• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

Newspapers Want US Help...

Photo Credit :

Many US companies consider lobbying the government just another cost of doing business. When newspapers want help from Uncle Sam, the cost could be their reputation.

Newspapers across the country are bleeding revenue and enduring the worst economic climate they have ever faced, similar to automotive and financial giants such as General Motors Corp and Bank of America Corp.

Some are seeking help from a source they once considered unthinkable: the government. But unlike other companies, newspapers cannot ask for public money without compromising their journalistic goals, media experts and executives say.

"That is so clearly contrary to what our role is as a watchdog that it's just not acceptable," said Tom Fiedler, dean of Boston University's College of Communication and former editor of The Miami Herald.

Instead, publishers are looking for changes to antitrust law, tax breaks and, for some, the leeway to convert their business into nonprofit companies.

The call for action among newspapers has grown since late last year, and increasingly, the Obama administration and Capitol Hill are signaling that they are receptive.

The stakes could not be higher. Many papers are losing unprecedented amounts of advertising revenue. At the same time, publishers such as The New York Times Co and McClatchy Co must pay off billions in debt.

Others, such as Tribune Co and Journal Register Co, are in bankruptcy protection. Some papers have closed, and experts say more are on the way.

At risk, beyond the lost jobs and shareholder money, is the journalism that people deem essential for telling them what they need to know about their communities, their investments and the world.

All Together Now

All the while, newspapers are trying to reinvent themselves for an age when people read most of their news online for free. They have not yet found a way to make it pay, and to figure that out, they say, they have to sit down as an industry.

To do that, they also say, requires the Justice Department to change its antitrust policies so publishers cannot be accused of colluding to find the answers that they need.

"I've never seen an industry where people are so afraid to share ideas," said Philadelphia Newspapers CEO Brian Tierney, at a House subcommittee hearing in April. "Antitrust concerns inhibit even the most rudimentary discussions."

Some publishers want the Justice Department to reinterpret the law in a way that would encourage newspaper mergers or joint ventures.

"All of this really translates to supporting local journalism," said John Sturm, president of the Newspaper Association of America, in an interview.

They also want freedom to discuss ways to get compensated by companies that make money by displaying their articles online, such as Google Inc and Yahoo Inc.

The Justice Department considers antitrust law flexible enough now, one of its officials said at that hearing. Attorney General Eric Holder has said that the department is open to adjusting antitrust policy if it would help.

Another idea, supported by Massachusetts Democratic Senator John Kerry, would let newspapers book losses in 2008 and 2009 over the previous five years when they were more profitable -- essentially a tax break.

Some journalists support a bill that would let newspapers operate as nonprofit organizations.

When's Your Deadline?

Nobody is arguing that government intervention can save the newspaper business, but more people in that industry say it is one of many pieces critical to its survival -- and with no end in sight to the ad declines, quick action is key, they say.

Whether that will happen is anyone's guess. Federal Trade Commission Chairman Jon Leibowitz told Reuters it is not time to act yet.

"Before you get to the point where you look at remedies, you have to discuss more the nature of the problem," said Leibowitz, who is planning a workshop for September to study the media's future.

"The notion of some special tax treatment or an antitrust carve-out (exception) is way premature."
Some publishers think even a tax break is going too far.

"The industry still needs to reinvent its business model," said Mike Reed, chief executive of GateHouse Media Inc. "That's not really the government's problem."

Morningstar analyst Tom Corbett questioned the government's need to intervene at all.

"Creative destruction is an integral part of economic history," he said. "It may not be pretty, but the free market left to its own devices will come up with a model."