I Don't Get It

Just a few days ago I wrote about proposals for government subsidies / bailouts / partial control of print media. Already, it seems that bills are popping up in Congress. I guess this is not surprising -- as Congress loves to throw pork at particular industries in exchange for help getting elected, the temptation to make the newspaper industry, with its unique political muscle, beholden to the political class must be overwhelming.

But I must say this makes zero sense to me:

With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.

"This may not be the optimal choice for some major newspapers or corporate media chains but it should be an option for many newspapers that are struggling to stay afloat," said Senator Benjamin Cardin.

I don't see how allowing organizations (whose problem is that they are making no profits) to avoid income taxes on their non-existent profits is really going to solve much. Is the thought that donations will save the day? Are we to endure endless pledge drives in print media?  Or maybe Democrats are hoping ACORN will use its stimulus funds to start buying up local papers?

This is classic government in the corporate state.  Economics and new technologies are driving huge changes in an influential business.  These changes will force survivors to adopt new business models, and will force formerly dominant competitors who refuse to change out of business.  Rather than face these changes and deal with risks to their leading positions, powerful incumbents run to government to try to get the state to lock in historic business models and prevent new entrants for poaching on what they consider their protected market preserves.


  1. Bobby L:

    My spidey-sense started tingling a few days ago when I saw a couple of articles (online!!!) that were woe-ing about a couple 150 year old newpapers that were closing down due to very low readership.

    I joked, "I'll bet a newspaper bailout is right around the corner!"

    I don't know if I wanna cry or laugh hysterically at this point....

  2. K:

    Newspapers can already convert to non-profit status. No enabling law is needed.

    This is just an attempt to steer tax money to favored publications while pretending the non-profit papers will be non-partisan. Sure they will!!!!

    I do agree that the DOJ should seldom block mergers when one party is clearly failing. DOJ has a lot of discretion in using the monopoly laws.

  3. DrT:

    I recently read a plea from a small newspaper publisher about how printed newspapers were the main force keeping democracy alive in America. But, looking at the record, most city newspapers have supported left-wing, socialist, and big government actions and opposed libertarian, federalist, and small government actions. For this reason alone, I would like most newspapers to go bankrupt.

    Also, most newspapers are poorly written. The articles are written at the fifth grade level by reporters whose writing skills are at the seventh grade level and who get corrected by editors whose skills are at the ninth grade level. Most articles get important facts wrong and have obvious biases.

    It might be amusing to see the newspaper owners squirm after receiving federal dollars and then being required to squelch some stories and spin others. However, my enjoyment of this plight would be outweighed by my dislike for further bailouts.

  4. Corky Boyd:

    I spent about 40 years on the business side of newspapers and I can tell you avoiding taxes isn' what is going to save them. The killer expenses are newsprint and payroll. I wrote an article on my blog coming to the same conclusion as yours. Then it hit me. The big supporter of this concept is the Guild (union).

    There is no way a for profit paper can ethically accept government largesse (more commonly called bailout money) and maintain the myth of being the the watchdog of government. But reclassifying themselves a non-profit puts them in the same category as NPR, PBS or the BBC. The stipulation in Sen.Cardin' bill is the non-profit papers can't endorse canidates and can't own TV stations.

    That's not a lot of restrictions for, say, the NY Times. The Times is losing money and has sold off their profitable TV properties, making them the el primo non profit newpaper candidate ready for a couple of hundred million bucks/year of your tax money. It's done for NPR and PBS even though these operation are among the most biased news sources in the world.

    The more I get into it, the more I find this is nothing more than opening for tax funding and avoiding the guilt pangs.

  5. Barak Pearlmutter:

    Nonprofits don't have to pay sales tax on their supplies, like paper.