[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
  A NEW AGE FOR NEWSPAPERS: DIVERSITY OF VOICES, COMPETITION AND THE 
                                INTERNET

=======================================================================



                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON COURTS AND
                           COMPETITION POLICY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 21, 2009

                               __________

                           Serial No. 111-38

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
ROBERT WEXLER, Florida               STEVE KING, Iowa
STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
  Georgia                            JIM JORDAN, Ohio
PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
LUIS V. GUTIERREZ, Illinois          JASON CHAFFETZ, Utah
BRAD SHERMAN, California             TOM ROONEY, Florida
TAMMY BALDWIN, Wisconsin             GREGG HARPER, Mississippi
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York
[Vacant]

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

             Subcommittee on Courts and Competition Policy

           HENRY C. ``HANK'' JOHNSON, Jr., Georgia, Chairman

JOHN CONYERS, Jr., Michigan          HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia               JASON CHAFFETZ, Utah
ROBERT WEXLER, Florida               BOB GOODLATTE, Virginia
CHARLES A. GONZALEZ, Texas           F. JAMES SENSENBRENNER, Jr., 
SHEILA JACKSON LEE, Texas            Wisconsin
MELVIN L. WATT, North Carolina       DARRELL ISSA, California
BRAD SHERMAN, California             GREGG HARPER, Mississippi
[Vacant]

                    Christal Sheppard, Chief Counsel

                    Blaine Merritt, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             APRIL 21, 2009

                                                                   Page

                           OPENING STATEMENTS

The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Chairman, Subcommittee 
  on Courts and Competition Policy...............................     1
The Honorable Jason Chaffetz, a Representative in Congress from 
  the State of Utah, and Member, Subcommittee on Courts and 
  Competition Policy.............................................     2
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     4
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, Chairman, Committee on the 
  Judiciary, and Member, Subcommittee on Courts and Competition 
  Policy.........................................................     5
The Honorable Charles A. Gonzalez, a Representative in Congress 
  from the State of Texas, and Member, Subcommittee on Courts and 
  Competition Policy.............................................     7

                               WITNESSES

Mr. Carl Shapiro, Deputy Assistant Attorney General for 
  Economics, Antitrust Division, U.S. Department of Justice, 
  Washington, DC
  Oral Testimony.................................................     9
  Prepared Statement.............................................    11
Mr. Brian P. Tierney, Chief Executive Officer, Philadelphia Media 
  Holdings, Philadelphia, PA
  Oral Testimony.................................................    24
  Prepared Statement.............................................    27
Mr. John Nichols, American Journalist, Madison, WI
  Oral Testimony.................................................    39
  Prepared Statement.............................................    41
Mr. Bernard J. Lunzer, President, The Newspaper Guild, 
  Washington, DC
  Oral Testimony.................................................    44
  Prepared Statement.............................................    46
Mr. Ben Scott, Policy Director, Free Press, Washington, DC
  Oral Testimony.................................................    48
  Prepared Statement.............................................    51
Mr. C. Edwin Baker, Nicholas F. Gallicchio Professor, University 
  of Pennsylvania, Philadelphia, PA
  Oral Testimony.................................................    59
  Prepared Statement.............................................    61
Mr. Dan Gainor, Vice President, Business and Media Institute, 
  Media Research Center, Alexandria, VA
  Oral Testimony.................................................    71
  Prepared Statement.............................................    73

                                APPENDIX

Material Submitted for the Hearing Record........................    99


  A NEW AGE FOR NEWSPAPERS: DIVERSITY OF VOICES, COMPETITION AND THE 
                                INTERNET

                              ----------                              


                        TUESDAY, APRIL 21, 2009

              House of Representatives,    
                 Subcommittee on Courts and
                                 Competition Policy
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 2:07 p.m., in 
room 2141, Rayburn House Office Building, the Honorable Henry 
C. ``Hank'' Johnson, Jr. (Chairman of the Subcommittee) 
presiding.
    Present: Representatives Johnson, Conyers, Gonzalez, 
Jackson Lee, Chaffetz, Goodlatte, and Smith (ex officio).
    Staff Present: Christal Sheppard, Majority Counsel; Anant 
Raut, Majority Counsel; Elisabeth Stein, Majority Counsel; 
Rosalind Jackson, Majority Professional Staff Member; Stewart 
Jeffries, Minority Counsel; and Blaine Merritt, Minority 
Counsel.
    Mr. Johnson. This is the Committee on the Judiciary, the 
Subcommittee on Courts and Competition Policy, and this meeting 
will now come to order. Without objection, the Chair will be 
authorized to declare a recess of the hearing, and I will now 
recognize myself for a short statement.
    The newspaper industry is facing hard times. Newspapers 
report losing millions of dollars a week, and clearly this is 
an unsustainable situation. So, as a result, it is nearly 
impossible to open a newspaper, turn on cable news, or even go 
online without reading about another newspaper threatened with 
the closure of its doors forever.
    A key contributor to this phenomenon is the ongoing 
reduction in advertising revenue. Advertising revenue, which 
was once the lifeblood of the newspaper industry, has decreased 
by 25 percent in the last year alone; and over the last 15 
years, public preference for news consumption has dramatically 
shifted from print media to online sources; and in that time, 
online readership has grown from essentially 0 to 63.2 million 
people. This has contributed to a vicious cycle as readership 
declines and newspapers earn less in advertising revenue, which 
results in less content, which results in fewer readers, and on 
and on, with no end, infinite.
    So most would agree, however, that online news is not a 
complete substitution for print media. Because of the digital 
divide, not everyone has access to the Internet or the news 
online. As print media disappears and content is moved online, 
entire segments of our society are being cut out from their 
access to the news. Thus, the elderly, the economically 
disadvantaged, niche markets, and some physically challenged 
individuals are disproportionately harmed by the decline in 
print media.
    In this light, access to print media, particularly print 
media that covers the national news from a local perspective, 
and also the local news, becomes increasingly important.
    Another negative consequence of the decline of newspapers 
is the erosion of responsible journalism. Over the last decade, 
economic pressures have resulted in layoffs of journalists and 
newspaper staff. The loss of jobs is bad enough, since every 
job must be protected in this economy.
    Compounding the problem is the harm to the first amendment 
of the United States Constitution. I have always considered, as 
many others have, the media to be our fourth branch of 
government. It provides a check on government and private fraud 
and abuse that may be lost to local and regional newspapers 
close to Washington, DC, and international bureaus.
    Even the wire services, by the way, Associated Press, I 
think UPI went out of business at one time, but it is back in 
operation, unlike its former self.
    In addition, local news only of importance to small areas 
and niche markets may be lost forever if the smaller newspapers 
are unable to survive. In fact, it is exactly this premise that 
the marketplace of ideas is harmed when there is not a wide 
dissemination of information from diverse sources that led 
Congress to allow newspapers to collaborate by joint operating 
agreement as long as editorial content was kept separate.
    And you all excuse me. My voice is leaving because of the 
pollen count.
    As more and more newspapers merge and ownership of papers 
is consolidated, the free flow of information in the 
marketplace of ideas is therefore restricted. This poses an 
enormous risk to our democracy. And if Congress does not act or 
something does not change, it is certain that a major city in 
the United States will be without a major newspaper in the very 
near future. Kind of like global warming is upon us much sooner 
than anticipated.
    And today, we discuss remedies and whether the current 
business model of newspapers is sustainable. I look forward to 
hearing the suggested solutions to this problem from today's 
witnesses.
    I will now recognize my good friend and colleague, Mr. 
Jason Chaffetz, from the great State of Utah for his opening 
remarks.
    Mr. Chaffetz. Thank you, Mr. Chairman. I appreciate your 
calling this hearing of the Courts and Competition Policy 
Subcommittee, and I appreciate all of you being here today.
    About a month ago, this Subcommittee considered the 
antitrust implications of the Troubled Asset Relief Program, 
otherwise known as TARP. That program of course deals with the 
financial institutions that have received hundreds of billions 
of dollars in taxpayer support. Today, we consider the health 
or lack thereof of the newspaper industry. Like the banks, the 
newspaper industry is in dire straits. Unlike the banks, the 
newspaper industry is not seeking a government bailout. I hope 
this continues to be the case, as I could not support such a 
bailout. Because of the protections of the freedom of the 
press, any such bailout could be constitutionally problematic, 
especially if it came with the types of constraints that were 
used with the TARP funds.
    The newspapers' plight is largely the result of the 
newspapers' failure to adjust to the changes in the 
marketplace. The biggest change has been the advent of the 
Internet. The Internet has facilitated the dissemination of 
news in a variety of forms, from blogs and streaming videos to 
online versions that were established with established news 
sources such as the Wall Street Journal and even, yes, Twitter, 
which I managed to send out that I was attending this event 
here today.
    So print newspapers must compete with this multitude of 
online sources for their readers' attention at the very moment 
that their main revenue source, advertising, is drying up. The 
question we need ask ourselves is, why is the advertising 
drying up? It is moving to be more focused media, including 
cable television and, yes, of course the Internet. Loss of this 
revenue threatens the ability of the newspapers to use their 
strongest weapon; i.e., robust news departments full of eager 
reporters to compete against each other for cheaper new forms 
of news gathering.
    Some entities, notably the Wall Street Journal, have been 
very successful in monetizing their content. Others, like the 
New York Times, have tried and subsequently abandoned efforts 
to try to charge for certain news stories. However, with the 
rise of a la carte pricing for online music, it seems possible 
that there are a variety of pricing schemes that will 
ultimately prove successful, even if a number of news outlets 
go out of business in the meantime.
    Which brings us to the crux of this hearing. I mentioned a 
few moments ago that the newspapers have not requested a 
bailout. They haven't. But that does not mean that they do not 
have powerful friends on Capitol Hill. Last month, Speaker 
Pelosi sent a letter to Attorney General Holder requesting that 
the Antitrust Division take into account changes in the 
newspaper marketplace, including for advertising, in the event 
of a merger of Bay Area newspapers.
    While it is appropriate for the antitrust agencies to take 
into account changed circumstances in evaluating mergers in 
newspapers or any other industry, this Committee should be wary 
of granting any new antitrust exemptions. This is particularly 
true given that the newspaper industry already has an antitrust 
exemption known as the Newspaper Preservation Act.
    Since the 1970's, the newspapers have been able to combine 
operations to save money without fear of antitrust enforcement; 
yet, such joint operating agreements have failed to save the 
newspaper industry as a whole. Newspapers will only be 
profitable when they adjust to an ever changing marketplace. 
History has taught us that the marketplace is the best place to 
determine how to price goods and services. I am hopeful that 
this Committee will take a hard look at any efforts to allow 
newspapers to discuss or make agreements regarding the pricing 
of their online content.
    I would note specifically in where I represent, the State 
of Utah, we have the Deseret Morning News and the Salt Lake 
Tribune who thrive in their ability to contrast their editorial 
content and compete with various news report services, at the 
same time share a department that consolidates some of the 
advertising functions and other issues. So I have seen that in 
my own community.
    And, with that, I would like to yield back the balance of 
my time, and look forward to hearing from each of our witnesses 
here today. Thank you, Mr. Chairman.
    Mr. Johnson. Thank you. And I appreciate your statement.
    We are going to go now directly to my colleague, the 
Ranking Member of the Judiciary Committee, my good friend Lamar 
Smith.
    Mr. Smith. Thank you, Mr. Chairman.
    Thomas Jefferson once said ``Information is the currency of 
democracy. Without access to all the facts, Americans cannot 
make informed voting decisions and our democracy is 
threatened.''
    Journalists have a responsibility to present information 
with fairness and objectivity. At their best, the news media 
help promote our democracy. Unfortunately, too often the media 
have fallen short.
    For example, an analysis by Investors Business Daily shows 
that journalists contributed 15 times more money to Democrats 
than Republicans during the most recent election cycle. In the 
2008 campaign, journalists who gave to Senator Obama 
outnumbered those who contributed to Senator McCain by a 20-1 
margin. A UCLA study rated 18 of 20 major news outlets as more 
liberal than the average voter. Just two scored as more 
conservative than the average voter. A Gallup Poll found that 
only 9 percent of Americans say they have a great deal of trust 
and confidence in the mass media to report the news fully, 
accurately, and fairly. The Gallup Poll also found that more 
than twice as many Americans say the news media are too liberal 
rather than too conservative.
    These studies reveal a troubling trend. Unfair news 
reporting exists, and can influence elections at the expense of 
qualified candidates. In fact, Newsweek editor Evan Thomas 
estimated that the media's influence in the 2004 presidential 
election was worth maybe 15 points. That is a huge impact. And 
the media's influence was even greater in the 2008 presidential 
campaign. They may well have determined the outcome of the 
election.
    Not all members of the media contribute to this problem. 
Many journalists with varied political views work hard to 
report the news fairly. But the media can and must do better.
    Recently, as the Ranking Member just mentioned, Speaker 
Pelosi sent a letter to Attorney General Holder asking him to 
take into account current market realities when evaluating any 
newspaper mergers in the Bay Area. Speaker Pelosi sent this 
letter in acknowledgement that the fundamentals of the 
newspapers' business have changed. Subscriptions are down, and 
advertisers have new and different ways of targeting their 
sales. This economic reality has resulted in a number of 
newspapers filing for bankruptcy, cutting back on the days that 
they print papers, or going to an all-online format.
    And continuing the consolidation of newspapers may 
contribute to increasingly biased coverage. When there are two 
or more papers in the city, there in an incentive to compete 
vigorously to provide the most accurate and pertinent news to 
readers. When one company, such as the New York Times or the 
Tribune Company, owns papers in multiple cities, there is a 
risk that the editorial biases of the big city papers will find 
their way into other markets.
    Our democracy is strongest when the American people make 
informed voting decisions based on accurate information about 
the major issues facing our country, such as homeland security, 
the cost of energy, immigration, educational reform, health 
care, and economic growth. Journalists are aware of their 
responsibility and should be held to a high ethical standard 
because of their tremendous influence on public opinion and 
debate. When journalists strive for the truth, the media are a 
tremendous asset to our society. When journalists falter, so 
too does our democracy.
    It is up to the American people to demand objectivity in 
the media regardless of whether they get their views online, 
from television, or in a newspaper.
    Mr. Chairman, as we discuss the consolidation of 
newspapers, we must also address the larger issue of inaccurate 
and biased reporting that has become too common today. Before 
journalists can expect the American people to buy their 
reporting, they must first restore the American people's trust 
in the news.
    Thank you, Mr. Chairman.
    Mr. Johnson. Thank you for your comments also, Mr. Ranking 
Member. And even though I have tried very hard to put this out 
of my mind, I must confess that I inadvertently left out the 
fact that Mr. Smith is Ranking Member of this Subcommittee as 
well.
    Without any further adieu, ladies and gentlemen, we are 
going to hear from a man who needs no introduction. So I will 
yield to the great Chairman, Mr. John Conyers from Michigan.
    Mr. Conyers. Thank you, Mr. Chairman. You have a lot of 
friends on this Subcommittee. That is all I can say.
    This is a very complex hearing. We are asked to come to the 
assistance of an economic institution that, to quote Rupert 
Murdoch, who I have never quoted before in my life, says in his 
submitted statement, ``Since the founding of our country, 
newspapers have been a cornerstone of our democracy. And I 
submit this statement in the hope that Congress will take all 
appropriate steps to help ensure that newspapers continue to be 
a vibrant and important part of our free society for the 
foreseeable future.''
    This is the one person in the United States of America that 
owns more media than anybody I know of, and he is telling us 
how important it is that the media remains free and viable 
because it is an historic predicate. So this really gets us off 
to an interesting start.
    Now, in 1996, I think it was in October, in the spirit of 
full disclosure, I was arrested in front of one of the 
newspapers in Detroit. I think the offense was disturbing the 
peace. There were other arrests made. One was Marianne, the 
late Marianne Mahaffey, the President of the Detroit Council. 
The other one was a labor organizer named John Sweeney. There 
were others arrested. I got a call in to James Hoffa, who was 
around there at the time, and peace activist, civil right 
advocate Al Fishman. And what we were doing was protesting the 
merger of the two newspapers, the Detroit Free Press and the 
Detroit News. Now, for some reason, I don't have any idea why, 
our arrest, we were given a trial date, too, but somewhere 
along the line the case was dropped. I don't remember even if I 
had a lawyer.
    So I don't come to this hearing with any bias or 
premeditated hard feelings or ill will toward the newspaper 
industry. As a matter of fact, we invited the Detroit News and 
the Detroit Free Press to come to the hearing to be a witness.
    Did they ever respond? You went to the Newspaper 
Association? Okay. So they will speak for them.
    But just to make sure I purge myself of any bad memories or 
ill will or hard feelings, I am going to ask their editors if I 
can meet with them now that they are in bad shape. Maybe I 
should help them.
    There is another thing that puzzles me. Professor Robert 
McChesney for years has been one of the people complaining with 
me about the undemocratic practices commonplace in the 
newspaper industry. Now, I think he has surfaced as one that is 
urging us that there are many grave and important reasons why 
we should rush in now and help them. So I will be calling my 
old friend Bob McChesney to help get me into the correct and 
fair alignment that will be required for us to determine what 
it is we do in the Committee.
    Now, newspapers remind me of automobile corporations; you 
never hear from them until they are on the verge of disaster. I 
mean, ``How are you doing?'' ``Everything's fine. Doing 
great.'' And then all of a sudden they need help, and they need 
a lot of help and they need it fast. That is how the former 
Secretary of Treasury called the leaders of the House and 
Senate together. You remember that evening. He called them 
together, and he put three sheets of paper on the table, the 
leaders of the first branch of government, as far as I am 
concerned.
    And he said: First of all, I want extraordinary powers that 
no treasurer has ever had in history. And then he said, second: 
I want $700 billion, and I want it fast. And then the third 
sheet of paper, he said: I don't want this to be reviewable by 
either the courts or the Congress.
    And so we are always put under the gun, and I am anxious to 
lay out my feelings before we go into this subject matter, not 
just for today's hearing, but afterwards, to see if we can all 
be as friendly as our Chairman, who everybody is his friend on 
this Committee, including me, and let's--can we all be friends 
together, everybody, on whatever positions that develop as this 
hearing goes on?
    So I thank you for your time, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Chairman. And I have always 
admired your even-tempered service on this Committee. That 
evenness has been marked by passion. And so I really appreciate 
the way that you run the full Committee, and I myself aspire to 
be just like you and so I am proud to be serving on this 
Committee, this Subcommittee, with you.
    And ladies and gentlemen, I have finally in fact become 
enlightened instantly; because I mentioned that Mr. Smith, my 
good friend, is Ranking Member of this Subcommittee, but I was 
trying to keep the great Howard Coble out of my mind but I 
can't do that, either. Mr. Coble is the Ranking Member, and we 
appreciate his service.
    Now, what I will do now is I will introduce the witnesses 
for today's hearing. Well, we have Mr. Goodlatte, the gentleman 
from Virginia, who is next for a statement. You may proceed, 
sir.
    Mr. Goodlatte. Thank you, Mr. Chairman. But I don't have a 
statement at this time.
    Mr. Johnson. Well now, that is rather untypical, Mr. 
Goodlatte. I guess you are saving the ammo for a full assault 
later during this hearing.
    Okay. And also, we have the very quiet warrior. Mr. 
Gonzalez from Texas is here. Did you wish to make an opening 
statement, sir?
    Mr. Gonzalez. Mr. Chairman, I will be very, very brief. I 
wasn't going to make one, but I just want to put our witnesses' 
minds at ease. I don't believe that your testimony today, that 
you would be prepared to address bailouts or campaign 
contributions. And I don't believe those are the questions that 
will be coming from Members of this Committee. The issue at 
hand is, and I truly believe this and I think all my colleagues 
would join me, is that laws have utility and meaning only when 
they are relevant to a society. The question today is whether 
antitrust laws as they relate to the printed media are relevant 
in what has transpired and what has been a technological 
revolution, which has been adopted by the majority of 
Americans, which truly jeopardizes the very existence of the 
printed media. So I am hoping that our witnesses will be able 
to shed light.
    Now, I am going to apologize to my colleagues and to the 
witnesses that I probably will be absent for much of the 
testimony. We have your written statements. There is a hearing 
going on in Energy and Commerce that will require that I be 
there as we prepare to mark up the energy bill. But again, I 
just want to thank my colleagues and hope that we have a 
fruitful afternoon.
    I yield back.
    Mr. Johnson. I thank the gentleman for his statements. And 
without objection, other Members' opening statements will be 
included in the record.
    So now I am pleased to introduce the witnesses for today's 
hearing. We have two distinguished panels of witnesses to 
assist us today. Our first panel features Carl Shapiro, the 
Deputy Assistant Attorney General for Economics At the 
Antitrust Division of the Department of Justice. Mr. Shapiro is 
also the Transamerica Professor of Business Strategy at the 
Haas School of Business, and also a Professor of Economics in 
the Economics Department, at the University of California 
Berkeley. He previously served as Deputy Assistant Attorney 
General for Economics in the Antitrust Division of the U.S. 
Department of Justice from 1995 to 1996. He later founded the 
Tilden Group, which was also a senior consultant with Charles 
River Associates, an economic consulting company.
    Welcome, Mr. Shapiro.
    Mr. Shapiro. Thank you very much.
    Mr. Johnson. Our second group of panelists will testify 
after Mr. Shapiro has concluded. Our second panel features Mr. 
Brian Tierney, Chief Executive Officer of Philadelphia Media 
Holdings LLC and a publisher and CEO of the Philadelphia 
Inquirer. Mr. Tierney is a nationally recognized expert in 
branding, marketing, and advertising, and he is also an 
accomplished entrepreneur in addition to being a lawyer. Nobody 
can really hold that against you, Mr. Tierney. At least not 
today, anyway.
    His leadership of Philadelphia Media Holdings marks the 
first time the papers are under private ownership. This is 
since 1969. Mr. Tierney has received numerous industry related 
awards. And we want to welcome Mr. Tierney.
    Next, we have Mr. John Nichols. Mr. Nichols is a journalist 
and author, and has written about politics for American 
newspapers and magazines since the 1970's. He is the Editorial 
Page Director of The Capital Times newspaper in Madison, 
Wisconsin, and writes about politics as a correspondent for the 
Nation magazine. Mr. Nichols is the author of many books on 
American politics and media issues, and he is also one of the 
co-founders of Free Press, the Nation's media reform expert 
and, actually, media reform network. He has been honored by 
numerous journalistic organizations for his editorial and 
column writing as well as his investigative reporting. Welcome, 
Mr. Nichols.
    Next, I will introduce Mr. Bernard Lunzer, who is the 
President of the Newspaper Guild Communications Workers of 
America, which is affiliated with the AFL-CIO and the 
International Federation of Journalists. Mr. Lunzer was elected 
T&GCWA President and CWA Vice President in May of 2008. From 
1979 to 1989, he worked in the newsroom in advertising, 
circulation, and promotion-marketing at the St. Paul, Minnesota 
Pioneer Press. Mr. Lunzer is also an integral part of the 
Newspaper Guild, and we welcome him here today.
    Our next witness will be Mr. Ben Scott. He is the Policy 
Director at the Free Press. And I thank Mr. Scott for his 
service in regularly testifying before Congress and the FCC. 
Before joining Free Press, Mr. Scott was a legislative fellow 
for then Representative Bernie Sanders out of Vermont. He has 
been quoted in publications, including the New York Times, Wall 
Street Journal, Los Angeles Times, and Salon, and featured as a 
commentator on MSNBC, BBC, PBS, C-SPAN, NPR, and local stations 
across the country. He is the author of several scholarly 
articles on American journalism and he is co-editor of the 
books Our Unfree Press and also The Future of Media. Welcome, 
Mr. Scott.
    And then we have Professor C. Edwin Baker. Professor Baker 
is the Nicholas Gallicchio Professor of Law at the University 
of Pennsylvania, and he teaches constitutional law, mass media 
law, and freedom of speech, and is the author of Media 
Concentration and Democracy: Why Ownership Matters. Professor 
Baker is also the author of a pending article on Viewpoint 
Diversity and Media Ownership. Welcome, Professor Baker.
    The last witness on today's panel is Mr. Dan Gainor, who is 
the T. Boone Pickens Fellow and Vice President of Business and 
Culture for the Media Research Center. Mr. Gainor has served as 
an editor at several newspapers, including the Washington Times 
and the Baltimore News American. Mr. Gainor also has extensive 
experience in online publishing, holding the position of 
Managing Editor for CQ.com, which is the Web site of 
Congressional Quarterly. And he is also the Executive Editor 
for Change Wave. Mr. Gainor has made many radio and television 
appearances and is published in a wide variety of publications 
including Investors Business Daily, the Washington Times, the 
Chicago Sun Times, the Orange County Register, the New York 
Post, and the Baltimore Examiner. Welcome, Mr. Gainor.
    And we thank you all for joining us here today.
    I wanted to ensure that today's panel would be fair and 
balanced with equal representation from those on all sides of 
the issue. As part of that goal, we invited several entities to 
testify today that could emphasize the newspaper perspective, 
along with Mr. Tierney. And one such witness, Rupert Murdoch, 
Chairman and CEO of News Corporation, was not able to appear 
personally, but he has submitted his written statement for the 
record. And, without objection, that statement will be 
submitted for the record. And, without objection, the 
witnesses' statements will be made a part of the record in 
their entirety.
    We would ask each one of you to summarize your testimony in 
5 minutes or less. To help us keep the time, there is a timing 
light at your table. When 1 minute remains, the light will 
switch from green to yellow and then to red when the 5 minutes 
are up. If anybody is colorblind, please raise your hand now.
    Mr. Shapiro, will you now proceed with your testimony, sir?

