Government ideas to help ease the local news crisis may be fizzling out

Photo (cc) 2007 by weirdisnothing

Less than a year ago, it looked like the federal government might be ready to pass legislation aimed at addressing the local news crisis. The ideas in play were far from perfect, but they might have provided some needed assistance, at least for the short term. Now those proposals appear to be all but dead.

Rick Edmonds, who analyzes the news business for Poynter, wrote recently that the Local Journalism Sustainability Act, or LJSA, seems likely to fall victim to Washington’s dysfunctional political environment.

The LJSA would create three tax credits for a period of five years. One would allow news consumers to write off the cost of subscriptions on their taxes. Another would be aimed at businesses that advertise in local news outlets, and a third would subsidize publishers who hire or retain journalists.

Late last year, though, the credit for publishers was broken off and added to the Build Back Better bill, which died because of intransigence on the part of all 50 Republicans plus Democratic Sen. Joe Manchin. As Edmonds observes, the LJSA could be revived and considered as a discrete piece of legislation. But, he writes, “separate breakout legislation would need to go through committees and get 60 votes. A subsidy for journalism is probably not so popular as to command those 10 added votes.”

Meanwhile, another Democratic senator, Amy Klobuchar, is pushing a bill that would allow the news business to bargain with Facebook and Google to share some of their ad revenues. That bill, dubbed the Journalism Competition and Preservation Act, or JCPA, is modeled after a law adopted in Australia. But the JCPA may also be dead on arrival, Edmonds reports, as Republican Sen. Mike Lee has trashed it by saying that “the last thing we should do is to accept a cartel — or create one — colluding against a business partner.”

Yet a third bill sponsored by Democratic Rep. Mark DeSaulnier may prove less controversial. The DeSaulnier legislation would make it easier for a for-profit news organization to convert to nonprofit status, something that is currently not covered by the IRS code. But given that the IRS has shown quite a bit of willingness to approve such conversions in recent years, the effect of that particular proposal may be minimal. (Disclosure: I had a hand in drafting the DeSaulnier legislation.)

As I said, these proposals are problematic. The LJSA would reward corporate chain owners along with independent operators, thus subsidizing a model that has failed to provide communities with news and information they need. In Australia, the revenue-sharing scheme with Google and Facebook has mainly served to further enrich Rupert Murdoch.

There is no substitute for innovation and passion at the local level. Still, given the dire straits in which local news finds itself, a helping hand from the government would be welcome. Sadly, it doesn’t look like it’s going to happen.

Manchin kills Build Back Better, doing what he could have done six months ago

Sen. Joe Manchin. Photo (cc) 2017 by Third Way Think Tank.

Sen. Joe Manchin has finally done what he was obviously planning to do all along — he’s killed the Build Back Better bill. Naturally, he made his announcement during an appearance on Fox News.

This is why I was upset with progressives like Reps. Ayanna Pressley and Alexandria Ocasio-Cortez for holding the infrastructure bill hostage until Build Back Better was passed. To what end? Manchin was never going to vote for BBB, no matter how many programs were cut out of it. At least we got the infrastructure bill anyway. But I hate to be right — BBB would have done an immense amount of good.

The protracted process did enormous damage to President Joe Biden’s political standing. He and his advisers need to think about how they got themselves in a position where they rolled all the dice in a very public way on something that was never going to pass.

It’s time also to think about how individual chunks of BBB might be salvaged. It won’t be easy. But the Local Journalism Sustainability Act, part of which had been folded into BBB, stands out as something that has actual bipartisan support. Let’s get it done.

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With Alden on the prowl again, it’s time to stop hedge funds from destroying newspapers

Photo (cc) 2007 by Mike

Previously published at GBH News. It’s rather late in the game to ask whether hedge funds can be stopped from buying up every last one of our local newspapers. After all, about half of us are already stuck with a paper that is owned by, or is in debt to, the likes of Alden Global Capital (Tribune Publishing and MediaNews Group), Apollo Global Management (Gannett) and Chatham Asset Management (McClatchy).

Still, with Alden having now set its sights on Lee Enterprises, a chain that owns 77 daily newspapers in 26 states, we need to take steps aimed at preventing what is already a debacle from devolving into a catastrophe.

