AMERICAN ISSUES PROJECT

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Earlier this week, a good friend of mine was apoplectic about news that President Obama supported a kind of bailout for the newspaper industry.

I had no such outrage. After all, no such thing will happen. And yes, this is a good thing.

Under a plan floated by the Administration and proposed in Congress by Rep. Carolyn Maloney (D-N.Y.), newspapers could reorganize as a 501(c)3 organization. The not-for-profit designation would exempt the newspapers from all kinds of tax liabilities.  In return, newspapers would likely have to refrain from making political endorsements.

Maloney chaired a hearing on the future of newspapers on Thursday. According to the Washington Times, only three of the 20 members of the Joint Economic Committee even bothered to show up.

Apparently, even the federal government is leaning against propping up an industry victimized by rapidly-evolving technology, inertia, labor problems and arrogance. Maybe Congress learned from its experience funding the auto industry?

Unfortunately, it’s probably not principle that’s guiding Congress in the right direction. It’s pragmatism.

First, understand that the Congressional elections just 13½ months away will color most Congressional actions from here on out. Editor and Publisher, a trade journal for journalists, reported that polling revealed Americans were strongly against any government intervention into newspapers. Unless sentiment changes dramatically, few Congressmen running for re-election are going to win any points for saving the local newspaper.

Just the idea of bailing out another business will not play well, for sure, but Congress knows very well how it could get worse. Imagine that Maloney’s bill saves a newspaper like the Chicago Sun-Times.  The Sun-Times operates in a very competitive environment. As a result, the newspaper tries to attract readers by offering several gossip columns, a few big name columnists, sensationalist tabloid covers, and heavily-staffing human-interest events. How will it look when the government-aided Sun-Times sends 10 staffers to spend a week in Miami for the Super Bowl? How will it be able to justify six-figure salaries to a movie critic, a couple sports columnists and a couple gossip columnists? Maybe Reps. Henry Waxman (D-Cal.) and Barney Frank (D-Mass.) can hold a couple of hearings in which they can scold the newspapers’ publishers.

However, such government oversight over a newspaper’s editorial content probably violates First Amendment protections.

Because of that, newspapers would ultimately reject the bargain.  Journalists are supposed to be government watchdogs, not dependents. AIP columnist Ed Morrissey explained this well on Hot Air earlier this week:

The entire raison d’etre of the newspaper industry, according to their own leading lights, is to shine a light on the halls of power and enforce transparency.  If they’re getting a big tax break from the government by becoming “non-profit” (many of them are already non-profit in practice, which is their problem), doesn’t take impact their ability to report in an objective manner?  For that matter, what would prevent blogs from organizing as 501(c)(3) entities themselves?

Journalists are fierce about remaining independent from any type of outside influence. Many political writers refrain from voting in primary elections lest they betray a bias one way or another. The Society of Professional Journalists has published an ethics code, which is considered a standard in the industry. A key principle in the code is to “act independently.” A bailout would erode any pretense of independence.

Therefore, it’s no surprise that Newspapers Association of America president John Strum told Congress Thursday that his group is opposed to any type of direct government aid.

So that’s the good news. At least we will not bail out the New York Times or any other newspaper any time soon. That bad news is that this does not signal any sea change in political thought on Capitol Hill.

Want more bad news? American mass media is in trouble. It’s distressing.

As a former newspaper staffer, I am sad to see former colleagues lose jobs (or see their pay decrease). I worry about friends who work for companies like the Sun-Times News Group, whose very existence is at stake during a standoff between private equity investor James Tyree and the Chicago Newspaper Guild. I pray for the lifelong employees at Tribune Company who were victimized by an ESOP gone wrong. I fret about losing some income from doing freelance work for various daily newspapers.

But media companies are going to have to figure out a way to fit in a market with so many competitors. They can start by asserting their rights on intellectual property. They can continue by challenging campaign finance laws like McCain-Feingold, which limit a major source of revenue in an Unconstitutional manner. Finally, they can regain financial help by evolving so that they can both leverage the technology of today to meet a large market of voracious news junkies. The fact that this website exists is proof that there is a hungry market for news and opinion.

And because of all that, the last things media needs are government money or tax breaks.

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