 TESTIMONY OF CARL SHAPIRO, DEPUTY ASSISTANT ATTORNEY GENERAL 
FOR ECONOMICS, ANTITRUST DIVISION, U.S. DEPARTMENT OF JUSTICE, 
                         WASHINGTON, DC

    Mr. Shapiro. Yes. Thank you very much, Mr. Chairman. I 
appreciate the opportunity to appear before the Subcommittee on 
Courts and Competition Policy. As somebody who has had some 
experience being an expert witness in court, I particularly 
appreciate Chairman Conyers' suggestion that we all be friends 
together.
    As you noted, I have been a Professor at UC Berkeley for 
about 20 years. During that time, I have been studying and 
practicing antitrust economics. One particular area of interest 
to me has been how advances in information technology, 
including the Internet, have affected a wide range of 
businesses, markets, and competition. I in fact wrote a book 
about these topics about 10 years ago. So the issues facing the 
newspaper industry are familiar to me and of interest to me as 
well as of course to the Antitrust Division in the Department 
of Justice.
    Newspapers play a unique and important role in our 
democracy. I myself very much enjoy sitting down in the morning 
with a cup of tea and reading the newspapers, and I count 
myself as a better citizen for what I learn while I sip my tea.
    Today, newspapers are facing financial pressures, most 
notably from the current recession on top of the challenge 
posed by the Internet. As a result, newspapers are experiencing 
a painful and ongoing decline in circulation and advertising 
revenues.
    Now, how does antitrust enter into this picture? Antitrust 
is the cornerstone of our free enterprise system. Antitrust is 
critical to ensure that the public obtains the full benefits of 
competition. This is especially true in industries experiencing 
technological change where competition can and does often spur 
innovation, including innovative business strategies and 
business models. And I noted that some of the other witnesses 
discuss some of the plans they have for such business models.
    Today, a wide ranging and healthy debate is taking place 
about the future of the newspaper industry, with different 
participants adopting different strategies for survival and 
success. This is the essence of the competitive process that 
the Antitrust Division is dedicated to protecting.
    Our antitrust laws are over 100 years old. They apply to 
declining industries as well as growing ones. They apply during 
tough economic times as well as during good times. They have 
proven flexible and effective in addressing a wide range of 
economic settings and industries, including industries 
experiencing the pressures of new technologies. And the 
Antitrust Division has experience in a range of industries 
where these conditions hold.
    Nonetheless, some have suggested that the antitrust laws 
are somehow unsuited for the newspaper industries. We at the 
Justice Department disagree. If anything, the interest Congress 
has expressed in preserving editorial and reportorial diversity 
makes antitrust enforcement in the newspaper industry all the 
more important. And Speaker Pelosi's letter to Attorney General 
Holder indicated as much.
    Some have suggested that antitrust enforcement at the 
Justice Department in the newspaper industry is mired in the 
past, failing to account for today's business reality. Our 
investigation in any given matter is highly fact intensive. I 
would like to assure the Committee and the public that we are 
dedicated to conducting a legal and economic analysis that 
reflects current business reality and accounts for emerging 
trends in the newspaper industry.
    Thank you.
    [The prepared statement of Mr. Shapiro follows:]
                   Prepared Statement of Carl Shapiro


