So what can be done? Steven Waldman, the co-founder of Report for America, which places young journalists in newsrooms, has some ideas. At the top of his list: redefining antitrust law.

“In general, antitrust law for the past three or four decades has focused on whether mergers would hurt consumers by raising prices or reducing competition,” Waldman wrote recently for the Washington Monthly. “But before that, antitrust regulators looked at mergers more broadly, including whether they would hurt communities. And that’s what needs to happen here.”

Waldman would also provide tax incentives for nonprofit organizations seeking to buy newspapers as well as tax credits to make it easier for news organizations to hire or retain journalists. That latter provision is part of the Build Back Better legislation, whose uncertain fate rests in the hands of Sens. Joe Manchin and Kyrsten Sinema.

“This will strengthen local news organizations of all shapes and sizes, making them less vulnerable to vultures,” Waldman argued. “The legislation could be a powerful antidote to the sickness spreading within local communities.” Trouble is, the tax credits would benefit the Aldens and the Gannetts just as much as they would the independently owned news organizations that are struggling for survival. Still, it seems like a step worth trying.

The problem with hedge funds owning newspapers is that such funds exist solely for the purpose of enriching their investors. Newspapers, of course, aren’t exactly lucrative. But they still have advertising and circulation revenues, even if they are much smaller than they were, say, 20 or 30 years ago. Cut expenses to the bone by laying off reporters and selling real estate, and you can squeeze out profits for the enrichment of the owners.

Alden is notorious for being the most avaricious of the bunch. Which is why shock waves ripped throughout the journalistic community last week when Rick Edmonds of the Poynter Institute reported that Alden — just months after feasting on Tribune’s nine major-market dailies — was making a bid for Lee, whose papers include the St. Louis Post-Dispatch, The Buffalo News and the Arizona Daily Star. (Julie Reynolds, an investigative reporter who has been dogging Alden for years, recently spoke about the hedge fund with Ellen Clegg and me as part of our podcast, “What Works: The Future of Local News,” at Northeastern University.)

Lee’s papers also include the Omaha World-Herald, and therein lies a sad story. The World-Herald was at one time the flagship of hometown boy Warren Buffett’s newspaper chain, which he began assembling in 2012. But despite Buffett’s self-proclaimed love for newspapers, he failed to invest in their future, cutting them repeatedly and eventually selling out to Lee. Now they face the possibility of a much worse fate.

Or not. Several days after Alden offered to buy Lee in a deal valued at $141 million, the Lee board of directors adopted a poison pill provison. As reported by Benjamin Mullin in The Wall Street Journal, Alden — which currently holds about 6% of Lee stock — would be forbidden for the next year from increasing its share above 10%. If nothing else, the move provides some time for other buyers to emerge. Perhaps the chain will be broken up, with some of Lee’s papers being acquired by local owners.

As Waldman suggests, there is nothing inevitable about local news being destroyed at the hands of venture capital. About two and a half years ago, I wrote about The Salt Lake Tribune, acquired from Alden by local interests and converted into a nonprofit news organization. Now, according to Lauren Gustus, the Tribune’s executive editor, the paper is adding staff and resources. “We celebrate 150 years this year and we are healthy,” she wrote in a message to readers recently. “We are sustainable in 2021, and we have no plans to return to a previously precarious position.”

Alden’s acquisition of Tribune Publishing (not The Salt Lake Tribune; I realize there are a lot of Tribunes to keep track of here) was an avoidable tragedy, made possible by a board that placed greed above the public interest. Since closing the deal, the hedge fund has been hacking away at Tribune newspapers that were already much diminished, including the Chicago Tribune, New York’s Daily News and the Hartford Courant.

Yet some good may come out of it, too: Stewart Bainum, a hotel magnate who had competed with Alden for Tribune, is starting a well-funded nonprofit news site, The Baltimore Banner, that will compete with Tribune’s Baltimore Sun. Maybe that will lead to similar efforts in other Tribune cities.

Meanwhile, Lee Enterprises’ newspapers are safe, at least for now. What will happen a year from now is anybody’s guess. But as long as the vulture can be kept outside the cave, there is hope for the millions of readers who depend on a Lee newspaper to stay informed about what’s happening in their community.