[Joint House and Senate Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 111-457
THE FUTURE OF NEWSPAPERS: THE IMPACT ON THE ECONOMY AND DEMOCRACY
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 24, 2009
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
HOUSE OF REPRESENTATIVES SENATE
Carolyn B. Maloney, New York, Chair Charles E. Schumer, New York, Vice
Maurice D. Hinchey, New York Chairman
Baron P. Hill, Indiana Jeff Bingaman, New Mexico
Loretta Sanchez, California Amy Klobuchar, Minnesota
Elijah E. Cummings, Maryland Robert P. Casey, Jr., Pennsylvania
Vic Snyder, Arkansas Jim Webb, Virginia
Kevin Brady, Texas Mark R. Warner, Virginia
Ron Paul, Texas Sam Brownback, Kansas, Ranking
Michael C. Burgess, M.D., Texas Minority
John Campbell, California Jim DeMint, South Carolina
James E. Risch, Idaho
Robert F. Bennett, Utah
Nan Gibson, Executive Director
Jeff Schlagenhauf, Minority Staff Director
Christopher Frenze, House Republican Staff Director
C O N T E N T S
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Members
Hon. Carolyn B. Maloney, Chair, a U.S. Representative from New
York........................................................... 1
Hon. Kevin Brady, a U.S. Representative from Texas............... 2
Hon. Michael C. Burgess, M.D., a U.S. Representative from Texas.. 3
Witnesses
Statement of Tom Rosenstiel, Director, Pew Research Center's
Project for Excellence in Journalism, Washington, DC........... 7
Statement of Paul Starr, Professor of Sociology and Public
Affairs, Stuart Chair of Communications and Public Affairs at
The Woodrow Wilson School, Princeton University, Princeton, NJ. 8
Statement of John F. Sturm, President and Chief Executive
Officer, Newspaper Association of America, Arlington, VA....... 11
Statement of Denise Rolark Barnes, Publisher, The Washington
Informer, Washington, DC....................................... 12
Submissions for the Record
Prepared statement of Representative Carolyn B. Maloney, Chair... 32
Prepared statement of Representative Michael C. Burgess, M.D..... 33
Prepared statement of Tom Rosenstiel............................. 33
Prepared statement of Paul Starr................................. 34
Prepared statement of John F. Sturm.............................. 36
Prepared statement of Denise Rolark Barnes....................... 38
THE FUTURE OF NEWSPAPERS: THE IMPACT ON THE ECONOMY AND DEMOCRACY
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THURSDAY, SEPTEMBER 24, 2009
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 10:10 a.m., in Room
210, Cannon House Office Building, The Honorable Carolyn B.
Maloney (Chair) presiding.
Representatives present: Maloney, Cummings, Brady, and
Burgess.
Staff present: Nan Gibson, Gail Cohen, Chris Frenze, Robert
O'Quinn, Colleen Healy, Andrew Wilson, and Aaron Rottenstein.
OPENING STATEMENT OF THE HONORABLE CAROLYN B. MALONEY, CHAIR, A
U.S. REPRESENTATIVE FROM NEW YORK
Chair Maloney. The committee will come to order. Mr. Brady
will be with us in a moment. And I want to, first of all, thank
our witnesses for joining us today to discuss the future of
newspapers and their impact on the economy and our democracy.
The newspaper industry has experienced serious financial
problems resulting from dwindling advertising revenues, falling
print subscriptions and a fundamental change in the way people
get their news. Recently the plight of the newspaper industry
has been punctuated by substantial job losses, downsizing at
various bureaus, and the halting of either printed editions or
businesswide operations. According to the Bureau of Labor
Statistics, newspaper publishers cut nearly 50,000 jobs between
June of 2008 and June of 2009, a record rate of job cuts
representing 15 percent of its workforce. Regional outlets like
the Seattle Post-Intelligencer and the Detroit Free Press have
either scaled back or halted printed editions, while others
like the Rocky Mountain News and the Cincinnati Post were
closed entirely.
Though a decline in printed newspaper readership is partly
to blame for recent developments, there are multiple factors
contributing to newspapers' declining quality and
profitability. Technological change has created structural
challenges for newspapers, which were reliant on subscription
and classified ad revenues to cover operating costs. On top of
that, the current recession has eroded advertising revenues
substantially. Between 2006 and 2008, ad revenues declined 23
percent, from $49.5 billion to $38 billion, and are expected to
fall further during 2009.
The way information moves today can make even the tech-
savviest New Yorker's head spin. Today's Kindle-clutching,
iPhone-toting subway rider who braves the rush-hour commute
spends every waking hour in a world of nonstop news and
information which none of us could have imagined just a few
years ago. Digital media, bloggers, news aggregators and
citizen journalists all on the Internet have forever altered
the speed at which news and ideas are disseminated. And while
there are many out there chronicling what ails our country's
newspapers, community dailies and weeklies continue to shut
down their presses, and not nearly enough is being done to find
ways to preserve these institutions that are so absolutely
critical to our democracy.