                               __________
    Mr. Johnson. Thank you, Mr. Shapiro. And we would now begin 
the questioning. And I will begin by recognizing myself for 
such time as I may consume.
    Mr. Shapiro, Attorney General Eric Holder has stated that 
he is open to reexamining government antitrust policies that 
limit mergers in the struggling newspaper industry. In your 
view, is a new antitrust exemption for newspapers necessary?
    Mr. Shapiro. We do not believe any additional exemptions 
for the newspaper industry are necessary. We believe the 
antitrust laws, as I have indicated, can work well in this 
industry, reflecting as well the Newspaper Preservation Act.
    Mr. Johnson. Well, tell me, do you believe that print media 
and online media are within the same product market and 
interchangeable?
    Mr. Shapiro. Print media and online media often do compete, 
for example, for advertisers' dollars. The exact contours of 
the relevant antitrust market will depend on the specific facts 
and specific matter that will depend on the time period, the 
locale, and the products involved.
    Mr. Johnson. And I would like to know from you, is it 
prudent--considering antitrust policy and economic efficiencies 
of acquiring businesses and also considering the public good, 
is it prudent to remove impediments to further consolidation in 
the newspaper industry?
    Mr. Shapiro. Well, to the extent that antitrust can be an 
impediment, the goal is to prevent consolidation that will 
substantially lessen competition and harm consumers. That I 
would not really call an impediment; I would call it protecting 
the public interest.
    Mr. Johnson. Thank you.
    I will now recognize the Ranking Member of the full 
Committee, Mr. Lamar Smith, for his questions.
    Mr. Smith. Thank you, Mr. Chairman.
    Mr. Shapiro, I just had a question or two for you. Could 
you give us an example of a merger between two newspapers or of 
two newspapers that you would question? What would the dynamics 
be that you would not necessarily approve of?
    Mr. Shapiro. The situation where we would tend to be most 
concerned would be two local daily newspapers in the same town, 
the only two, where our investigation revealed that they were 
substantial direct competitors for readers or for advertisers 
or both.
    Mr. Smith. Would you consider in that case a city that had 
a morning and an afternoon newspaper and you had one of the 
papers purchase the other, would you consider that to be 
questionable?
    Mr. Shapiro. That certainly could be. And those situations 
have arisen in the past.
    Mr. Smith. And would you give me a real life example--I 
realize it is totally hypothetical--of two papers that 
currently exist in the United States somewhere, in some city, 
that you would question if one were to purchase the other?
    Mr. Shapiro. Well, there is--I am not sure whether you want 
real life or hypothetical. But we do have an ongoing litigation 
involving two newspapers in West Virginia where the acquisition 
took place, and the Antitrust Division is challenging that.
    Mr. Smith. That is the kind of example I was looking for. 
Thank you, Mr. Shapiro.
    Thank you, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Smith.
    And I will now turn to our distinguished Member from Texas, 
Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    Let me ask you, Mr. Shapiro, how would you describe the 
purpose of antitrust laws?
    Mr. Shapiro. To protect competition; in particular, by 
preventing abuses by monopolies, by preventing mergers that 
substantially reduce competition, and by policing cartels.
    Mr. Gonzalez. And it is competition within--this is 
obvious--in the industry itself? What I am saying is, like--I 
am trying to describe it, and I apologize. Newspapers to 
newspapers, TV stations to TV stations, a certain type of 
enterprise to that certain type of enterprise. Right? Let me 
ask you, where is the competition to newspapers in America 
today? Is it among, between themselves, or is it something 
totally different, a whole different medium that is out there? 
Isn't that the real competition? And what we are discussing 
here is the old laws may not accommodate the flexibility given 
to newspaper enterprises to compete with basically an 
information service that is a different platform? I mean, that 
is what we really have.
    So I guess, if I am hearing you right, you are saying we 
can remain with the same antitrust model, and the newspapers 
will still have the flexibility to adopt business practices 
that will allow them to compete with these other delivery 
systems?
    Mr. Shapiro. The antitrust laws will not, should not stand 
in the way of creative business practices and models that are 
part of the competitive process and create efficiencies and 
serve consumers. I know some of the later panelists want to 
pursue new business strategies, and there is no reason the 
antitrust laws would stop that so long as they in fact are pro-
competitive.
    Mr. Gonzalez. It is interesting, and I think the next 
witnesses--and I am going to be gone for part of their 
testimony but I hope to be back--will shed some light on that. 
I think they are going to look at it as from their business 
experience. And I understand where you are coming from, and I 
agree with you. I think if you listen to Chairman Conyers where 
we are all so rooted in the antitrust philosophy and the 
tremendous benefits that we have derived from it, but the world 
has changed. And the question then comes, we may not have a 
certain enterprise or certain industry because we are 
worshipping at this altar of what once was sacrosanct, which 
was the antitrust laws and what they attempted to accomplish. 
There won't be anyone to protect. There won't be any survival. 
That is what I am getting at.
    I am really worried that the printed media is really faced 
with a do or die situation that may encompass what we may have 
found objectionable in a different setting years ago. That is 
all I am saying. And I still don't think that we are going to 
lose the integrity of the process and the enterprise and the 
professionalism, because the truth is that is what 
distinguishes the printed medium from so many of the others.
    Now, I believe that you are saying they can just transport 
that quality product and have it delivered by this different 
platform of delivery system. I don't think it is going to be 
that easy. I just don't think. And even if it is, then you 
still have lost the traditional printed media. You won't have a 
newspaper to sit there with your morning coffee or tea. And 
maybe it is generational, I just have got to have it. I don't 
like looking at this at the coffee shop in the morning, to be 
honest with you.
    But that is--and I understand that this is a sincere belief 
that you hold, and I will just wait and reserve my own opinion 
until we hear the witnesses and I read their testimony. But 
thank you for the benefit of your knowledge and study.
    Mr. Shapiro. Well, let me just say thank you for that. I 
also can't do without my newspaper in the morning. That is why 
I mentioned it.
    The fear that newspapers will close or the industry will be 
in grave trouble, we are here to protect competition. And of 
course that means if a company is in sufficiently bad shape, we 
have a failing firm doctrine, and so greater antitrust 
flexibility is allowed in certain circumstances. And that 
doctrine has been in place for 40 years in the newspaper 
industry following the Supreme Court decision. So it is not in 
anybody's interest to have there be no newspaper in any of our 
towns, and antitrust would not lead to that result.
    Mr. Gonzalez. Again, and I don't know the various opinions 
that are going to be expressed after your testimony. There may 
be some that would disagree with you. And maybe it is not 
necessary, and I don't want to have to rework, modify, or 
alternate something that is so basic and that we have depended 
on for so long but it appears to me that there may be some 
adjustments that may have to be made. I do not know. But, 
again, I thank you for your testimony this afternoon.
    Mr. Shapiro. You are welcome.
    Mr. Johnson. Thank you, Mr. Gonzalez.
    I will now turn to Mr. Bob Goodlatte, a very cerebral 
Member of the Judiciary Committee as well as this Subcommittee. 
You may proceed, sir.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    And, Mr. Shapiro, welcome. Does the Justice Department have 
any role in approving the Joint Operating Agreements under the 
Newspaper Preservation Act?
    Mr. Shapiro. Yes.
    Mr. Goodlatte. And, if so, how many JOAs has it approved in 
the last 5 years?
    Mr. Shapiro. I am not sure of the number.
    Mr. Goodlatte. Can you get that for us and submit it to the 
Chairman of the Committee?
    Mr. Shapiro. That would be fine. Yes.
    Mr. Goodlatte. Thank you. What factors do you consider in 
reviewing the JOAs?
    Mr. Shapiro. Well, let me just clarify. The Antitrust 
Division looks at these, but it is the Attorney General's 
decision about whether to approve them.
    Well, we follow the language of the Newspaper Preservation 
Act, which requires that the JOA include not more than one 
newspaper that is not failing and that the operating agreement 
be in the public interest.
    Mr. Goodlatte. To follow up on Mr. Smith's question, you 
stated that the Antitrust Division takes into account both the 
readers and the advertisers when it considers the impact of a 
proposed merger in the newspaper industry, But you didn't 
really tell us how you balance that. Do you place more weight 
on readers or more weight on advertising? How do you arrive at 
a conclusion that is appropriate?
    Mr. Shapiro. I would say both groups we view as consumers 
or customers of the newspapers. They are both sources of 
revenue typically. I believe in most matters a balancing really 
isn't needed. When we have seen a loss of competition, we 
believe that both readers and advertisers would be harmed by an 
anti-competitive merger.
    Mr. Goodlatte. It is clear that online advertising has 
changed the economics of the newspaper industry. Last Congress, 
this Committee took a look at the proposed deal between Google 
and Yahoo for search advertising dollars. At that hearing it 
was alleged that Google already had a dominant position in 
search advertising. How does Google's dominance in search 
advertising affect the Department's review of newspaper 
mergers, particularly as to how such a merger would impact 
advertisers?
    Mr. Shapiro. When we look at a proposed newspaper merger, 
we are looking at the choices that advertisers would have and 
the extent to which the newspapers compete directly for each 
other--excuse me, for advertisers. Alternative choices for 
those advertisers, be it search advertising, be it television, 
radio, other media, would all be considered in our analysis. 
And we would typically--we would see a problem with the merger 
if the extent of direct competition between the merging parties 
was significant, even though there would typically be some 
competition; that is, advertisers would spend some of their 
money on these other media, including Google.
    Mr. Goodlatte. In his written testimony, Mr. Tierney of the 
Philadelphia Inquirer calls for expedited Department of Justice 
review of these Joint Operating Agreements, and he also calls 
for a limited antitrust exemption for newspapers to discuss new 
business models. How would the Department view such an 
exemption?
    Mr. Shapiro. Well, we generally don't believe exemptions 
are the way to go. We feel the antitrust laws are flexible and 
have proven that flexibility over many years.
    In terms of specific discussions among newspapers to pursue 
a new business model, those could easily be handled without 
running into antitrust problems. Obviously not price fixing 
discussions, but discussions about a legitimate new business 
enterprise. And if there are concerns about that on occasion we 
can issue a Business Review Letter to give assurance to 
companies who are doing something that is not or not clear to 
them how it would be treated by the Antitrust Division.
    Mr. Goodlatte. Are these Joint Operating Agreements always 
entered into by newspapers in the same market, the same SMSA, 
if you will? I mean, are they always newspapers within the same 
city?
    Mr. Shapiro. To the best of my knowledge, yes.
    Mr. Goodlatte. How many cities still have more than one 
daily newspaper?
    Mr. Shapiro. I could not give you a number on that. It has 
declined, to be sure.
    Mr. Goodlatte. Thank you very much, Mr. Shapiro.
    Mr. Chairman, I would ask that the statement by Rupert 
Murdoch, the Chairman and CEO of News Corporation, be made a 
part of the record.
    Mr. Johnson. Yes. Thank you, Mr. Goodlatte. And so it will 
be done, without objection.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Johnson. You are welcome.
    Mr. Shapiro, I thank you for your testimony here today and 
the time spent today.
    And we will now move to our second panel. Hear ye, hear ye, 
hear ye, the next panel come forward and assume the position.
    Mr. Johnson. We will now begin with opening statements from 
Mr. Tierney. Proceed, sir.

    TESTIMONY OF BRIAN P. TIERNEY, CHIEF EXECUTIVE OFFICER, 
         PHILADELPHIA MEDIA HOLDINGS, PHILADELPHIA, PA

    Mr. Tierney. Good afternoon, Chairman Johnson, Members of 
the Subcommittee. I am Brian Tierney, the Chief Executive 
Officer of Philadelphia Newspapers. We own the Philadelphia 
Inquirer, the Philadelphia Daily News, and about 30 weekly 
newspapers in southeastern Pennsylvania and southern New 
Jersey.
    In 2006, I joined forces with a diverse group of local 
investors, men and women, Black and White, entrepreneurs, CEOs, 
and a union pension fund to purchase these publications, and we 
are the largest locally owned news organization in America.
    Philadelphia Newspapers, like virtually all of our Nation's 
newspaper publishers, have recently faced a severe revenue 
decline. Consequently, we have had to make some very difficult 
choices in order to continue serving as the top quality news 
source in the Pennsylvania and New Jersey area we serve.
    In order for our newspapers and other newspapers to succeed 
in the Internet age, in order for us to continue to serve as 
our country's preeminent source of local news, the newspaper 
publishers and journalists need greater flexibility from 
lawmakers and regulators to discuss and implement new and 
sustainable business models.
    Newspapers serve as the vital source of local, national, 
and international information, and, as such, we provide high 
quality public service journalism that is critical to the 
functioning of a vibrant democracy. The news gathering 
resources and investigative arsenals commanded by our daily 
newspapers typically dwarf those of any other local media. In 
Philadelphia, for instance, we spend more than $51 million in 
news gathering operations, and we have more reporters on the 
street every day than all other local media combined.
    In addition to serving as an effective watchdog of business 
and local government, newspapers play another role. We connect 
our communities to themselves. Newspapers serve as a primary 
source of information for other news outlets as well. Most 
local television stations in Philadelphia begin their news 
meetings by leafing through the newspaper and doling out 
assignments based on what we have reported that morning.
    In addition, while online news sources and citizen 
journalists certainly add a perspective to the news, they 
seldom provide original reporting, and even fewer ascribe to 
the same professional journalism standards.
    In short, many new sources of news are actually free riding 
on the investments in journalism made by newspapers.
    By all accounts, the industry is in a real crisis. The 
problem, ironically, is not a readership or an audience 
problem. In fact, more people read a newspaper the Monday after 
the Super Bowl than watched the Super Bowl. In fact, in 
Philadelphia, more people read the Inquirer today than they did 
10 years ago when you add our print and online readership 
together. The problem is the business model we have today and 
the fact that advertising revenues, which account for 80 
percent of our earnings, of our revenues, have dropped by 23 
percent in 2 years. Recent news reports predict a 30 percent 
decline this quarter alone. Classified advertisement has been 
hit the hardest, and dropped $4 billion just that year; and 
most of that is not coming back even when the economy returns.
    Online advertising, which was often hailed as the industry 
saviour, declined in 2008 and accounted for less than 10 
percent of revenue. Our online traffic in Philadelphia is up 
over 300 percent. You can add up every other source of news or 
information in the marketplace; it doesn't compete with it, but 
our revenue is flat.
    In fact, it is interesting, here in town, POLITICO.com, 
which is very successful, has about 30 or so reporters, maybe a 
little bit more, almost all of their revenue comes from the 
printed newspaper product that is distributed free.
    The result of these seismic shifts in advertising has been 
devastating. In February, our company announced that it was 
voluntarily restructuring under Chapter 11. The factors that 
led us to this difficult choice are similar to those facing 
publishers across the country.
    But even in these trying times, our commitment to the 
communities we serve has remained steadfast. And I am 
incredibly proud of the relationship we have also built with 
our unions. We are working hard to find efficiencies, cut costs 
and preserve jobs, good jobs that a man or woman can raise 
their family on.
    Other newspaper companies, such as Tribune company, Lee 
Enterprises, the Minneapolis Star Tribune, to name a few, have 
had to file for bankruptcy in recent months. The Seattle Post-
Intelligencer is all online, but they have had to lay off 130 
of their 150 journalists. So it is hardly going to be able to 
serve the same function in Seattle. And of course, the Rocky 
Mountain News closed in February. Some analysts are predicting 
that major cities may be left without a single daily newspaper 
soon unless we act.
    While we may have once hoped that we could merely shift our 
operations online and continue operating as usual, the much 
smaller revenue generated from Internet advertising has shown 
that we must look for another answer, and we need the freedom 
now to experiment with new business models.
    With the critical role of daily newspapers, we at 
Philadelphia Newspapers believe strongly that we have the 
possibility to evolve. But in order to do so, however, 
newspaper publishers need the flexibility to explore new 
approaches and innovative business models without the delay, 
burdens, and uncertainty created by the competition laws we 
have now. When it comes to daily newspapers, the enforcement of 
antitrust laws has not yet caught up with market realities. 
Past enforcement actions have been premised on the now outdated 
view that daily newspapers compete exclusively with one another 
and that they dominate their local advertising markets. And in 
fact, newspapers' share of overall advertising has declined so 
much that it is less than 15 percent today.
    In today's precarious and ever-changing environment, 
antitrust enforcers must be vigilant to ensure they are not 
frustrating the possibility of a reinvigorated newspaper 
industry. Since, for many newspapers, time is of the essence, 
Congress, I respectfully request, should act quickly on 
legislation that would, one, provide for expedited Department 
of Justice review of newspaper transactions that can reduce 
costs and achieve other efficiencies; and, two, provide limited 
antitrust relief for newspapers and journalists to discuss and 
experiment with new and more sustainable business models.
    Mr. Johnson. Mr. Tierney, if you could go ahead and close 
out now. The light is green.
    Mr. Tierney. From my own experience, antitrust concerns are 
preventing the industry from even the most rudimentary 
discussions which could potentially lead to the next big idea.
    Thank you for the opportunity to appear at this hearing 
today. The publishing industry remains one of our Nation's 
foremost providers of in-depth and locally oriented news, and 
it is my hope today that we begin the road back. Thank you.
    [The prepared statement of Mr. Tierney follows:]
                 Prepared Statement of Brian P. Tierney
























                               __________

    Mr. Johnson. Thank you, Mr. Tierney.
    We will now hear from Mr. John Nichols.

