Non-Profit Newspapers

Senate Bill Would Make Papers Nonprofits

A new Senate bill could grant nonprofit status to newspaper companies, many of which are currently struggling to survive in a worsening economic environment.

Sen. Benjamin Cardin (D., Md.) has introduced what he calls the Newspaper Revitalization Act, which would grant newspaper companies nonprofit status under the same U.S. Internal Revenue Service code reserved for religious, educational and other charitable organizations.

"We are losing our newspaper industry," Sen. Cardin said in a statement. "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.

Because newspaper profits have been falling in recent years, no substantial loss of federal revenue is expected, Cardin said.

If the bill were approved, newspapers would not be allowed to make political endorsements, but would be allowed to freely report on all issues, including political campaigns. Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.

While a transformation to a nonprofit organization may not be the first choice for some major newspapers or corporate media chains, Cardin said "it should be an option for many newspapers that are struggling to stay afloat."

A number of published newspapers have run aground recently, including the 149-year-old Rocky Mountain News in Denver, The New York Sun and The Seattle Post-Intelligencer, which is now only on the Internet. Meanwhile, the Ann Arbor News has announced it would stop publishing later this year, and the Hearst Corp. has threatened to shut down The San Francisco Chronicle if a buyer cannot be found.

A number of other publications have gone through dramatic changes, including newspapers owned by the Tribune Company, while filed for bankruptcy. Meanwhile, The Detroit Free Press and The Detroit News will curtail the home delivery schedule for their print editions to the three days.

Gannett, the owner of USA Today and more than 80 daily newspapers, wants virtually all of its U.S. employees to stay at home and forgo at least one week's pay before July. The Plain Dealer, Ohio's largest newspaper, also ordered pay cuts of 8% and 10-day furloughs for nonunion employees.

I'm still digesting the implications of this.

Free Market proponents might argue that since people are getting their news from the Internet then the newspapers should just die. But Internet news sites don't make money, except from banner ads. Subscription models have failed. So then what happens? Journalists have to get paid too. Less journalists means an already narrowly focused newsmedia becomes even more enslaved to the 24 hour news networks, where ratings rule the day. Haven't we heard enough about the Octumom or the Pop Tart-of-the-Month's run in with the Paparazzi? Local news? Gone. You're not going to find out about your town's budget hearing on CNN.

I don't believe that this should be misconstrued as a bailout. Less tax revenue? Is tax revenue even relevant with trillion dollar deficits? At least, if we get newspapers to stop worrying about the bottom line and start focusing instead on journalism, there's a chance that the quality will improve. Ok, maybe not. But at least it'll give small cities a chance to keep receiving newspapers instead of being at the mercy of national corporations who are beholden to Wall Street.

Eventually, the newspaper industry will figure out how to make the transformation from print to bytes a profitable one. Once everyone owns a PDA and has electronic banking, then some form of micropayment system will probably be established. As much as the digital gadget crowd claim they're ready for it now, Small Town, USA isn't. Read the Sunday paper online? At least if one of my kids spill their milk on the newspaper, it won't cost me $500 to replace it.

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