Report: Public Policy and Funding the News

[Source: USC News, by Geoffrey Baum; January 28, 2010]

“Public Policy and Funding the News” is a unique effort to begin examining how involved the government, at all levels, has been in subsidizing news throughout American history to foster an informed citizenry and what this support has meant for publishers, journalists and news consumers.

The report by the USC Center on Communication Leadership & Policy analyzes some of the financial tools that government has used to support the press over the years - from postal rate discounts and tax breaks to public notices and government advertising. It documents cutbacks across a range of sectors, presents a framework for the consideration of policy options to place the industry on more secure financial footing.

“It is a common myth that the commercial press in the United States is independent of governmental funding support,” said Geoffrey Cowan, who co-authored the report and is USC Annenberg School for Communication & Journalism dean emeritus and director of the Center on Communication Leadership & Policy. “There has never been a time in U.S. history when government dollars were not helping to undergird the news business to ensure that healthy journalism is sustained across the country.”

David Westphal, co-author of the report, former Washington editor for McClatchy and USC Annenberg executive in residence, said: “Certainly, the U.S. has never supported news gathering the way some European and Asian countries have. The point here is that it’s time all of us, outside and inside the industry, to realize that tax dollars support the American news business, and those dollars, which throughout our history have been critical in keeping the news media alive, are now shrinking quickly.”

The late 1960s marked a high-water mark of government support for the news business. The postal service was subsidizing about 75 percent of the mailing costs for newspapers and magazines, roughly $2 billion in today’s dollars. At this time, however, publishers’ mailing discounts for their printed news products are down to 11 percent or $288 million.

Paid public notices, government-required announcements that give citizens information about important activities, also have been lucrative for newspaper publishers, providing hundreds of millions in revenue to publications ranging from local dailies and weeklies to national newspapers such as The Wall Street Journal.

For example, in a four-week study, researchers found that the government was responsible for the most purchases, by column inches, of ad space in the Journal. And the newspaper wants more: In 2009, the publication battled Virginia-area papers in a move to get its regional edition certified to print local legal notices.

This public notice income is especially important to weekly and other community newspapers, accounting, in 2000, for 5 to 10 percent of all revenue. But now, proposals are pending in 40 states to allow agencies to shift publication to the Web.

Tax breaks given to news publishers are likely to decline because many are tied to expenditures on paper and ink, and cash-strapped states are seeking to find new sources of revenue. Federal and state tax laws forgive more than $900 million annually for newspapers and news magazines, with most of the money coming at the state level.

Some additional excerpts:

• In 2009, federal, state and local governments spent well over $1 billion to support commercial news publishers.

• The cumulative effect of reducing these government subsidies is not the primary problem afflicting the news business today. At most, government assistance has dropped by a few billion dollars while newspapers alone have lost more than $20 billion in revenue in the last three years. Yet government support represents a critical element of economic survival.

• Policymakers cannot afford to be mere spectators while these changes flash by. American government does not work very well if citizens do not have a reliable supply of news and information.

“We live in an era of profound technological change that threatens many forms of news media,” Westphal said. “We do not favor government policies that keep dying media alive. But we do believe government can help to provide support during this period of transition.”

A copy of the report is available at www.fundingthenews.org.

The Web site also features supplemental research papers on eight specific areas: postal rate subsidies, tax policy, broadband expansion, international broadcasting, government funding of public broadcasting, public notice requirements, copyright laws and antitrust regulations. In addition, the authors have collected an online directory of proposals for government intervention and links to public hearings and other activities regarding these issues.