  TESTIMONY OF JOHN NICHOLS, AMERICAN JOURNALIST, MADISON, WI

    Mr. Nichols. Thank you, Chairman Johnson, Chairman Conyers, 
and Ranking Member.
    My name is John Nichols. I grew up in Union Grove, 
Wisconsin; population 970. When I was 11-years-old, I rode my 
bike down Main Street and walked into the office of our weekly 
newspaper, The Union Grove Sun. I explained that I had read the 
Bill of Rights, Tom Paine, and I.F. Stone. I knew a free press 
was the essential underpinning of the American experiment and 
the journalists were front-line soldiers in the struggle for 
democracy. I snapped to attention and announced that I was 
reporting to duty.
    It would give you a sense of the Sun circumstance that the 
editor responded, I will give you $5 a story and $1 for every 
picture that turns out. I was a journalist. I have practiced 
the craft of journalism ever since as a reporter, columnist, 
and editor of metropolitan dailies, part owner of a weekly 
newspaper, editorial page editor of a State capital daily, The 
Madison Capital Times, and political writer for The Nation 
magazine. Along the way, I have written and co-written seven 
books on the state of American politics and media.
    So what is the state of the print press? Our country's 
first great journalist, Tom Paine, would surely describe it as 
``the crisis.'' A daily newspaper industry that still employs 
roughly 50,000 journalists, the vast majority of the remaining 
practitioners of this craft teeters on the brink. Media 
corporations, after running journalism into the ground, have 
determined that news gathering and reporting are no longer 
profit-making propositions. So they are jumping ship.
    The Denver Rocky Mountain News recently closed, ending 
daily newspaper competition in that city. The San Francisco 
Chronicle may soon close, along with the Boston Globe. The 
Chicago Tribune, LA Times, Minneapolis Star Tribune, and 
Philadelphia Inquirer are in bankruptcy. The Christian Science 
Monitor has folded its daily print edition, as has the Seattle 
Post-Intelligencer. Whole newspaper chains struggle as the 
value of stock shares fall below the price of a daily 
newspaper.
    Those are the headlines. Arguably uglier is the death by 
small cuts of newspapers that are still functioning. Layoffs of 
reporters and closings of bureaus mean that, even if newspapers 
survive, they have few resources for journalism. Job cuts 
during the first months of the year, 300 at the Los Angeles 
Times, 205 at the Miami Herald, 156 at the Atlanta Journal-
Constitution, and on and on, suggest that this year will see 
more positions eliminated than in 2008, when almost 16,000 
newspaper jobs were lost. Even Doonesbury's Rick Redfern has 
been laid off by the Washington Post.
    Whole sectors of our civic life are going dark. Newspapers 
that long ago closed foreign bureaus and eliminated 
investigative operations are now shuttering Washington bureaus. 
The Cox chain, publisher of the Journal-Constitution, padlocked 
its D.C. bureau April 1, a move that follows the closures of 
the bureaus of Advance Publications, Copley Newspapers, and 
great dailies in Des Moines, Houston, Pittsburgh, Salt Lake 
City and Toledo.
    Newspapers as we know them are dying, and there is little 
evidence that broadcast or digital media is prepared to fill 
the void. The digital day may come, but it is not here. Thus, 
those of us who believe in the essential role of an informed 
citizenry fear that we are facing not a journalism crisis, not 
a media crisis, but a democracy crisis.
    So it is appropriate to consider the steps the Federal 
Government, which has historically aided publishers with 
favorable postage rates and broadcasters with free access to 
the airwaves, might now take to protect the public's right to 
know. The congressional response to the crisis must, however, 
recognize the importance of maintaining and expanding the 
practice of journalism as a tool of informing and engaging 
citizens. The emphasis should be on fostering competition, 
diversity and localism, not on protecting the bottom lines of 
media companies and speculators who balance their books by 
dismissing reporters and shuttering news rooms.
    A crisis for journalism and democracy must not become an 
excuse for eliminating existing rules that promote competition 
and diversity, especially antitrust and cross-ownership 
restrictions that prevent consolidation of print broadcast and 
digital newsrooms into one-size-fits-all content-provider 
services.
    Congress should recognize that the existing ownership model 
has proven in this crisis to be anti-journalistic. Government 
policies and spending should be tailored to support the 
development of new ownership models, not-for-profits, 
cooperatives, employee-owned publications, and on allowing 
citizens, unions, foundations and enlightened local owners to 
purchase financially troubled daily newspapers.
    We should encourage the consumption of journalism perhaps 
by providing tax breaks for newspaper and magazine 
subscriptions. Postal rates should be structured to help 
journalists of inquiry and dissent stay afloat.
    I am a journalist. I love my craft and hope to continue 
practicing it for a long time. But I love our democratic 
discourse and the diverse society it fosters more. I would ask 
my Congress to recognize, as did the Founders, that journalism 
and democracy are closely linked. James Madison was right when 
he said ``a popular government without popular information or 
the means of acquiring it is but a prologue to a farce or a 
tragedy or perhaps both.'' We are deep in the prologue moment. 
It is essential now to act wisely and responsibly to avert 
tragedy and farce.
    Thank you.
    [The prepared statement of Mr. Nichols follows:]
                   Prepared Statement of John Nichols






                               __________

    Mr. Johnson. Thank you, Mr. Nichols.
    And if someone would call the Physician's Office and have 
them to come forward because we have several people who have 
developed a sudden case of color blindness.
    So our next witness will be Mr. Lunzer.
    Mr. Lunzer, please proceed.

          TESTIMONY OF BERNARD J. LUNZER, PRESIDENT, 
              THE NEWSPAPER GUILD, WASHINGTON, DC

    Mr. Lunzer. Chairman Johnson, I want to thank you, the 
Ranking Member and other Members of the Committee for this 
chance to testify.
    I am Bernie Lunzer, president of the Newspaper Guild of the 
Communications Workers of America representing media workers 
throughout the U.S.
    I have worked in the industry for 30 years, 10 of those at 
the St. Paul Pioneer Press, in the newsroom, in advertising and 
circulation. I welcome this opportunity to talk about the 
current crisis within American journalism. This crisis affects 
all Members of this Committee, all your colleagues, and all 
Americans.
    American journalism is and will continue to change 
radically in the next 5 years. The policies you promote will 
decide whether we have a strong and fair press or a limited-
opinion press, regardless of the medium.
    The underlying premise of this hearing is that Hearst 
Corporation and MediaNews wants Congress to relax antitrust 
law. The Newspaper Guild is not convinced that such a remedy 
will be good for journalism in California or in the United 
States. History has demonstrated that relaxing antitrust law 
may actually do more harm than good.
    MediaNews purchased over 20 publications in northern 
California, some unionized, some not, to create a new entity 
called the BANG-East Bay. Once completed, the company withdrew 
recognition of the Newspaper Guild-CWA. We lost a legal 
challenge but later won representation of the full group 
through a hard-fought organizing campaign.
    Despite this, almost 2 years later, our members still don't 
have a contract. If this exemption is granted in northern 
California, others will demand the same ability to create 
monopoly markets resulting in other workers throughout the 
country becoming targets for similar actions.
    There is now one combined copy desk for all of the 
publications within BANG-East Bay. MediaNews has laid off 
roughly one-third of the original journalists. The result is a 
homogenized mix of publications with readers complaining that 
their local newspapers have little local content and are 
increasingly irrelevant to their communities.
    Unhindered by antitrust law, a newspaper monopoly across 
northern California will lead to job loss and to diminished 
products. This is contrary to the notion advanced by Hearst, 
which argues that its proposal would save something vital to 
the community. The Hearst-owned Chronicle now has fewer than 
half of its original workers, and coverage in large sections of 
the community has already been diminished.
    History shows us that such a monopoly will not benefit the 
local market and will further marginalize underserved minority 
communities within the market. Currently, publishers have 
recourse to an antitrust exemption through the Newspaper 
Preservation Act, which maintains separate newsroom but 
combines business operations. The sole purpose of the exemption 
was to help preserve the diversity of journalistic voices.
    But these Joint Operating Agreements, or JOAs, often 
resulted in inflated advertising prices. So they have not 
proved to be a panacea for newspapers' problems. Furthermore, 
out of over two dozen JOAs, only 10 exist today.
    President Obama campaigned in favor of more antitrust 
enforcement, stating in Gresham, Oregon, May 18, 2008, ``there 
are going to be areas, in the media for example, where we are 
seeing more and more consolidation, that I think it is 
legitimate to ask, is the consumer being served.''
    The fundamental question of what is gained through such 
consolidation remains very relevant. The largest concern we 
have about such a monopoly in northern California is that, is 
it an answer to the very real problems that exist in our 
industry? We think they will remain unanswered and that real 
innovation will be stifled. The two large corporations behind 
this initiative will only have forestalled the inevitable 
reckoning. The result will be underserved communities.
    If there is to be serious consideration of the problems 
facing newspapers, Congress needs to look at alternative 
ownership ideas, like employee stock ownership, nonprofit 
approaches and the new L3C concept. The L3C approach would 
allow publications to serve a stated social purpose in exchange 
for the ability to accept nonprofit money. Smaller, more 
committed news operations will be more successful in providing 
real coverage to communities.
    Bigger is not better. The current financial crisis is 
evidence of this. An antitrust exemption for such large 
corporations could create real barriers to entry for others. 
Without oversight, congressional and local oversight, this 
exemption may not work. While these companies become a single 
voice for over half of our most populace State, similar 
consolidations elsewhere would create incredible power for a 
select few.
    A commitment must be made to local coverage and local job 
creation. These same entities that are promoting this current 
proposal have been the loudest in supporting the outsourcing of 
jobs, causing one to truly question any commitment to local 
communities. Agreements amongst competitors to shut down or 
reduce capacity or output are normally illegal per se under the 
Sherman act. Any effort to assist the newspapers in this regard 
will have far-reaching consequences.
    Newspaper workers have made great sacrifices to invest in 
the future of their publications. We have given up a lot, pay 
increases, vacations, and other benefits, to preserve quality 
local media coverage and a diversity of voices. We have 
accepted these concessions with an understanding that we are 
investing in a long-term recovery plan. There must be a focus 
on new ways to generate revenue and on creating new business 
models that recognize the deep changes we are experiencing.
    We look forward to working with your Committee to address 
the long-term problems of the newspaper industry in an 
equitable and progressive manner. Thank you.
    [The prepared statement of Mr. Lunzer follows:]
                Prepared Statement of Bernard J. Lunzer






                               __________

    Mr. Johnson. Thank you, Mr. Lunzer.
    And now we will hear from Mr. Ben Scott.

           TESTIMONY OF BEN SCOTT, POLICY DIRECTOR, 
                   FREE PRESS, WASHINGTON, DC

    Mr. Scott. Thank you, Mr. Chairman, Chairman Conyers, 
Members of the Committee, thank you for the opportunity to 
testify today.
    I am the policy director for Free Press, which is the 
largest public-interest organization in the country working on 
media policy issues. As the name of the organization implies, 
Free Press has a strong interest in the future of journalism 
and the vibrancy of the news marketplace.
    I would like to begin by addressing the nature of the 
problem we face, since the crisis in the newspaper business is 
often seen as monolithic, but in reality, there are several 
major problems hitting different parts of the news industry in 
different ways.
    The most immediate problem, of course, is the debt load 
carried by major news companies that are pushing them into 
bankruptcy. But a more general problem is the decline in print 
circulation and advertising revenue as readers shift to the 
Internet. And online papers are up against more national and 
international news competition.
    Some newspaper companies have made things worse and 
accelerated their demise by pursuing flawed business models of 
consolidation. The short-term benefit emerges, of course, as an 
increase in revenue and market share, but the long-term 
consequences are mounting debt, a debt that now threatens to 
sink the ship. The revenue declines, and shareholder demands 
then force budget cuts. Budget cuts force layoffs. Layoffs mean 
fewer journalists. Fewer journalists, fewer stories and a lower 
quality product for the American public.
    But that doesn't necessarily mean that the core business of 
news production isn't profitable anywhere, at least for now. 
Many papers actually have profitable newsrooms, complete with 
double-digit margins and executive bonuses. The demand for 
text-based news is at an all-time high, but the readership no 
longer translates into big dollars because of the Internet. And 
that is the fundamental problem.
    The historical alignment of technology, market demand and 
public good that made monopoly newspapers a revenue engine for 
decades is coming to an end. But the outlook is not all dark. 
There are new journalism experiments cropping up all over the 
Internet. However, none has the clear financial base to scale 
up to replace the quantity and scope of news production that is 
disappearing around them.
    So we are left with a conundrum. As the news shifts online 
and advertising dollars dry up, will the remaining revenue base 
be sufficient to pay for the journalism that a democratic 
society needs? If it won't, then that is the policy problem 
that you have to solve.
    A decline of print newspapers doesn't necessarily mean the 
decline of journalism. Journalism just needs journalists, and 
lots of them. And the risk that we face today is that market 
failure will result in the departure of tens of thousands of 
experienced reporters.
    So what is to be done? Combining the best elements of 
traditional and new media, we need to create and sustain 
journalism models where it is possible to earn a living writing 
the news. And we need the resources to cover expensive 
international and long-term reporting alongside the local daily 
news.
    We also have to recognize that the Internet can't solve all 
of journalism's problems. More than one-third of the country is 
not yet connected to high-speed Internet. So solutions that 
rely on technology will have to deal with the digital divide.
    Quite rightly, people are alarmed when they hear that their 
daily newspaper is about to stop publishing. But we should 
avoid the temptation to turn to policies that resemble 
bailouts. Relaxing the antitrust standards to permit further 
consolidation won't solve the problem. Uniting failing business 
models will not produce success any more than tying two rocks 
together will make them float.
    While expanding scale may pay short-term dividends, in the 
long rum, it will deepen debt, shed jobs and reduce the amount 
of local coverage. That is the exact opposite of what we should 
be doing. We should be expanding the diversity of ownership and 
with a special focus on minority ownership.
    There are no easy answers here. And that is why we need a 
comprehensive policy approach. Just as we have created national 
strategies to address crisis in health care, energy 
independence and education, it is time to craft a national 
journalism strategy to get out ahead of this problem and take 
advantages of the opportunities it creates.
    It will begin by understanding how this happened and 
recognizing that journalism and journalists are essential for 
democracy. It will begin by showing why the Internet is a 
powerful force for positive change but not a substitute for 
everything of value that has come before. And it will begin 
when we recognize that the future of journalism is a policy 
issue. Policy makers should seek to join the robust discussion 
happening already about the future of the news room. The answer 
is certainly not to relax antitrust standards and double-down 
on the bad decisions of the past. The most likely answer, based 
on the evidence available today, is that there will be many, 
many answers. And that is good news.
    I thank you for your time. And I look forward to your 
questions.
    [The prepared statement of Mr. Scott follows:]
                    Prepared Statement of Ben Scott
















                               __________

    Mr. Johnson. Thank you, Mr. Scott.
    Now we will now hear from Mr.--actually Professor Edwin 
Baker.
    Please commence your testimony, sir.

