The Newspaper Revitalization/Beetle Bailey Protection Act

Dear Sen. Benjamin Cardin,

As a Maryland resident, long-time journalist and a citizen with a keen interest in the economy, I’d like to offer my opinion on the bill you introduced yesterday, The Newspaper Revitalization Act:

During a period of monumentally feeble-minded legislative lunging, this bill earns a place right alongside that nutjob 90 percent tax on AIG bonuses your good friends in the House voted for recently. In fact, it has eerie similarities.

Your Newspaper Revitalization Act:

• uses the U.S. tax code to express emotion rather than solve a problem;
• reflects a poor understanding of the industry it will affect;
• could trigger a series of events that threatens our collective future; and
• won’t make it past the first constitutional lawyer who gets her hands on it.

Far worse, unlike the AIG bill, the Act threatens to sustain publication of Beetle Bailey cartoons in perpetuity. More on that below.

Let’s start thinking through some of the issues surrounding the The Newspaper Revitalization Act [hereafter, "NRA"][!], which allows local newspapers [but not big newspaper chains, Senator, you sly populist!] to declare non-profit status as 501(c)3 organizations devoted to public education.

[Insert the sound of knuckles cracking here.]

It provides advantages for newspapers, not news organizations.

Like the AIG bonuses themselves, the NRA rewards the very people who got us into this mess in the first place, which in this case means the retrograde, hidebound lamebrains–excuse me, “public-minded community business leaders”–who have been thwarting innovation in the news industry for the past decade as their world has collapsed around them. By providing tax advantages to a declining business, this isn’t just “picking winners and losers.” It’s making the losers winners.

It punishes innovation

So: An entrepreneur who has invested in new technology, is moving the industry forward and training a workforce for the 21st century will face unfair price competition from the folks who continue to cling to a dying business model and distribute news on forest products.

This is like granting tax advantage to steam-powered automobile makers when the gasoline engine threatened to put them out of business. [I wonder if we'd have a steam-powered auto industry today if the Steam Powered Automobile Revitalization Act had been passed in 1920.]

It rewards small newspapers over bigger ones.

Since “large newspaper conglomerates” [from your press release, Senator] would not be covered under this bill, the newspapers of diversified media companies would be at a competitive disadvantage in local markets, since their revenues won’t be shielded from taxes and their pricing must account for some profit margin.

The result may well be the survival of small, non-profit newspapers and the speedier decline of larger newspaper companies. Hello, Moline Weekly Journal-Register-World, goodbye Gannet local paper! Is this outcome in the public interest? Beats me.

The bill is silent on the, how we say, “nettlesome” issue of online news distribution by tax-advantaged non-profits.

Under the bill, can a non-profit newspaper publish its content online? If so, is its digital revenue tax-protected? Can the paper sell content created under tax shield to big, for-profit online media companies? Can these non-profit newspaper organizations make their content available for online-first distribution? If not, would holding news back until it’s been dropped off by truck at the local drug store be in the public interest?

Let’s get us some lawyers and dig into this stuff!

Non-profits can be fat, rich and plutocratic, just like for-profits.

It’s sweet to think of non-profits as humble organizations with hard-working people devoted to the public good. Some are. But take a look at non-profits like United Way, the Red Cross and AARP–great buildings, comfortable salaries, cool technology, folks who come in once a week to polish the shiny surfaces in the lobby, etc.  The major difference: what private companies call “profit,” 501(c)3’s must invest [most of] every year to keep advancing their mission.

And while we’re on the topic of non-profit plutocracy, how long before someone realizes that hey, if I can lash together a group of local, non-profit newspapers under the umbrella of a bigger national non-profit, that’d be a sweet business–I mean, public service organization. [Look at that, someone just thought of that already!]

The new non-profits will be permitted to receive tax-advantaged donations from companies and private individuals.

Yes, NPR, PBS and their affiliates take donations from benefactors. But in a local market, let’s say the area chamber of commerce and its leaders, donating as individuals, pony up 20 percent of the newspaper’s annual budget with generous contributions, hoping to support “fair and balanced” coverage of the local business issues.

[Moment of silent reflection here.]

The problem of definitions

The bill defines a newspaper that may convert to non-profit status in this way:

(1) the trade or business of such corporation or organization consists of publishing on a regular
basis a newspaper for general circulation,

(2) the newspaper published by such corporation or organization contains local, national, and
international news stories of interest to the general public and the distribution of such newspaper is necessary or valuable in achieving an educational purpose, and

(3) the preparation of the material contained in such newspaper follows methods generally considered educational in nature.

All right, let’s just drive the ol’ Ford 150 through some of the bigger holes:

• Does the newspaper have to include local, national and international news stories? Two of the three? Any one?
• Who will determine what’s “of interest to the general public”? And what sort of accountability would there be?
• And do you really mean that the preparation follows methods considered educational? i.e., that the process of newsgathering must be done via a method considered educational? I don’t get that one at all. Did someone proofread this thing?

The Beetle Bailey Educational Conundrum

Let’s talk education.

Will such non-profit newspapers be allowed to run stuff like Beetle Bailey as part of their “educational” mission? Crossword puzzles? Feature stories on cute cats? Hollywood gossip? A publication devoted to pro-choice issues? Pro-life? How about a newspaper about the issues and personalities of the local transgendered population? Computer gamers?

Or would the newspaper to achieve educational goals have to run nothing but “hard news” and “investigative reporting” or “public service journalism,” however you want to identify that? And if so, who would choose to read it? And if nobody reads it, how could even these publications survive, even as non-profits?

++++++++++++++

Senator, I share your concern that the publication of news from a variety of independent sources is essential to a vital democracy.

But government bailout is not the answer. I endorse what your esteemed colleagues across the aisle call “a free market approach.”

The way to ensure survival and growth of news–of journalism–is to let the free market take its course.

Let the newspapers die so that the next generation of news operations can grow and thrive.

Think of the death of newspapers as a down payment on building a competitive, dynamic, democratic future with an informed citizenry and accountable public officials.

And freedom, forever, from Sargent Snorkel.

Sincerely,

Craig Stoltz