Public TV. Public Radio. Public Newspapers?

March 26, 2009

Senator Ben Cardin (D-MD) has introduced a bill that would allow newspapers to file as 501(c)(3) nonprofits in order to avoid paying corporate income taxes. Many newspapers around the country (NY Times, Tribune Co., the Philadelphia Inquirer, etc.) have been feeling the pressure of reduced readership and ad revenue for a long time, and the current economic climate is only making it harder for papers to keep printing. The status as a nonprofit would mean that a newspaper’s circulation and ad revenue would be tax exempt, which would presumably help keep them afloat.

Giving newspapers the option of becoming nonprofit organizations would essentially create a situation similar to that of public radio and public television. The newspaper would be supported by readers and organizations that “underwrite” the paper (which could count as tax deductible contributions), and as nonprofits the papers would not be allowed endorse political candidates or specific pieces of legislation or initiatives. Because of this limit on political speech, editorials and columnists might cease to exist in these papers. From a policy perspective it would seem difficult to justifiably draw a line between TV/radio and newspapers such that the former could enjoy nonprofit status but the latter could not.

But Cardin’s proposal ignores the bigger picture. The newspaper industry has been headed for problems for a long time. With the advent of the internet and free online news it was only a matter of time before print newspapers began to lose readership. Online news sources are adaptable, can keep readers up-to-date on developing stories (much like TV or radio news), and can provide more information than print news sources who have to worry about page space. Not to mention that there is a serious cost advantage to electronic media. But many newspapers did not (or possibly could not) adapt and are now suffering a loss of revenue from advertisers and readers. As a result those news providers are now entering bankruptcy or ending their print editions and moving subscription service completely online. Maybe it is only fair that we allow newspapers the same nonprofit option as radio and TV stations, but exempting newspapers from paying taxes doesn’t help if they have no revenue in the first place.

This situation is reminiscent of the U.S. auto industry’s failure and subsequent bailout. Domestic car companies had an increasingly difficult time competing in the global market, and when the economic troubles hit they were bailed out in an attempt to prevent (or more likely postpone) the industry from going under completely. It seemed obvious to many last year that the auto industry’s problems were not merely due to a temporary economic crisis, but to a more fundamental problem: a lack of ability to compete in a changing economy. The situation seems to be the same for print newspapers.


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