Newspaper Revitalization Act Can't Hurt, But Can It Help?
By Gina Cuclis
A Senate bill that would allow newspapers to operate as tax exempt nonprofits has picked up only one co-sponsor since it was introduced in March, indicating little enthusiasm from the newspaper industry for the bill. The Newspaper Revitalization Act by Senator Benjamin Cardin of Maryland is co-sponsored by Cardin's Maryland colleague, Senator Barbara Mikulski. The bill is in the Senate Subcommittee on Communications,Technology and the Internet.
Not For All Newspapers
Cardin's bill is intended to provide newspapers a tool as the industry struggles to survive. I've discussed in previous posts the declining newspaper industry and what this could mean to our democracy. A press release from Cardin's office says the Newspaper Revitalization Act "is targeted to preserve local newspapers serving communities and not large newspaper conglomerates." In other words, the Santa Rosa Press Democrat, owned by the New York Times, would not benefit, but the family owned, twice-weekly Sonoma Index Tribune could.
No Political Endorsements
As a tax exempt nonprofit, under the 501(c)(3) status, a newspaper would not be allowed to make political endorsements. It would continue to be allowed to report on all issues, including political campaigns. Advertising and subscription revenue would be tax exempt. As a nonprofit, a newspaper would be allowed to solicit charitable contributions to support coverage or operations, similar to how public broadcasting operates.
Limits Amount of Advertising
The bill also limits the amount of space nonprofit newspapers would be allowed to use for advertising to 50 percent. To be profitable, newspapers traditionally have needed 2/3rds to 3/4th of their space for advertising. This limitation will make nonprofit status unattractive to some newspaper owners. A newspaper would need to be proficient at fundraising to make this work.
Doubtful Bill Will Help Much
Media industry analysts are skeptical about this legislation. The economic problem newspapers face is the industry hasn't figured out how to be profitable in the digital age. The numbers of people getting their news online keeps growing, and they expect the information to be free. Online advertising rates are tiny in comparison to what newspapers get for print ads. There are also people who don't believe traditional print newspapers are worth saving.
I also doubt newspapers will have the ability to attract enough philanthropic interest to make up for the decline in ad revenue. Donors respond to emotional appeals and to the sense that they're making their communities better places. However, since it would be up to an individual newspaper whether to switch to the nonprofit option, I don't see a downside to providing newspapers the ability to go that direction if they want.
A Senate bill that would allow newspapers to operate as tax exempt nonprofits has picked up only one co-sponsor since it was introduced in March, indicating little enthusiasm from the newspaper industry for the bill. The Newspaper Revitalization Act by Senator Benjamin Cardin of Maryland is co-sponsored by Cardin's Maryland colleague, Senator Barbara Mikulski. The bill is in the Senate Subcommittee on Communications,Technology and the Internet.
Not For All Newspapers
Cardin's bill is intended to provide newspapers a tool as the industry struggles to survive. I've discussed in previous posts the declining newspaper industry and what this could mean to our democracy. A press release from Cardin's office says the Newspaper Revitalization Act "is targeted to preserve local newspapers serving communities and not large newspaper conglomerates." In other words, the Santa Rosa Press Democrat, owned by the New York Times, would not benefit, but the family owned, twice-weekly Sonoma Index Tribune could.
No Political Endorsements
As a tax exempt nonprofit, under the 501(c)(3) status, a newspaper would not be allowed to make political endorsements. It would continue to be allowed to report on all issues, including political campaigns. Advertising and subscription revenue would be tax exempt. As a nonprofit, a newspaper would be allowed to solicit charitable contributions to support coverage or operations, similar to how public broadcasting operates.
Limits Amount of Advertising
The bill also limits the amount of space nonprofit newspapers would be allowed to use for advertising to 50 percent. To be profitable, newspapers traditionally have needed 2/3rds to 3/4th of their space for advertising. This limitation will make nonprofit status unattractive to some newspaper owners. A newspaper would need to be proficient at fundraising to make this work.
Doubtful Bill Will Help Much
Media industry analysts are skeptical about this legislation. The economic problem newspapers face is the industry hasn't figured out how to be profitable in the digital age. The numbers of people getting their news online keeps growing, and they expect the information to be free. Online advertising rates are tiny in comparison to what newspapers get for print ads. There are also people who don't believe traditional print newspapers are worth saving.
I also doubt newspapers will have the ability to attract enough philanthropic interest to make up for the decline in ad revenue. Donors respond to emotional appeals and to the sense that they're making their communities better places. However, since it would be up to an individual newspaper whether to switch to the nonprofit option, I don't see a downside to providing newspapers the ability to go that direction if they want.
Posted by Gina Cuclis at 7/22/2009 2:31 PM 
Categories: Newspapers, State of the Media
Tags: Sonoma Index Tribune Benjamin Cardin newspapers Santa Rosa Press Democrat
Categories: Newspapers, State of the Media
Tags: Sonoma Index Tribune Benjamin Cardin newspapers Santa Rosa Press Democrat
It seems that a successful non-profit could be a newspaper now, but then there was the Christian Science Monitor example. I don't see the Newspaper Revitalization Act as adding much. I think out basic democracy will have to thrive though new means other than the traditional mode. The hyper linked social network you referred to is a more viable model. And we don't subsidize a product to make it dominant, nor successful. Granted, corporate video media have their own unique forms of subsidies in the form of pseudo utilities...
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I have read your previous posts about the decline in revenue from the newspaper industry and I must say this is really good news. I would love to see this legislation go through just to provide another option for struggling newspaper companies. I guess that most people don't see how imperative it is for a functional democracy to have media outlets like newspapers. I am just now realizing myself how valuable these assets are to bettering our communities. Great information and lets hope this legislation passes!
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