money where their mouths are” and buy the papers, so the government is going to take their money and do it for them? This is insane. Or else the government will “shift the burden” onto other with preferential tax treatment(like you wrote)? But once again, all of my objections will fail to connect since we are well past the stage of a logical and ethical way to run an economy, and into the era of the preferential abuse of political power.

[...] The story garnered a lot of attention from major news networks and bloggers, not to mention varying opinions on a potential “newspaper bailout.” The author of the story, Robert MacMillan, followed up on his story with a blog post. [...]

Neo – Thanks for the response. That is a good argument and I appreciate you writing it here. I will rebut on one point: The “bailout” term in the way that we’ve been using it in the past few months, and as it was used in the newspaper debate regarding Connecticut, has a definition. At least it does when I use it. I wanted to make sure that it was clear that no one is asking (at least for now!) for a taxpayer-funded bailout, the likes of which the auto and financial services sectors are receiving from the federal government. Nicastro, the other lawmakers and the DECD in Connecticut were quite clear about that. In fact, I didn’t even have to ask the question before they volunteered that information. They are correct – it’s not a bailout like that. They know what a firestorm that would raise.
I still wonder if such a proposal will come from somewhere in the business. Everyone I talk to says it won’t, but things change.

Posted by Robert MacMillan | Report as abusive

Regarding Brian’s comment (the former JRC newspaper editor) — It matches up with everything I’ve heard so far about the way things work at Journal Register. Ouch.

Posted by Robert MacMillan | Report as abusive

Thanks for clarifying the whole issue some more. And much thanks for spreading word of plight across the globe. It can’t hurt!
By the way, take a look at an interesting piece that a blogger did for the Everyday Republican blog about your story and the reaction. It does speak to the changing ways of journalism, which I know you already get.
I hope you’ll be mentioning soon that we somehow come through this!

And one more thing, Brian doesn’t tell the half of it. I’ve had a JRC publisher try to charge employees to drink water at work. I’ve had the company award me a $100 prize for some story — and then renege on paying. I’ve seen one crummy, stupid, evil thing after another. So good riddance to the JRC. But I hope its papers can be saved.

As a journalism, Integrated Marketing Communication and new & emerging media professor who is actively engaged in research in this area, I have a couple of comments to ad here. Firstly, I teach cross-platform journalism so that my budding converged journalism students can write for all mediums and emerging medium forms that garner ad dollars in unprecedented amounts away from traditional television and print market areas. Secondly, the people that still read and subscribe to papers are only those resistant to technological change; one of which is my mother. She is retired and living in Florida. I visited her recently for ten days, picked up her paper for her every day and didn’t see her actually read it once–she is mostly chairbound. Unless traditional print mediums do not reinvent themselves in emerging markets such as those south of the border they will all fold to newer and more effective marketing targeted at publics which are staying more currently plugged in.

Posted by Joann Nilson Tartalone | Report as abusive

used to subscribe to the la times,but got sick reading about their point of view.they persistently try to persuade me to reconsider even suggesting that the discount coupons are incentive alone to disregard the half truths that they print.

Posted by brian lee | Report as abusive

A government bailout of newspapers is a good idea. But the money should only be used for re-tooling: Helping newspapers embrace the digital era and depart the dead-tree era. Newspaper and wire service journalism are critical to democracy and free society. Blogs, TV, Radio, even magazines get their news first from newspaper and wire service journalism. They can’t survive either without these vitally important reporters and editors.

Your right that we’re about to see some major newspapers going down; I expect that within the next couple of years there will be a major US city with no newspaper. But it doesn’t have to happen.

Like the auto industry, newspapers are partly to blame for not changing with the times. But unlike the auto industry, bailing out newspapers will only require millions, not billions. And if the government takes some sort of equity stake in exchange for the re-tooling bailout, that’s OK. It works for NPR and BBC.

Read more at http://tinyurl.com/newspaperbailout

Of course media is part and parcel of this world. It cannot escape from the meltdown

maybe no weants to read the newspaper because of the junk that is being wriien?

maybe it’s the fact that the newspapers will not mention the race of the bad guy in less it’s a white guy doing something bad to a minority?

maybe the papers report the samething over and over again?

maybe we don’t need the papers?

Posted by Tuco | Report as abusive