What Congress Could do to Protect Newspapers

New Law Would Allow News Companies to Become Nonprofits

Oct 2, 2009

Would the declining fortunes of U. S. newspapers bounce back and thrive if newspaper companies were converted to nonprofit organizations?

Their business model was already threatened – advertising and circulation profits declining as the public embraced Internet delivery of news. Then the economy collapsed, and with it, more of the much-needed remaining advertising revenue. Could nonprofit status rescue newspapers from extinction?

For some it might, say two federal law makers. Senator Ben Cardin and Congresswoman Carolyn B. Maloney want to provide a tool to newspaper companies, encouraging them to adopt nonprofit status as a new business model. The Newspaper Revitalization Act of 2009 (S. 673) was introduced by Senator Cardin (D-MD) in March this year.

Newspaper Revitalization Bill Not a Bailout

Now a companion bill (HR 3602) has been introduced in the U.S. House of Representatives by Congresswoman Maloney (D-NY). Both Maloney and Cardin stress that they are not proposing a "bailout for newspapers", and do not envision their proposal helping large corporate organizations; it is aimed at locally-owned community papers. Both stress the goal of protecting the watchdog function of newspapers.

"It's clear that we need to explore alternative business models to ensure an independent and vibrant press in the 21st century," said Maloney. Using her position as Chair of the Joint Economic Committee, she convened a hearing, September 24, to examine:

She invited the witnesses – John F. Sturm, president of the Newspaper Association of America; Dr. Paul Starr, professor of sociology and public affairs; Tom Rosenstiel, director of the PEW Project for Excellence in Journalism; and Denise Rolark Barnes, publisher of the Washington Informer – to discuss funding alternatives for print media.

Cardin Testified in May

In May, Cardin testified about the bill in a hearing convened by the Subcomittee on Communications, Technology and the Internet. Cardin said that despite 24 / 7 availability of news sources, nothing has replaced the original, in-depth reporting done by newspapers.

He described in detail the work that reporters do in gathering the news. Diligently working their beats over a period of years, not hours, said Cardin, they forge relationships and build networks, creating avenues of information. Such hard-won information is the key, he said, to providing a check on "governments.... elected officials, corporations" and other powerful people and institutions.

The Newspaper Revitalization Act of 2009 which he and Maloney have introduced, would allow newspapers to operate under the 501 (c)(3) status for educational purposes. The bill would:

The Nonprofit News Debate Among Industry Pros

An industry-wide debate on nonprofit status for news companies commenced in January this year when David Swensen and Michael Schmidt, of Yale University, published a discussion-inducing op-ed piece, "News You Can Endow" at the New York Times. Turning newspapers into endowed institutions, they suggested, might not only save newspapers, but also make them stronger by insulating them from economic pressures.

When Cardin first introduced the Newspaper Revitalization bill in late March, Rick Edmonds at the Poynter Institute offered cautious interest. "This is a time for exploring lots of options – and this is an option that could help," he wrote. He also offered links to other "insiders" whose more negative assessments included this one: keep government out of the news business.

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