TESTIMONY OF C. EDWIN BAKER, NICHOLAS F. GALLICCHIO PROFESSOR, 
          UNIVERSITY OF PENNSYLVANIA, PHILADELPHIA, PA

    Mr. Baker. Thank you.
    I wish to make six points. First, the market cannot be 
expected to adequately support professional-quality journalism. 
Much of the value produced by newspaper journalism goes to 
people other than the media companies' customers. We all, 
including nonreaders, benefit from the work of journalists in 
exposing corruption. We all benefit when corruption and 
negligence do not occur due to news media's reputation for 
watchfulness. We all benefit from the wiser voting of those 
informed by journalism. Newspaper companies cannot turn 
benefits to nonreaders into revenue. The gap between benefits 
provided and revenue obtainable results in inadequate 
incentives to put resources into producing news.
    Second, this inadequacy has been understood since the 
country's founding. Recognizing both the vital role of 
newspapers in holding the fledgling country together and 
inadequate support provided by the market, Congress, beginning 
in the first years of the Republic, provided huge subsidies on 
which newspapers were highly dependent. By the early 20th 
century, the annual postal subsidy to newspapers was $80 
million, which on a per-person basis equals roughly $6 billion 
in today's dollars.
    Third, the highly publicized decline in newspaper 
circulation does not indicate any decline in public interest in 
newspaper journalism. Rather, it mostly arises from two 
factors. Primarily, it represents a shift to online readership 
of newspaper stories with little or no real decline in actual 
readership, only a change in people's method of access. In 
addition, huge layoffs of journalists degrades a newspaper's 
product. Circulation predictably declines from a level more 
reporters and editors could achieve.
    Fourth, bankruptcies, newspapers closures and huge layoffs, 
over 30 percent, up to 50 or more percent at some papers, 
together represent the daunting nature of the crisis. But the 
key concern should be the last, layoffs. Bankruptcies primarily 
reflect papers' inability to generate sufficient operating 
profits to make huge interest payments, usually from debt taken 
on to finance recent unwise purchases. Unduly lax laws 
exacerbate this problem by failing to restrict these sales of 
newspapers. Still, these papers will continue after 
reorganization. Losses to unwise purchasers merit no public 
concern.
    Next, closures of the second paper in two-newspaper towns, 
illustrated by the Rocky Mountain News or the Seattle P-I, 
merely continue a 100-year trend of towns being unable to 
support more than one English-language daily paper.
    In contrast, huge layoffs of journalists and threatened 
closure of the town's only daily paper are major threats to 
democracy. As ad revenue declines, so does the value to the 
paper of journalism and attracting readers to sale of 
advertisers. The paper consequently lays off journalists, 
despite knowing that these layoffs cause a decline in 
circulation and paper quality. Temporary declines in ad revenue 
always occur during recessions. More worrisome now is a major 
long-term shift of advertisers' budgets to online sites, 
especially to support search engines and the migration of 
previously highly profitable classified ads to online specialty 
sites. Unless public policy can create replacements for these 
lost revenue streams, we may lose much of the professional 
journalism on which our country's Founders knew any robust 
democracy depends.
    Fifth, corporate consolidation is a problem for a 
democratic press, not a solution. Relaxing antitrust laws can 
increase the problem. A primary rationale for mergers is to 
save money, often through laying off journalists, thereby 
endangering the democratic contribution to the media. In 
contrast, the widest possible dispersal of media ownership 
serves to democratize voice within the public sphere, serves to 
increase the number of watchdogs, provides a safeguard against 
demagogic abuse of media power, and places ownership in the 
hands of people most likely to be committed to quality 
journalism.
    Sixth, the crisis justifies a public policy response. The 
central problem, the decimation of employed journalists, 
follows from the inability of media companies to obtain revenue 
that even approaches the real value that journalists' efforts 
produce for the community. The government would serve the 
public interest by giving media a tax credit for half the 
journalists' salary. This tax credit would reverse newspapers' 
incentive to lay off journalists. More journalists would in 
turn increase the quality of newspaper and cause circulation to 
rebound.
    For the roughly 48,000 journalists now employed by the 
Nation's newspapers, this tax credit would cost about 1 and a 
quarter billion dollars, a fraction of the amount in today's 
dollars, per person, that the country provided newspapers in 
postal subsidies 100 years ago. This targeted subsidy would 
duplicate the financial commitment that the country's Founders 
made to the news media of their time.
    Thank you.
    [The prepared statement of Mr. Baker follows:]
                  Prepared Statement of C. Edwin Baker




















                               __________
    Mr. Johnson. Thank you, Professor.
    And it has always been my dream to be able to gavel into 
submission one of my, or any, law school professors. And I was 
really at the 3-minute mark thinking that I would. It is just 
so tempting. But I was able to restrain myself.
    Next, we shall hear from Mr. Dan Gainor.
    Mr. Gainor, please.

  TESTIMONY OF DAN GAINOR, VICE PRESIDENT, BUSINESS AND MEDIA 
        INSTITUTE, MEDIA RESEARCH CENTER, ALEXANDRIA, VA

    Mr. Gainor. Thank you, Mr. Chairman, Members of the 
Committee, ladies and gentlemen, I am Dan Gainor, vice 
president of business and culture for the Media Research 
Center.
    It is an honor and a privilege to come here and speak about 
one of my favorite topics, newspapers. From the first time I 
ever read on my own, newspapers have been a part of my life. I 
have worked at three different dailies and several weeklies and 
online news operations following that calling.
    You don't have to tell me that the newspaper business is 
changing. Three of those organizations I have worked for are 
now out of business. Until recently, I wrote a column for the 
Baltimore Examiner, but it closed, putting dozens of friends 
and fellow journalists out of work.
    The news media are going through a time of epic changes, 
and that is never easy. In a few short years, evening dailies 
have all but died out. The rise of the Internet has changed 
even more. Newspapers first lost employment advertising to 
firms like Monster.com and since have lost classified ad 
revenue to Craigslist. Other sources of revenue, from personal 
ads to real estate, have met with smarter, more nimble 
competition.
    While it is fair to blame much of this decline on 
newspapers to technology, it is not the only factor. The 
newspaper industry has changed too for the worst. Standards 
have slipped or all but disappeared. The concept of a 
journalist as a neutral party has become a punch line for a 
joke, not a guideline for an industry.
    We all saw how poorly the mainstream press covered the last 
election. According to the Pew Research Center for People and 
the Press, voters believed that the media wanted Barack Obama 
to win the presidential election. Here is a quote from them, 
``By a margin of 70 percent to 9 percent, Americans say most 
journalists want to see Obama, not John McCain, win,'' Pew 
reported.
    Other surveys confirmed it. According to Rasmussen, ``over 
half of U.S. voters, 51 percent, think reporters are trying to 
hurt Sarah Palin.''
    It wasn't just the surveys; it was journalists themselves. 
According to Washington Post ombudsman Deborah Howell in a 
column headlined ``An Obama Tilt in Campaign Coverage,'' the 
paper's election coverage consistently supported Obama in 
everything from positive stories to flattering photos. That 
same slant reappeared last week during the Tax Day Tea Party 
protests. The Post didn't write a story about more than 750 
events nationwide until the day they happened; far different 
than how they handled other protests. Their own media critic, 
Howard Kurtz, even knocked such minimal coverage. While the New 
York Times did preview the events six times, five of those were 
negative.
    Such one-side reporting has destroyed the credibility of 
the print press. Among newspapers, the most trusted name in 
news is the Wall Street Journal, and just 25 percent of readers 
believe all or most of what that organization says, according 
to Pew. For the New York Times, the number is 18 percent; and 
USA Today, 16 percent. The only publications lower are People 
Magazine and the National Inquirer.
    In fact, for the New York Times, the number who believe 
almost nothing in the newspaper is nearly identical to those 
who do believe.
    And while newspaper credibility has taken a hit among both 
Democrats and Republicans, it is lowest among Republicans, with 
the Times having just 10 percent credibility rating with that 
group; 1 person in 10. You could write graffiti on a wall and 
have more people believe you.
    But the Times still has widespread influence, and a story 
on the front page can be picked up and appear in some form in 
countless media outlets. The Times's former public editor, 
Daniel Okrent, answered the question, is the Times a liberal 
newspaper, by saying, ``of course it is... These are the social 
issues: gay rights, gun control, abortion and environmental 
regulation, among others, and if you think the Times plays it 
down the middle on any of them, you have been reading the paper 
with your eyes closed.''
    For decades, many in the media have been working with their 
eyes closed, convinced of their own neutrality when all around 
them feel otherwise. In study after study, journalists 
consistently admit they support liberal causes and vote for 
Democratic candidates. In 2004, Pew found journalists 
identified themselves liberal over conservatives by a five to 
one ratio. Were journalists the only ones voting for President, 
they would have elected a Democrat every time since 1972.
    The Society of Professional Journalists, to which I proudly 
belong, has a detailed Code of Ethics. At its heart, it says 
journalists should provide ``a fair and comprehensive account 
of events and issues.'' They do neither.
    It is fitting, then, in a hearing to discuss ``diversity of 
voices,'' that every one here grasp a key point, the diversity 
of voices in print isn't about news. It is fiction.
    Thank you.
    [The prepared statement of Mr. Gainor follows:]
                    Prepared Statement of Dan Gainor






