Cardin proposes nonprofit status for newspapers

Senator says bill aimed at local products, not conglomerates

WASHINGTON - Struggling newspapers should be allowed to operate as nonprofits similar to public broadcasting stations, Sen. Benjamin Cardin, D-Md., proposed Tuesday.

Cardin introduced a bill that would allow newspapers to choose tax-exempt status. They would no longer be able to make political endorsements, but could report on all issues, including political campaigns.

Advertising and subscription revenue would be tax-exempt, and contributions to support coverage could be tax deductible.

Cardin said in a statement that the bill is aimed at preserving local newspapers, not large newspaper conglomerates.

"We are losing our newspaper industry," said Cardin. "The economy has caused an immediate problem, but the business model for newspapers, based on circulation and advertising revenue, is broken, and that is a real tragedy for communities across the nation and for our democracy."

Cardin said his proposal may not be the best choice for some major newspapers, but "should be an option for many newspapers that are struggling to stay afloat."

Speaking on the Senate floor, Cardin added: "As local papers are closing, we're losing a valuable tradition in America -- critically important to our communities, critically important to our democracy."

Reports of layoffs and furloughs at newspapers around the country have become common in recent months. Gannett Co., which publishes 85 daily newspapers, announced Monday that it was asking most of its 41,500 employees to give up a week's pay for the second time this year. The same day, Advance Publications, which publishes daily papers in nearly two dozen cities, said it was ordering 10-day furloughs and a pension freeze at nearly all its daily newspapers.

This is an exceedingly interesting proposition. I'd love to see this bill pass.

I think newspapers would balk at not being allowed to make endorsements, but I like the idea in general. Something needs to be done before many communities across the country find themselves without papers. And that day is rapidly approaching. Newspapers are too important to be allowed to just vanish.

I agree with you dgg. If there is anything I can do besides write my senators let me know?

Thanks, Heart.

I'll bet a lot of small to mid-sized chains/papers would jump at this opportunity if it were to happen. And a number of those type of papers are among the most endangered, so it would make a lot of sense.

I would guess that major metro dailies and large corporate owners would be a lot cooler to the idea. But if they're desperate enough ...

FCC Head Says Agency Should Reconsider Newspaper Ownership Rule

March 26 (Bloomberg) -- The Federal Communications Commission should reconsider restrictions on combined ownership of broadcast stations and newspapers as daily publications struggle with a plunge in revenue, the agency’s head said.

The agency should “visit this whole problem” before long, Michael Copps, acting chairman of the FCC, said in an interview today.

Members of Congress and Attorney General Eric Holder have said they’re concerned with the newspaper industry after four bankruptcies in as many months. Sales and advertising are dropping amid the recession and a migration of readers to the Internet. Daily papers have announced staff or pay cuts in New York, Atlanta, Washington, D.C. and Boston in the past two days.

Copps, a Democrat, said the FCC’s rule didn’t meet “the needs of the industry, the economy or the public.” The rule generally bans combined ownership of a daily newspaper and nearby broadcast station, except in the largest markets.

His term as an FCC member expires next year. Copps is to relinquish the chairmanship when the Senate confirms Julius Genachowski, President Barack Obama’s selection for FCC chair. A hearing date hasn’t been set for Genachowski.

Copps was on the losing side of a 3-to-2 party-line vote in 2007 when the agency, led then by Republican Kevin Martin, loosened a ban on common ownership.

‘Media Frenzy’

In 2007, Copps said the FCC was “rushing to encourage more media frenzy.” The action provoked court challenges, still unresolved, by companies arguing the changes didn’t go far enough and those who said they went too far. The Senate voted to reverse the FCC’s action. The House didn’t act on the matter, leaving the ruling intact.

House Speaker Nancy Pelosi on March 16 called for an examination of whether antitrust enforcement harms newspapers by keeping them from mergers or other arrangements. A panel of the Judiciary Committee is to hold hearings soon.

In a March 18 session with reporters, Holder said it is “important for this nation to maintain a healthy newspaper industry.”

“To the extent that we have to look at our enforcement policies and conform them to the reality that that industry faces, that’s something that I’m going to be willing to do,” Holder said.

Senator Ben Cardin of Maryland has introduced a bill to allow newspapers to operate as non-profits, and Senator John Kerry of Massachusetts in a Feb. 26 statement said he will look into the “disturbing trend that is the disappearance of journalism.”

U.S. newspapers eliminated 5,000 newsroom jobs in 2008 as industry advertising revenue fell 16 percent, and 2009 “may be the worst year yet,” according to a study by the Pew Project for Excellence in Journalism.

I have my doubts that changing the ownership rule is really going to significantly help newspapers. Why would anyone buy one in the current climate? And mergers are not going to help either readers or newspaper employees. You're still going to be out a newspaper, and a lot of people are going to be out of jobs.