                               __________

    Mr. Johnson. Thank you, Mr. Gainor.
    And before we commence with my questionings, I would like 
to recognize a large group of students who are here today to 
observe democracy in progress. I appreciate you all's 
attendance.
    And do we know whether or not there are any spies amongst 
you? If anyone is--yes, I see one hand.
    Thank you, sir, for being honest.
    More shall been revealed later with you all. Don't forget 
that torture was once ruled legal.
    And so, but now I would like to at this point recognize the 
fact that I have heard through the grapevine a couple of times 
that there is a secret relationship that exists between some 
Members of Congress, who predominantly are of Republican. I 
understand that there is, and this is from folks I talk to, 
some believe strongly that there is an unhealthy connection 
between FOXNews and the Republicans.
    Mr. Gainor, I would like to hear your take on that, and 
also Mr. Lunzer.
    Mr. Gainor. We are spinning a little out of newspaper 
territory, but I think what FOXNews does what a lot of 
publications do in journalism. They have a target market. They 
identified a market that is clearly underserved by the 
mainstream media because the mainstream media, by all reports, 
don't pay attention to the concerns of conservatives, which 
represent a fairly sizeable portion of the American public. So 
Fox decided--and clearly records show, they are right--that 
they found a target market that was very viable. So since we 
had Rupert Murdock's comments read into the record, I am not 
about to dispute Rupert Murdock's business acumen.
    Mr. Johnson. Thank you very much, but I have been told that 
the tea party held last week was a result of an organized 
effort by politicians in conjunction or in conspiracy with the 
Fox TV Network that was an unholy alliance, if you will, 
between those two, as opposed to just a spontaneous outburst 
from uninformed people.
    Can someone comment on that?
    Mr. Nichols, please.
    Mr. Nichols. I attended one of the tea parties. And the 
people I saw at the tea party were grassroots Americans who are 
deeply concerned about the bailout of the banks and about the 
PATRIOT Act and a host of other matters, many of which this 
Committee has dealt with. I think we should be cautious about 
being too worried about media outlets, be they Fox or the New 
York Times, having a connection with their readers that might 
inspire them to go and do something, to go and turn out and 
act.
    You see, this is really the core of what we are talking 
about here. The core of what we are talking about is that we 
need a diverse media with many different voices. We need a 
media that will speak to those folks who would go to a tea 
party. We need a media that will speak to the folks who 
wouldn't go to a tea party. What we desperately, desperately, 
need and what is dying, and I want to emphasize it is dying in 
this country today is that competition of strong media outlets 
coming from many, many different perspectives.
    And what troubles me the most is the notion that we have a 
liberal media or a conservative media. The fact is, by and 
large, we have a lousy media in this country. And I want to 
tell you how lousy it is. The fact of the matter is George Bush 
shouldn't have been surprised that there weren't weapons of 
mass destruction in Iraq. We should have had a media that was 
on top of that story and did a good job. It didn't. And all 
these people, many people blame George Bush or criticize him; I 
will be very blunt with you, I blame the media. Our media 
didn't do its job. It didn't do investigative, challenging, 
aggressive journalism. And the way you get investigative, 
challenging, aggressive journalism is to have a lot of media 
outlets that employ a lot of journalists and send them out from 
different perspectives to go do their job.
    Mr. Johnson. Thank you.
    And Mr. Ben Scott, would you like to respond to that 
vicious rumor that is going around?
    Mr. Scott. Well, I can't comment on the veracity of that 
rumor, although it wouldn't surprise me. I think what the key 
issue here that I am hearing is a widespread agreement at this 
table that what we need is a diversity of viewpoints in the 
media. It strikes me that, at a moment of crisis in the 
newspaper industry, the print newspaper industry, largely the 
daily newspapers, is also a moment of opportunity for us to 
take advantage of new technologies, to create new business 
models, to see the market and the government work together to 
figure out how we can support more journalists, not to 
replicate the status quo on the Internet that we once had on 
the newspaper pages, but to create a better media system, to 
create a media system that creates more journalists, to create 
a media system that can aspire both to the goals of objectivity 
and to the goals of partisanship, so that, for the first time 
since the 19th century, when every major city had a 
dozennewspapers, we can see a robust marketplace of ideas in 
this country.
    Mr. Johnson. Thank you, and unfortunately, I wish I could 
hear from the other Members on this point.
    But I will at this point in time note that my time has 
expired, and it took a while for me to see that red light.
    Mr. Conyers. Mr. Chairman, I would ask unanimous consent 
that the Chairman be given 1 additional minute.
    Mr. Johnson. Does anyone have the courage to disagree with 
the Chairman?
    Mr. Goodlatte. Not me.
    Mr. Conyers. Without objection, we shall do so. Thank you.
    Mr. Gainor, if you would respond to that.
    Mr. Gainor. If I just might remind people a little bit 
about the history of the tea parties is, tea parties were 
spawned by comments made by Rick Santelli on CNBC, which is 
part of NBC and ultimately GE. Santelli had what is called the 
``rant heard round the world'' complaining about spending in 
government. Soon after that, there was an event in February 
that, yes, did not get much media coverage, but it included 50 
different tea parties on February 27.
    Mr. Johnson. Did it get covered on Fox like this one did?
    Mr. Gainor. Actually, it didn't get very much coverage. It 
did coverage on Fox some. Fox saw, again, I think an 
opportunity that people were not covering it much. But, again, 
the cause of this, and the tea party people themselves, 
proclaim on their Website that this was spawned by comments, 
inspired by comments made by Rick Santelli. So to say it is a 
Fox conspiracy, not one that I held any credence for.
    Mr. Johnson. All right.
    Thank you, sir. I will next turn to Mr. Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Gainor, to follow up on that, according to a Gallup 
poll, only 9 percent of the Americans say they have a great 
deal of trust and confidence in the mass media to report the 
news fully, accurately and fairly. That is even lower than 
Congress's approval rating.
    The same poll found that more than twice as many Americans 
say the news--we are not talking about just FOXNews here, by 
the way. We are talking about all sources of information 
through the media. That same poll showed that more than twice 
as many Americans say the news media are too liberal rather 
than too conservative. How has Americans' lack of trust in the 
media exacerbated the news industry crisis? What can be done to 
restore that?
    Mr. Gainor. What can be done to restore it, first of all, 
is to do a better job. That is something everybody on the 
Committee, the panel, can at least agree on. Before we get too 
lost in the woods talking about Fox in a newspaper discussion, 
I want to remind everybody the scale of the media in this 
country. If you talk about Fox and the tea party day, when they 
had 3.9 million people watching their one program, their 
highest rated program that night, they did very well. They are 
one-sixth of what ABC, NBC and CBS get on a typical evening 
news show. They roughly equalled that night what MSNBC, CNN, 
and CNN Headline News, so you are talking about a drop in the 
bucket by comparison, so it is not an apples-and-oranges 
comparison.
    What can the media do? They need to do a better job. They 
need to recognize, we talked about diversity of voices; they 
need to recognize that there aren't a diversity of voices in 
the newsroom. In a typical newsroom, you will see a diversity 
plan that talks about gender, talks about race, some of the 
more advanced diversity plans will talk about religion. They 
won't talk about opinion. So you will find a newsroom where 
they were forced in one case, where they did a story on 
religion where they had to go to a graphic artist who actually 
was more actively religious because they didn't have enough 
people in the newsroom who went to church. You need to have a 
newsroom, if we are going to have a newsroom reflect America, 
it certainly hasn't been doing so for a long time.
    Mr. Goodlatte. Let me turn to Professor Baker.
    In your testimony, you stated that huge layoffs of 
journalists have resulted in degraded newspaper product.
    Can you tell us more about what that degraded product is? 
Has it led to more one-sided or biased news coverage, or is it 
possible this degraded product has caused news consumers to 
switch to alternative news sources?
    Mr. Baker. Actually, when they switch, they usually switch 
to the online newspaper product for the most part. When----
    Mr. Goodlatte. Is the online newspaper product a degraded 
product, too?
    Mr. Baker. But both of them are. Any editor will tell you 
that with more newspaper resources, they can do a better job 
covering the various things that newspapers ought to do. Now 
they may do it from a particular slant. Fox might do it from 
one slant. Another media entity might do it from a different 
slant. Under the first amendment, that is not really our 
concern.
    But for a democracy, our concern is that they do it in a 
quality way with resources. So when newspapers have invested in 
hiring more journalists, they have actually increased their 
circulation. The trouble is that circulation isn't as valuable 
to the paper as it costs the paper in salaries. So they lay off 
the journalists.
    Those journalists are providing a public service by 
providing a better paper. So when the paper fires their 
journalists, the data tends to show that they lose some of 
their readers. That is what I mean by degraded product. When 
you use more money to produce something and sell it for the old 
price, it is going to be a better deal----
    Mr. Goodlatte. Let me follow up on that point because I 
think it is a good point, but by the same token, newspapers 
have got to be able to raise the money necessary to be able to 
afford that quality reporting force. So why has the newspaper 
industry been unable to monetize its content in recent times? 
Is it strictly the fact that they are competing with free, on 
the Internet, oftentimes on the Internet--they may be competing 
with--anybody can be a publisher. Anybody can be a reporter on 
the Internet. The quality of that is often subject to 
considerable question. But nonetheless, they are having to 
compete with that.
    Is there a model that the newspaper industry could follow 
that they have haven't? Itunes, for example, has changed pretty 
dramatically how you buy music by selling it one song at a 
time. Are we headed toward that where you are going to pay for 
your story, story by story?
    Mr. Baker. Most everybody in the industry is looking for 
those models. And some of those people are pretty good business 
people, and they will probably find what is available. What 
they won't find is enough to support the type of journalism 
that the country historically supported basically with 
government subsidies. As long as the benefits are going to 
people beyond the readers, there is no way to monetize those 
benefits.
    If you are talking about readers, there is at least the 
possibility of monetizing it. And newspapers are trying to find 
how to do that as a way of capturing more money from their 
online readers. They are not going to be entirely successful. 
They are going to do somewhat better than they are doing now. 
It is going to help a little. It is not going to deal with the 
real crisis problem.
    Mr. Goodlatte. Well, I take it the subsidy--Mr. Chairman, 
if I might, I see my red light is on as well, if I might have 
leave to ask a follow-up question to Mr. Baker.
    Mr. Johnson. Mr. Goodlatte, if there is no objection, I 
will give you 30 seconds extra.
    No, to be fair, though, we will do 1 minute. Is that fine?
    Mr. Goodlatte. That should do it.
    Professor Baker, to follow up on that point, you referenced 
government subsidies, is that in terms of the postal costs of 
sending newspapers? What subsidy are you talking about?
    Mr. Baker. At this time, today, the newspaper industry is 
not being subsidized. One hundred years ago or 200 years ago, 
it was being hugely subsidized. One hundred years ago, the $80 
million would be in today's dollars per person $6 billion that 
they were getting from the government 100 years ago. Today, it 
is not there.
    Mr. Goodlatte. You are saying the newspaper industry was 
subsidized 100 years ago? It is not today?
    Mr. Baker. One hundred years ago, the postal subsidy to the 
newspaper was worth--according to a Supreme Court case--was 
worth $80 million.
    Mr. Goodlatte. But the reality is that now, the problem is 
that subsidy, at almost any price, would be very difficult to 
compete with getting information online. So are you proposing a 
subsidy for online journalism? Because that is where this is 
all headed.
    Mr. Baker. What democracy requires is journalists. I think 
it also requires newspapers. But I am not as much concerned 
about newspapers as I am about journalists. If you gave a tax 
credit to newspaper companies for half the salary of their 
journalists, they would suddenly find it valuable, desirable to 
hire more journalists.
    Mr. Goodlatte. Who would be eligible for that? In an online 
world, wouldn't anybody be able to say, I have an online 
newspaper, I want to have a one-half subsidy of my journalists?
    Mr. Baker. Most of the journalists today, most of the news 
being produced today is by the print newspaper sometimes also 
operating online sites. If you went forward with my proposal, 
one of the questions would be whether or not it should be made 
available to various types of online publications which had 
paid staff, paid journalists working for them. There is nothing 
in principle that would say that you shouldn't, but we would be 
dealing with the problem even if we didn't extend the subsidy 
that far.
    Mr. Goodlatte. The Chairman has been very generous with my 
time, so I will yield it back. But I would be interested in any 
other, if any of you want to submit in writing any thoughts 
about how such a subsidy could be sustained in a world where 
anybody can define themselves as a journalist.
    Mr. Johnson. Thank you, Mr. Goodlatte.
    And now we will have questions from Chairman John Conyers.
    Mr. Conyers. Thank you, Mr. Chairman.
    This is an important issue. And what we will begin to look 
at, as this examination of what to do with newspapers in crisis 
continues, is the exact nature of the crisis. I have had, I 
think pretty, good examples, but we need to know precisely what 
it is we are going to fix.
    But I was moved by the Scott recommendation that we come up 
with a national strategy for dealing with papers. And would 
like to have you and Nichols and others expand on that, if you 
would.
    Mr. Scott. Certainly. I think the first thing to do is to 
look at the different dimensions of the problem. That problem 
that is happening for a major daily newspaper is not the same 
problem that is happening for a rural weekly. It is not the 
same problem that is happening for a new experiment in online 
journalism. It is not the same problem that is happening for a 
hybrid that does specialization, like investigative journalism 
or government reporting.
    So I think we need to understand the different kinds of 
problems, and I think we need to begin to design solutions. And 
I think the main problem that we are trying to get at here is, 
if the historical accident of advertising-supported newspapers 
no longer works, and there is no longer a revenue model in the 
marketplace that produces the news that we need for our 
democracy, how do you fill that hole?
    First, there is reduction of costs with the distribution 
model provided by the Internet. But there is always going to be 
a core expense for production of news. And I think we need to 
get at that through----
    Mr. Conyers. But how do we go about putting together a 
national strategy? Would this Committee be a place to begin? Or 
would we call in all the newspaper leaders in the country or 
invite them to start a conference themselves to come up with a 
strategy?
    Mr. Scott. I think you can begin by taking the leadership 
of those who have begun, such as the Knight Commission has a 
panel on this subject. A number of university professors have 
written extensively on the subject. I think that we need to 
begin to look at solutions that range the gamut from tax 
policy, bankruptcy policy, direct investments in education and 
public media. Those are all areas in which I think potential 
solutions lie. And it will be a combination of those things 
which produces a desired result.
    Mr. Conyers. Which would include the subsidies that they 
are already enjoying. You know, when you raised the cost of a 
postage stamp, do you know what we are paying for?
    Mr. Scott. We are paying for the news media and the 
periodicals class.
    Mr. Conyers. Exactly.
    John Nichols.
    Mr. Nichols. If I can just come off that and actually, 
Congressman Goodlatte's very, very good questioning in this 
area, the notion of a subsidy from the government to a 
newspaper is, I think, abhorrent to most journalists. What you 
really want to do is----
    Mr. Conyers. That is capitalism at its worst.
    Mr. Nichols. Well, we did it with banks, and I am a little 
troubled by that.
    Mr. Conyers. That was the same--and yeah, it applies to 
whomever.
    Mr. Nichols. What we are talking about here is democracy. 
We want the people to be able to get information. We have all 
said that in some way or another.
    And so the way that you might look at congressional action, 
one piece of congressional action, is to do what some European 
countries have done, which is to allow people to take the cost 
of their subscriptions off their taxes. You can deduct your 
subscriptions from your taxes.
    As a journalist today, professionally, I can deduct my 
subscriptions from my taxes. But a citizen cannot. I would just 
suggest to you that this is a way where we democratize a 
support of journalism. We come in, and Dr. Baker has offered 
some very wise proposals, but imagine this, where we 
democratize journalism by saying to people, yeah, if you want 
to subscribe to a conservative Internet site that charges or a 
liberal newspaper that charges, that is great. And you can, you 
pay your money in and then attach that, staple it to your 
taxes, like a lot of us did on April 15, and it is a way to 
support media that you approve of without sending the money--
and this is my personal bugaboo here--without sending it down 
the rat hole of the existing companies, because the existing 
companies have done a horrible, horrible job of running 
newspapers.
    Newspapers, I mean, imagine, we are all talking about how 
much we love newspapers. And yet somehow they have managed them 
into extreme crisis. And this crisis did not begin when 
somebody flipped the switch on the Internet. If you monitor the 
declining advertising revenues of newspapers, it started before 
the Internet hit its stride.
    And frankly, the bottom line is also on circulation. We 
have had basically stagnant circulation since the 1950's. And 
so the reality is newspapering has had a long-term problem. It 
has come to a head in the current economic crisis. But what we 
need to do is realize that a lot of these companies that have 
been running these newspapers haven't been doing a particularly 
good job, and I will close with one of the explanations for why 
they are in so much trouble right now that we have not talked 
enough about right now. They, big companies went to buying 
sprees. They spent too much money to buy daily newspapers in 
communities, took on huge debt, and now they are laying off 
working journalists so that they can pay their debt. And at the 
end of the day, what they will end up with is perhaps a paid-
off debt but no newspaper that is worthy of reading.
    Mr. Conyers. Mr. Chairman, I ask unanimous consent for one 
additional minute.
    Mr. Johnson. In the absence of any objections, please, sir.
    Mr. Conyers. I just wanted to ask Mr. Gainor if he is 
familiar with an organization called Freedom Works.
    Mr. Gainor. Yes, sir.
    Mr. Conyers. I wanted to ask you further, are you familiar 
with an organization called Americans for Prosperity?
    Mr. Gainor. Yes, sir.
    Mr. Conyers. And are you familiar with an organization 
called the Heartland Institute?
    Mr. Gainor. Yes, I am.
    Mr. Conyers. I am glad to know that. I am not, but I think 
I am going to get more familiar with them.
    Mr. Gainor. They are conservative. You should check them 
out.
    Mr. Conyers. Thank you. Maybe that is why I never heard of 
them before. But I understand they are pretty effective, that 
they influence the business of getting news out to the people 
and, in their own way, quite effectively.
    Mr. Gainor. I think they are public policy organizations 
that, like probably about a thousand of public policy 
organizations in Washington, try to do their best to get their 
word out. They are probably just fairly good at it.
    Mr. Conyers. And you recommend them to my attention?
    Mr. Gainor. Absolutely.
    Mr. Conyers. And to everybody else in the country as well?
    Mr. Gainor. Certainly.
    Mr. Conyers. Thank you very much.
    Mr. Johnson. Thank you, Mr. Chairman. There being no others 
from the other side of the aisle who are present at this time, 
I will now turn to Representative Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. I am not 
sure that I would even have agreement among all the witnesses 
if I said, do we all agree that the newspapers provide us 
something that is very unique, different from any other media 
source? And we can complain about the bias, the prejudice, the 
incompetence, and so on in the newspaper. The real question is, 
as opposed to what? TV? Radio? The Internet? Suddenly, 
newspapers truly become essential and vital in the professional 
product that they provide more often than not and that you will 
find in the newspaper setting that you will not find as often 
in any other delivery system. That is my premise. If we don't 
agree with that, then we can all pack it up and go home and say 
let nature take its course, survival of the fittest, and the 
wonders of the free market, and it is over.
    The question is, are the laws antiquated? Do we need to do 
something about it? Maybe, maybe not. Or is it just a matter of 
the application of the laws in a manner that will take into 
account all relevant factors? Your competition not necessarily 
within the same similarly situated industry, but rather who are 
your competitors?
    Now, I am going to say, I saw everybody kind of shaking 
their head that we all agree that the newspapers provide 
something that is very unique and valuable that cannot be 
replicated elsewhere or presently is not being replicated. So, 
how did we get to where we are today? And now I am going to 
quote from newspaper articles.
    June 5, 2008. Whenever I find something interesting, this 
is the wonders of technology. Isn't it? We used to just 
highlight it, cut it out, put it in the your file. Now it is in 
your BlackBerry or iPhone.
    June 5, 2008. Peter Moresky from the Post, quoting Steve 
Balmer, CEO of Microsoft. Quote. Here are premises I have. 
Number one, there will be no media consumption left in 10 years 
that is not delivered over an Internet protocol network. There 
will be no newspapers, no magazines that are delivered in paper 
form. Everything gets delivered in electronic form.
    And if that is what we need to prepare ourselves for, that 
is fine. But what happened is that businesses adopted certain 
business models and revenue streams. And maybe it is 
irreversible and it is an irrevocable future out there. I mean, 
we have set something in motion.
    June 6, 2008, New York Times, Paul Krugman column. Quote: 
In 1994, one of those gurus, Esther Dyson, made a striking 
prediction that the ease with which digital content can be 
copied and disseminated would eventually force businesses to 
sell the results of creative activity cheaply or even give it 
away. Whatever the product, software, books, music, movies, the 
cost of creation would have to be recouped indirectly. 
Businesses would have to distribute intellectual property free 
in order to sell services and relationships, and we will have 
to find business and economic models that take this reality 
into account.
    That is where we find ourselves. The question is, is there 
a role for us? I think, Mr. Scott, you said the future of 
journalism is really dependent on policy. And I assume you mean 
policymakers, Washington and elsewhere, which I think is what 
Steve Kay said about the Internet: The future of the Internet 
is not dependent on technology but on regulation. So I think 
there is a role for us.
    So what is it that newspapers bring that is so valuable 
that we all have to work together to salvage the survival of 
the printed media in America? And I will start to my left. And 
that is the only question I have.
    Mr. Tierney. Thank you very much. Congressman, I think it 
is an advantage, sometimes it seems like a disadvantage, 
actually running a newspaper. And I am not a theorist and I am 
not somebody who testifies here. It seems that the good ones 
can hit that 5-minute mark right to the second.
    I actually have 10,000 men and women, full-time, part-time, 
and independent contractors that are depending upon me in this 
organization. We are probably as close to the ideal kind of an 
ownership group as you can want. Four Republicans, four 
Democrats, and four Independents, all self-made folks who 
really cared about it, who put up 30 percent so it wasn't 
highly leveraged at the time, who are willing to put more money 
into it.
    The idea that somehow it is because the news media is too 
liberal or conservative; Rupert Murdoch is a really smart guy. 
Right? The New York Post is struggling. I hear it loses money. 
The New York Times is struggling, and the Boston Globe. So 
Republican, Democrat, liberal, conservative, the business model 
is not working. And part of that is as simple as classified 
advertising.
    I have only been in the industry 3 years, and I have found 
since coming in here that there were some mid-level business 
people in the industry that weren't up to snuff. I know when I 
was at Penn there were people who wanted to go in to be 
reporters at the Philadelphia Inquirer, but nobody said at the 
Wharton School, ``I want to go in to circulation at Knight-
Ridder.'' I understand that is the case. But at the top of 
these companies there are really smart people who are really 
successful in--Rupert Murdoch in television, and he is 
struggling in newspapers. Don Grant, a very, very bright guy, 
the Washington Post, 50 percent of their revenue comes from the 
Stanley Kaplan Learning Center. So they are not all dummies, 
and there is a real systemic problem here. And part of the 
problem that I have noticed repeatedly, most recently with a 
group of publishers in San Diego at a meeting, is everybody is 
afraid to talk to each other. We had an antitrust lawyer in the 
room. I have been in advertising for 20 years, I have advised 
large corporations, and I have never seen an industry that 
everybody is so afraid to even begin to have a discussion. Now, 
perhaps they are more conservative by nature, but it was 
shocking, about issues about, well, could we kind of cooperate 
on some kind of a free classified space? Couldn't we cooperate?
    Listen, nobody is trying to decide whether they should buy 
the Philadelphia Inquirer or the Dallas Morning News tomorrow 
morning. They don't. And there are opportunities but--to find a 
new business model. Because, you know what? Nobody does what we 
do. The bloggers comment on what we do, or they rip it off and 
copy it and put a sentence in front of it.
    Eric Schmidt said the average blog in America is read by 
one person, I am all for other things. And if there could be 
subsidies for subscriptions, et cetera, we have to look at the 
impact of some of those things. But fundamentally, you know, if 
I thought the answer was to hire more journalists to fix the 
problem, we would do that. The question is--I mean, and forget 
our debt. We have a lot of debt; it is going to be 
restructured. Even if I have zero debt--and we are the number 
three in advertising sales among top newspapers so far this 
year, number three among the top 25 papers, one of the most 
efficient newspapers in the country according to an industry 
report as well. So, number three in advertising, one of the 
most efficient. At the same time, our profitability has gone 
from 70 to 49 to 36 last year to 11 this year. And that is with 
making a lot of savings. So to somehow think that even if we 
had no debt, even if we had no debt--our investors are so 
committed to this that they haven't received a dividend--the 
model doesn't work. Conservative paper, liberal paper, however 
you want to do it. And I think most people just try to--over 
the course of the whole baseball season, it is pretty fair, 
most papers. But the fact of the matter is--and we have to look 
at that because there won't be anybody here--like I had a great 
situation, whether it be Toys for Tots was struggling in 
Philadelphia, we wrote about it, they got 50,000 toys. Or 
somebody who wrote to me and said: I never thought of taking my 
children to the Philadelphia Orchestra. I am a construction 
worker. I happened to see something, and how neat it was for 
the first time at 52 years of age to walk in to hear the 
Philadelphia Orchestra. Or vice versa.
    I mean, nobody does what we do. And over a million people 
every day read our paper in Philadelphia, and another half a 
million people go online. We have to figure out how to charge 
them. All of us are afraid to talk to each other about how to 
create a one-pass system for that. I mean, we really need some 
help. We don't need a subsidy, we just need a little bit of 
room for things that will come before the Justice Department 
again to be approved before they are done. We just want to be 
in Philadelphia. We are not trying to create a media empire. 
None of us would be interested in buying a paper in Chicago or 
Los Angeles. We are Philadelphians; this is the only reason 
that we are here. But we do need--I am telling you as a 
relative newcomer to the industry, this industry is in extreme 
situation. Once it goes, democracy will suffer.
    Mr. Conyers. So why don't you create a new model?
    Mr. Tierney. Well, we are struggling to some extent to do 
that, Mr. Chairman, in terms of what we have done. We have come 
up, and now we are willing--we are in negotiations with the 
banks and putting in more equity, et cetera. But even if we 
have--when we are competing to some extent with a Google, I 
mean, think about that. They have 70 percent of the search. And 
they--I mean, and they are in many ways a competitor to us. We 
don't control the advertising. All the newspapers in the 
Philadelphia market together aren't that powerful as an 
advertising vehicle compared to a Google. That is--I won't get 
into that. But, anyway, that is probably for another hearing. 
Anyway, but so there are--and I guess what I am suggesting is 
that I have never seen a more fearful industry about talking 
about cooperation. Honestly. And I have advised people in the 
electric utility business, you name the business, and it is an 
industry that--and there is so little concentration. I think 
the largest chain of newspapers has less than 10 percent, and 
then it drops off after that. We are probably the most 
deconsolidated industry compared to cable or any other 
business.
    I am sorry, I know I have gone over the 5-minute mark, but 
I appreciate the opportunity. Thank you, sir.
    Mr. Johnson. Thank you, Mr. Tierney.
    Mr. Conyers. Mr. Chairman, I ask unanimous consent so that 
Mr. Gonzalez's question can be gone down the row here.
    Mr. Johnson. Without objection, so ordered. Proceed.
    Mr. Nichols. I am very honored to be on a panel with Brian 
Tierney, because he stepped in at a time when we had a major 
chain breaking up and put together one of the few situations 
where local people actually bought their paper. And this is 
something we should be about. We should be about local 
ownership of newspapers.
    I can't tell you how much damage has been done. I know it 
is a relatively unconsolidated industry, but let me tell you, 
chain ownership by and large has been a nightmarish situation 
for the daily newspaper business. And when you have distant 
owners who are taking profits out but not putting much back in, 
you see the dumbing down and the destruction of the daily 
newspaper.
    So at the end of the day when we start to deal in these 
consolidation, antitrust, cross ownership issues, all central 
to this discussion, we have to be very, very careful. If we 
simply make it easy for distant owners to consolidate more and 
do less, we will end up in the newspaper business with 
something much like what happened in radio. In 1996----
    Mr. Conyers. But isn't that the nature of capitalism?
    Mr. Nichols. The nature of capitalism, frankly, if I 
understand it, has something to do with free markets. And when 
you have a monopoly owner----
    Mr. Conyers. Free markets. That means global.
    Mr. Nichols. When you have a monopoly owner in one place, I 
am not sure if that is a free market operating there. So what I 
would hope is that Congress would be in the business of trying 
to promote a real free market of ideas, where you set up a 
situation where it is possible for competing newspapers, 
competing media outlets in the same town to employ journalists 
and do something of quality.
    But just to close off that thought, I think it is the great 
danger, the great danger in saying, well, let's just throw off 
the antitrust rules, let's just throw off the cross-ownership 
rules, let's just throw off the consolidation rules, is that we 
then begin to end up in a situation where people who have 
already shown a penchant--not Mr. Tierney by and large, but the 
people who have shown a penchant for taking freedom, more 
freedom as an opportunity to dumb down, downsize newspapers and 
newsrooms and to take more profits out.
    We saw this happen in radio when Congress passed the 
Telecommunications Act of 1996, allowing one company to own as 
many as eight radio stations in a market. These companies, 
Clear Channel is the first example, came in, bought eight 
stations, shut down seven or eight competing newsrooms, and put 
one kid running from microphone to microphone. And we ended up, 
as Senator Dorgan has revealed in his hearings, with situations 
in some communities, substantial communities, where there was 
not a single broadcast journalist on the job.
    Now, that is the danger of throwing off some of these 
controls, throwing out some of these rules in an irresponsible 
manner. You could well end up not helping newspapers but 
actually hastening the decline of newspapers and, more 
importantly--because this isn't really about newspapers--more 
importantly, the decline of journalism. And a democracy cannot 
function without journalism.
    Mr. Lunzer. If I may. In Chairman Conyers' town just this 
last week two very enterprising journalists as part of a team 
won a Pulitzer Prize for the work they did in investigating an 
ethically challenged mayor. They didn't ask what party he came 
from. They had heard the rumors, they did the work. It was 
something that ultimately was very tragic but also very 
important to that community.
    When people say what do newspapers represent? What will be 
lost? That kind of work isn't being done by MSNBC or Fox News. 
This is the kind of work that good journalists do every day in 
organizations that are big enough to support this kind of 
information. They are hardworking. They really don't pick 
sides. I reject all this talk of bias. I think that is more 
about the polarization of politics.
    But what I would say is this in terms of policy. You want 
to encourage journalism, you don't want to try to pick winners. 
And that is the direction we need to go in. Thank you.
    Mr. Scott. Mr. Conyers, you asked me earlier how Congress 
could go about constructing a national journalism strategy, and 
I did a poor job of answering that question. But it occurs to 
me that the answer to your question is the same answer to Mr. 
Gonzalez's question, and I think he is absolutely right, which 
is, what we need to do is we need to bring people together in 
the spirit of cooperation, which Mr. Tierney rightly points out 
has been absent in this space, and bring together the industry 
and the unions and the readers and the new Internet journalists 
and the academics who have all been thinking about these 
questions, and we need to identify what is the essential thing 
about print journalism that we need to preserve in this 
transitional technological environment. And, how do we support 
those things in a business model where advertising revenues 
have been decoupled from the value of news? And, third, what 
are the policies that we can put in place to facilitate that 
transition so that those essential elements are preserved?
    That is the challenge I think that sits before this body 
and the one that would be the first objective of a national 
journalism strategy.
    Mr. Baker. Mr. Gonzalez's question about what is unique 
about newspapers, I think it has to be the journalistic unit. 
And if that survives, whether the paper edition survives or 
not, is a somewhat marginal question. But to have those 
employed journalists--and most of the journalism done in this 
country today is done by newspaper journalists, not all of it. 
And we should be supporting it wherever it exists. But 
newspapers do most of it. And if we do something that 
sacrifices that, democracy suffers.
    Evidence is, from around the world and also within this 
country from State to State, that the biggest correlator with 
less government corruption is newspaper readership. When people 
are reading newspapers, corruption goes down. That happens 
place after place. My suspicion--these studies were mostly pre-
movement of all the readers to online. I suspect it is not just 
the readership of the newspaper that has been crucial for this 
reduction of corruption, but it is the fact that there are 
journalists out there making reports on what people in 
government are doing.
    It has been suggested by somebody that in the recent 
stimulus bill we would get much better use of that money if a 
small fraction of it was used to support investigative 
journalism; then the other money that is spent would be used 
much more wisely.
    As for how we keep these journalistic units together, the 
history has been that when you allow the exemptions from the 
antitrust law, the general result is, as has been mentioned in 
the radio example, is that the merged entities lay off the 
journalists, that that is the part that is hit first and 
hardest. The Newspaper Preservation Act, which I think was a 
wonderful idea in terms of keeping competing newspapers alive, 
keeping the competing journalistic units alive, has as a 
practical matter not turned out well: Once you have allowed 
them to join forces as a monopoly business enterprise, then 
they discover that it is really not all that valuable to still 
have to produce two products when they could have a monopoly 
with one product. So the JOAs have largely been hospice care. 
They keep one paper alive for a while and then eventually put 
that one out of its misery, and then the monopolists can split 
up the profits of a single newspaper in a town.
    The exemptions from antitrust laws have never been a good 
method of making sure that these journalistic units stay alive. 
Other policies of a variety of sorts, I offered a subsidy 
scheme, the notion of new ownership forms has been mentioned by 
other panelists. There is a variety of other things that could 
be usefully done. But it is these journalistic units that is 
the crucial thing that newspapers have offered us, and it has 
been something vital for democratic societies.
    Mr. Gainor. First, I want to thank Congressman Conyers for 
giving us a chance to answer this question. It is very 
important.
    Yes, what newspapers or what news organizations do is 
unique but it is not always going to be in print. You can ask 
any of the people who work on your staff or any of your family, 
they are getting their news from other venues. They are getting 
their news on their BlackBerry or online in some form or 
another. Times are changing and changing very rapidly.
    But I get very concerned, people are thinking that there is 
no strategy. There are strategies that are working. People are 
paying for content. You can find financial news, people will 
pay, readers pay for financial news online. They will pay for 
health news online. They even pay for sports news online. There 
are models that work for the news industry where these are 
working. So I reject the contention that there are no business 
models.
    I think the problem is, and I think we would all agree that 
the industry has not been very well run, they haven't found 
them yet. But nothing scares me more in the middle of a 
congressional hearing than three words that say: National 
journalism strategy. For Congress to be mandating a national 
journalism strategy results in what you to some extent have 
even here in this hearing right now, journalists lobbying 
government, and then in turn being beholden to the decisions 
and whatever moves you make to then aid them in protecting 
their career and their employees. It is natural. It is human. 
We all have friends in the industry. We all want the industry 
to survive. If Congress bails them out, how hard are they going 
to be then treating those Congressmen who voted for that the 
next day?
    So I want to close just with--an editor and publisher 
actually addressed the issue of bailouts in September. This is 
an industry publication, and it came out against them. And it 
ended its editorial by saying: There is no reason to believe 
bureaucrats would do any better picking winners and losers 
among newspapers, and plenty of reason to fear turning the 
financial future of newspapers over to a Federal Government all 
too enamored of secrecy and surveillance.
    I second that opinion. Thank you.
    Mr. Johnson. Thank you, Mr. Gainor. I will now ask this 
very simple question. Mr. Chairman, Chairman Conyers is about 
the only one who actually ran with the dinosaurs, and he 
regrets that he can't run with them today. But--because of 
course they went extinct, and we were not able to as a 
government save them. And now we are talking about the polar 
bears getting ready to leave, the famous seals whom our Navy is 
so fond of are threatened with imminent demise due to this 
alleged global warming phenomenon.
    And you know, so that being the case, things change, 
dinosaurs come and go. Newspaper industries come and go. Why is 
it so necessary for government to get into the pockets of the 
people and save this dinosaur? Why should we move toward 
socialism?
    Mr. Tierney. Let me just say from the perspective of 
somebody again who actually is running a newspaper, I can say 
our industry is not looking for a bailout. We are not looking 
for a dime, we are not looking for a dollar. We are just 
looking for the ability to have discussions which may or may 
not bear fruit. But the industry is still--when I hear about 
the monopoly. If it is such a great monopoly, there wouldn't be 
dozens of newspapers for sale right now with no buyers. If this 
was the biggest monopoly in the world, you would think that 
somebody would want to buy a newspaper in town after town.
    The value of stocks like Gannett is down about 85, 90 
percent in 2 years. The McClatchy Company, the second largest 
newspaper chain, has dropped 99 percent from $60 to 60 cents in 
2\1/2\ years. The New York Times Company. And, again, we are 
not looking for a subsidy at all, unlike other industries that 
have come before you. We are just looking for the ability to, I 
believe, have a chance to--because you would be surprised, 
Congressman, if you were there as an attorney, the fear of 
these publishers to have any discussions at all even with a 
lawyer present I think stymies the ability to begin to kind of 
say, gee, how can we find some ways to save some money, or can 
we find some ways to compete with one of the big Internet 
sites, et cetera.
    Mr. Conyers. Mr. Tierney, you are confusing cause with 
effect. The reason these big monopolistic newspapers may be 
going into the toilet isn't because of the system. It is 
because of the way they have run it and the poor quality and 
the fact that there are competing technologies that weren't 
there when the Founding Fathers started off bragging about 
newspapers. So to tell me what their stock is worth now may be 
a direct result of their causation, not anybody else's or the 
government's.
    Mr. Tierney. Respectfully, Congressman, they are not all 
rotten operators, and they are all down. And they are not--and 
that is kind of what is going on. And what is going on now----
    Mr. Conyers. Wait a minute. You say they are not all rotten 
operators. How do I know that?
    Mr. Tierney. Well, it would be a--like, again, I will look 
at Rupert Murdoch. We think he is a good businessman.
    Mr. Conyers. Well, I suppose there are people that think he 
is a good businessman.
    Mr. Tierney. Maybe I should find another example. No. You 
know, it is interesting, too, because people say I can get that 
information online. If you get that information online and it 
is about Philadelphia news, nine out of 10 times it is going to 
be coming from the Philadelphia Inquirer or the Philadelphia 
Daily News. It is just what we are now--and that is a whole 
issue of copyright and rights, because people can basically get 
it, paste it in, and what is fair use is what is--I mean, when 
people say information wants to be free, they are not in the 
business of paying people to create information. You know? I 
mean, I think that I have heard people related to Google saying 
that it all should be free. Well, the ads aren't free. It is 
kind of like somebody who has the right to--you will excuse 
this analogy--but the right to sell, the exclusive right to 
sell beer at a dance club, let's just say. So you think that 
dancers shouldn't be paid, but the beers are 10 bucks each? 
Well, the dancers have to be paid, too, in this situation, not 
just the guys selling the beer. And we have too many situations 
where people are selling the ads around our content, the 
content that we create. And that is--you just can't create 
something for free. We can't have great journalists that we 
have, such as we have in our two papers from the Guild, and not 
pay them.
    Mr. Conyers. Was your example in reference to a gentleman's 
club?
    Mr. Tierney. I think that is the kind of club I meant, sir. 
Is that a first for Congress, I don't know, for me to reference 
that? I am sorry, sir.
    Mr. Johnson. Ladies and gentlemen, we have been--I think I 
would be remiss not to recognize the imposter who has just 
entered the room. And though she is very low profile, you know, 
folks like me, nerds and that kind of thing, definitely know 
what she looks like. And--but the individual on stage on the 
panel with us, I guess we have checked her ID and everything. 
And I personally have--I want to say the real Sheila Jackson 
Lee. I missed her over the last couple of weeks when Congress 
has been on district work periods.
    And so I want to recognize that we have been joined by my 
good friend Congresswoman Sheila Jackson Lee from Texas. 
Welcome. Thank you. And we will ask you to proceed with your 
questions on this issue as soon as we can--I think instead of 
answering my questions, I will just yield--instead of you all 
doing that, I am going to yield again to Mr. Goodlatte.
    Mr. Goodlatte. Well, thank you, Mr. Chairman. But I am 
going to go back to my first statement: I don't have any other 
additional questions. If Ms. Jackson Lee has any questions, you 
should go right to her.
    Mr. Johnson. I am sure--Ms. Sheila Jackson Lee, how do you 
feel about that? And if it is okay with you, please proceed.
    Ms. Jackson Lee. Thank you. I know that the hearing is 
winding down. I want to thank the Chairman of the full 
Committee, Mr. Conyers, and I want to thank you for your 
leadership. This is a vital continuation of this Committee's 
assessment in this economic arena of the various entities and 
bastions of business. But in this instance, we are talking 
about a very vital aspect of the first amendment, something 
that we treasure here in the United States.
    And so my questions, in light of the fact that I apologize 
for just arriving back into town, and I wanted to have an 
opportunity to at least comment very briefly on this question 
that I think has to be a studied question and we have to come 
up with some answers. Because on one hand we are losing the 
Nation's very vital source of information. One reason of course 
is the fact that everyone believes that they are tied to the 
Internet. I think there is something good about the morning 
paper and the afternoon paper and being able to have that. I 
also think that communities suffer, frankly, when--though I 
respect small papers--when papers close and there is only one 
source of information, explanation, if you will, in the arena 
that is necessary.
    So I guess, let me just try to go straight to Mr. Nichols, 
who is the man on the ground. And he has got his hands in the 
mix because he is a journalist. Let me tell you the respect 
that we have for you in this Committee. I know that you know 
that we have passed legislation to protect the rights of 
journalists as regards to sources, and the Chairman of this 
full Committee has been a leader on those issues and I have 
been glad to join him along with the leadership of Chairman 
Johnson.
    What are we looking at here from your perspective in 
essence to be considered not only a journalist but an employee 
if you were working for a major newspaper, what is the major 
economic impact that we are talking about? And I would 
appreciate if you would mix the economic impact question with 
the whole issue of the first amendment. Antitrust, obviously we 
are dealing with the economic impact, the business of 
newspapers, which I think is very important as well, deals with 
advertising. But economic impact, what it does to the first 
amendment if we begin to see either mergers or closings. We are 
looking at whether we should intervene governmentally. What is 
your assessment? And forgive me for asking a redundant question 
that you may have already answered.
    Mr. Nichols. It is not so redundant. And also, I would be 
remiss if I did not thank the Committee for--and Republicans 
and Democrats, conservatives and liberals, for their commitment 
to protecting reporters and the pursuit of information in this 
society. We have just had so many examples in the last week.
    Mr. Jackson Lee. Absolutely.
    Mr. Nichols. Stories that have come out that relate to this 
Committee and--on surveillance and torture and other issues 
that were driven by journalists who felt free to do their job, 
and so it is very important what you do.
    I would just suggest to you that--I keep looking over at 
Chairman Rodino and remembering that Chairman Conyers was on 
this Committee when a newspaper revealed the wrongdoing of a 
President and empowered, much more than any congressional 
investigator or any judge or any lawyer, the Congress of the 
United States to make the Constitution real. And the 
Constitution is real when we use it. When you held those 
impeachment hearings in 1974, the Constitution became real.
    Similarly, free speech and freedom of the press is only 
real when it can be practiced in a meaningful way. And so if we 
lose newspapers and if we lose journalism, we begin to lose 
freedom of the press as something meaningful. And we have had 
this question bounced around somewhat before you came, 
Congresswoman, about the role of government, how government 
might step in. And I just want to remind you, I am a historian 
of these issues. I write books about it. And the fact is, 
government has always been involved in trying to assure that 
freedom of the press is real. This country was founded by 
journalists. Tom Payne was a journalist. Ben Franklin was a 
journalist. Jefferson and Madison were contributors to 
newspapers.
    So what we need to do at this point is figure out how the 
government can engage with these issues without becoming a Big 
Brother, a heavy hand, the institution that is giving you your 
resources so you have to be kind to them. We don't want to 
recreate the king supporting his favorite newspaper. We want a 
free press.
    And I do think government has a role there. I think that 
role, though, is mainly in empowering the subscribers and the 
users of media, of journalism. And one of the ways that you can 
do this is to consider this notion that has been put forward of 
allowing subscribers to deduct or get a rebate for their 
subscriptions in their taxes. They get to choose what they 
read, what publications, what Internet sites they support. Not 
the government. And hopefully this provides some resources 
coming in, and maybe even an increase in readership and things 
of that nature.
    And I would suggest it has worked rather well with 
churches. We do allow people to take a bit of a deduction when 
they give money to their chosen house of worship. And I don't 
say that I worship at the altar of journalism, but I come 
pretty close. And I would appreciate very much if Congress 
looked at all the creative ways in which it could involve 
itself in making sure that freedom of the press is real and 
that the Constitution is real.
    This democracy will not survive without newspapers and 
journalism. It won't. And so you are at a very critical moment 
here. If you fail to take this task seriously, look at all the 
options, look at all the possible actions, make sure that you 
do it in the right way, you will be a part of watching those 
dinosaurs pass away. And I don't want--I am young enough that I 
would like the dinosaur to last for a little longer.
    Ms. Jackson Lee. Thank you for your eloquence. Let me ask 
Mr. Tierney and as well as--in fact, let me, other than Mr. 
Nichols, answer this question on the antitrust exemption. One 
would think that the legislation, the Newspaper Preservation 
Act, which allowed I think the merger of newspapers would have 
helped preserve some of these entities. And, however, it 
certainly merged newspapers and I think lost a lot in the 
political thought and independence of political thought.
    Since we are at the end of the hearing, why don't I ask 
each of you just to give me your perception of the kind of 
intervention now that we should have with respect to, say, 
newspapers? Why don't we begin with you, Mr. Tierney?
    Mr. Tierney. It is interesting, this is my own perspective, 
the Newspaper Preservation Act of 1970--if your roof lasted for 
40 years, you would think that was pretty good. So I don't 
think it is a failure in that it did help in the 1970's, 
1980's, and 1990's, and they don't seem to be working as well 
now. The issue now isn't so much preserving two newspapers in 
most towns, but it is preserving the one.
    And so I think that is--what we need is a period of time--
we don't need any subsidies or anything like that, although 
that is wonderful to have them but I think it is problematic in 
this, and then you will have a lot of people saying, ``Me, too. 
Me, too.'' But we provide something unique to our community, 
where the source of alt-journalism, television journalism, 
everything else springs from what we do in our communities, and 
what we are asking for is the ability--and we all agree that 
journalism should be saved and we play a unique role. So what 
we are just asking for is a period of time, perhaps it is 18 
months--and I am not an expert on this, so I am probably 
speaking out of line in terms of the industry--but where there 
could be discussions which would then be reviewed with the 
Justice Department on some basis. So it is not as if anything 
can be done unless it is approved, so that we could begin 
discussions among newspaper publishers.
    And, again, I said earlier, ma'am, before you were in the 
room that here in Philadelphia we are a locally owned diverse 
group. We are not looking to build the next empire of 
newspapers. But I think if we could work with the folks in 
Dallas or Los Angeles and Chicago, we could come up with new 
products that would be national in scope which we don't have 
now, but online classified advertising, all the rest of it, to 
compete against some other players. And we are afraid to even 
begin to have those discussions. And I said before you got 
here, it is amazing; I have been in advertising for 20 years 
before this, the last 3 years, I have never seen an industry 
where people are paralyzed even with lawyers in the room to 
begin to scratch at the surface.
    Ms. Jackson Lee. Is that because of the regulatory 
structure that the newspapers are operating under?
    Mr. Tierney. Exactly. Yes, Congresswoman. And I don't have 
a history of it, but I feel like some people must have really 
been spanked sometime in the past, because it is amazing how 
afraid people are to talk.
    So if we could have a period of time where we could have 
some of these discussions, and again subject to the DOJ review 
and a final approval, I just think that would be one step 
without a subsidy or anything like this where the industry 
could begin to come--because we need to come up with our 
version of a Craigslist. And when it is Philadelphia for Free 
Rentals and then it is Dallas for Free Rentals, it is not a 
national brand. And I just offer that as one example. And that 
is how we can compete in our own way. But people are afraid to 
do that right now.
    Ms. Jackson Lee. Mr. Lunzer.
    Mr. Lunzer. It is very difficult to answer, because before 
this hearing took place there really has not been much 
specificity about what people believe the current barriers are. 
I frankly don't see them. I do know that in the San Francisco 
Bay Area, where there was talk of a need for relaxation of 
antitrust, the only reason why they could have been requesting 
it is because they wanted to share journalists. And the 
fundamental fear that we have is the union that represents the 
vast majority of journalists--newspaper journalists in the this 
country is that if the solution is to further diminish these 
products by having fewer and fewer journalists and now use them 
across more publications and perhaps with broadcasts, we are 
going to have a dozen journalists working in one town chasing 
stories and you are not going to get the story. You are going 
to lose voice, you are going to lose diversity, you are going 
to lose a lot of things that matter.
    So you need to encourage journalism. The crisis is real. 
And we want these people to be successful, but you have to be 
cautious about the way you go about encouraging it. We need the 
discussion, and I applaud you for having this discussion.
    Ms. Jackson Lee. Mr. Chairman, I know we are concluding. 
Could I get a quick answer from these remaining witnesses on 
just that question?
    Mr. Johnson. If there is no objection.
    Ms. Jackson Lee. If they remember the question, which is 
the NPA and the structure that we have now. And thank you. That 
is important, Mr. Lunzer, for--with respect to the concept of 
what you do with the talent of journalists.
    Yes, Mr. Scott.
    Mr. Scott. I think that we have to evaluate a 
recommendation of relaxing antitrust standards in the context 
of policies to address the crisis in journalism. But before you 
came in, I suggested that we ought to convene a national 
journalism strategy. Mr. Gainor objected because he fears that 
as sort of a Big Brother intervention from the government in 
the business of the news. And I hear that concern and I share 
it. However, I think it is a historical--because the government 
has always been involved in the news business to some extent. 
And though the Constitution says do not abridge the freedom of 
the press, it does not say do not promote the freedom of the 
press. And in fact, many laws have been made in the history of 
this great country to promote the freedom of the press, 
including the Newspaper Preservation Act.
    Ms. Jackson Lee. So we are looking for answers, and you 
think we should be meeting to get that?
    Mr. Scott. So I think, just to conclude that thought, 
convening a national journalism strategy and bringing together 
experts from all camps allows you to evaluate different 
proposals. One proposal is to relax the antitrust standards. 
Now, we have to evaluate against--that proposal against others 
and against the facts of what caused this crisis and what we 
are trying to achieve with a solution. So if what we are trying 
to achieve is more journalists and healthier business models 
and the diversity of business models to produce more and better 
news in the marketplace of ideas, we need to see whether that 
proposal meets that standard. In my view, on my analysis it 
does not meet that standard and should not be one of the 
solutions on the table. But I think having a form in which to 
evaluate multiple policy options is a good idea.
    Ms. Jackson Lee. Thank you. Mr. Baker.
    Mr. Baker. I went into law teaching primarily because of my 
commitment to the first amendment and wanting to write about 
it, and I have been one of the strongest advocates of first 
amendment protections in the academy.
    The first amendment in the area of the--let me refer to 
both your question about the first amendment and about 
antitrust and the Newspaper Preservation Act.
    The first amendment in the press area mandates some things, 
allows a lot of things, and has been used perniciously to make 
a lot of irrelevant claims. It mandates that the government not 
engage in any type of censorship. When we earlier discussed 
whether or not Fox News was too connected to the Republican 
Party, I thought that, whatever your view on that subject is, 
that should be irrelevant under the first amendment. What we 
want out of the government is policies about how we can promote 
a media industry, not make judgments about the goodness or 
badness of particular publications.
    It has been irrelevant but been used perniciously to claim 
lots of things. Newspaper publishers claim that the first 
amendment was the reason why they didn't have to pay their 
workers minimum wage. The Supreme Court slapped them down 
unanimously when they made that type of claim. It has also been 
used to claim that antitrust laws couldn't be applied to 
newspapers. The Supreme Court rejected that claim in a stirring 
opinion by Justice Black that said that the first amendment 
doesn't disable the government from protecting freedom of press 
from private combinations that would suppress it.
    The history of the country has been involved with the 
government being involved with the media. What the first 
amendment should do is make sure that the forms of those 
involvements not be of an objectionable sort. And so what we 
want to see is the objectionable forms of involvement, in 
particular censorship, not be allowed, but that the role of the 
government from the country's founding has been intently 
involved----
    Ms. Jackson Lee. So we can't intervene on the antitrust if 
we are trying to save newspapers, we have a legitimate standing 
in that instance?
    Mr. Baker. You clearly have legitimate standing to try to 
save newspapers. Then the question becomes, would relaxation of 
the antitrust laws be an effective way to do that? If it is--
you certainly would have the power to relax them for that 
purpose; however, the evidence seems to me--and this is what 
Mr. Lunzer suggested--is that the main result of relaxing 
antitrust laws historically has been and most likely now would 
be to reduce the key value of newspapers; namely, to fire or 
get by with less journalists.
    When I hear Mr. Tierney, who as an analyst of the industry 
seems dead right, everything he says about the industry 
situation is right. But when he says this is an industry that 
is more scared to talk than people in any other industry, well, 
why would they be scared to talk? They live, for instance, 
under the same antitrust laws under which everybody else lives. 
In the first panel, Carl Shapiro suggested that if they think 
that the antitrust laws are interfering with them talking, they 
could just go to the Justice Department and ask for permission 
to talk. But there hasn't been any suggestion that he has made 
of anything that they would talk about that would in fact do 
anything that would save journalists. What they might do with 
some alleviation of antitrust laws is to make money for the 
companies as they engage in their firing of journalists.
    So I see antitrust law reduction in this area as not 
accomplishing anything for the key value in the news industry, 
which is provision of news. It may do something to help some 
owners of businesses make more money, but not in a way that 
serves the public interest.
    Ms. Jackson Lee. Thank you.
    Mr. Gainor. Professor Baker makes the point that--raising 
the issue that you can intervene. The real question is, the 
better one: Should you? Should Congress get involved in trying 
to save newspapers?
    It is like we are trying to catch lightning. The situation 
is it is moving so fast. Almost every major newspaper in the 
country has already switched from just print to now providing 
video on their Web sites. The escalation of technology is so 
rapid.
    We are all sitting here. We love newspapers. With the 
exception of the Congresswoman, I would say we all love 
newspapers because we are old.
    Ms. Jackson Lee. Thank you.
    Mr. Gainor. I grew up with newspapers. Generally, the first 
thing I ever read was a newspaper.
    Mr. Johnson. Mr. Gainor, speak for yourself, sir.
    Mr. Gainor. I gladly speak for myself, Congressman, on that 
point.
    But we like the technology. But news is not a delivery 
mechanism. News is the people providing it, how they provide 
it. And we now have more news sources and more opportunities 
for people to read than ever before. Newspapers are now 
competing, instead of--their national coverage is actually 
competing with global national coverage.
    So the situation is still being sorted out. To try to 
overreact and get involved in something that is just a rapid 
technological change I think would be a big mistake.
    So when you ask, what should Congress do? I would say 
nothing.
    Thank you.
    Ms. Jackson Lee. Mr. Chairman, thank you for your 
indulgence. I think that we have just seen sort of a mountain 
being built, and I think we have got to find a way to overcome 
it and answer a lot of questions. Thank you for this hearing. I 
yield back.
    Mr. Johnson. Thank you, Congresswoman Jackson Lee. And I 
will say that there is no way that we can stop this ``too big 
to fail'' phenomena as it relates to the media and our precious 
first amendment right. There is just simply no way that I know 
of.
    But at any rate, I want to thank the witnesses for your 
testimony today. And, without objection, Members will have 5 
legislative days to submit any additional written questions 
which we will forward to the witnesses and ask that you answer 
as promptly as you can, and then those responses will also be 
made a part of the record.
    And, without objection, the record will remain open for 5 
legislative days for the submission of any other additional 
materials.
    Again, I want to thank everyone for their time and 
patience, and this hearing of the Subcommittee on Courts and 
Competition Policy, though long and complicated, has now come 
to an end.
    [Whereupon, at 4:55 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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