Last week I introduced H.R. 3602, which is carried in the
Senate by Senator Cardin, a bill which will enable local
newspapers to take advantage of nonprofit status as a way to
preserve their place in communities nationwide.
Since the ratification of the Bill of Rights, the Federal
Government has acknowledged that the press is an institution
which is afforded special protections by name. In this spirit I
think that the government can help foster solutions for this
industry in ways which protect the independence of newspapers
and enables their objective reporting to thrive in a new
economic and media climate.
In so many ways the change brought about by the digital
media amplifies what is written in newspapers. The Internet and
mobile devices extend news and information in a way that opens
dialogues to more and more aspects of our life. The Internet
has allowed anyone, regardless of background or world view, to
express themselves, connect with others, and access an entire
world of electronic information. Journalists play a critical
role in monitoring the activities of individuals and
institutions that are supposed to be working in the public
interest. As our witness Dr. Starr put it, ``they provide a
civic alarm system.'' The absence of a strong media may even
allow corruption to flourish unchecked.
In addition, studies show that journalism fosters civic
engagement by the population at large. A recent study showed
that when the Cincinnati Post shut its doors, voter turnout in
local elections dropped. Without our newspapers we lack a
critical uniting feature which fosters broad participation in
our democracy and community.
Minority-owned publications are among the hardest hit by
recent trends, and more must be done in order to ensure that
these institutions continue their important public service. The
reporting done by minority-owned newspapers is a critical voice
in communities across the Nation that must be preserved.
It is clear that we need to explore alternative business
models to ensure an independent and vibrant press in the 21st
century. I look forward to the testimony of our witnesses, and
I thank you so much for being here today before the committee.
[The prepared statement of Representative Maloney appears
in the Submissions for the Record on page 32.]
Chair Maloney. And I recognize Mr. Brady for 5 minutes.
OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A U.S.
REPRESENTATIVE FROM TEXAS
Representative Brady. First, thank you, Madam Chairman, for
calling this hearing, and thank you to the witnesses for coming
today to talk about what is clearly a critical issue in the
country. I will submit my notes for the record, but just some
thoughts.
I think it has been widely known that a transformation in
the news business was coming, but I, for one, have been
surprised at the speed of it in recent years. Everyone has been
impacted in some way by the mergers and closings and layoffs,
but I guess I have been troubled most by the loss of so many
good, knowledgeable, highly respected journalists and
reporters, many of whom have the widest base of institutional
knowledge, and they are gone, and it places even a greater
burden on those left behind to cover an ever broader and more
complex range of issues at the state and national and local
level.
There are a lot of ideas floating around about what the
next business model is that is sustainable for the future. I am
anxious to hear about those ideas myself today.
One word of caution. I think the freedom of the press is
too important to rely upon philanthropy or the government.
While all ideas ought to be explored, I think those that touch
the government should have the greatest scrutiny and be most
thoroughly examined.
For example, nonprofit status. I serve on the Ways and
Means Committee that deals with tax treatments of all types of
businesses. Nonprofit status for news institutions raises
important policy questions. Is the political speech from a
pulpit, including endorsements, to be viewed differently from
the political speech of a publication? Can the politicians that
bestow nonprofit status also threaten to rescind it if they
don't like the opinions or endorsements or the views in reports
from those publications?
Special tax treatments like exemption from the payroll tax
also raise questions about preferential treatment versus other
types of free enterprise, as well as raising questions about
the continued viability of some of our key programs like Social
Security and Medicare that already face a bankrupt future. And
as you open that door, the reason it hasn't been opened for
exemptions is there is no good determination where to stop once
you have opened that door.
The point is this, that Congress, I think, as we sincerely
look for ways to help smooth that transformation, we just need
to tread carefully, examine all these issues. It is every bit
as complex as the witnesses today will tell us, plus more. And
it deserves, I think, some real, again, thoughtful look at, and
at the end of the day, I am really hopeful that the next
sustainable business model can be sooner rather than later.
So, Madam Chairman, thank you very much. This is a great
issue for us to be looking at.
Chair Maloney. Thank you so much.
Mr. Burgess.
OPENING STATEMENT OF THE HONORABLE MICHAEL C. BURGESS, M.D., A
U.S. REPRESENTATIVE FROM TEXAS
Representative Burgess. I was going to say, as usual, my
microphone is not working.
I probably feel a little differently than my colleagues up
here. In the interest of full disclosure, my middle child is a
journalist. She is now retired and teaching school, for which I
am grateful. But it did give me a little bit of a peek inside
the schooling and then the work that carries on at a large
daily newspaper.
Dr. Starr, I have contributed to your well-being in the
past by buying your book, albeit 15 years ago, but I still have
it in my office. It is certainly a well-researched volume, and
for someone who came from a medical family, whose father and
grandfather were physicians, it was very interesting to read
the history even going back now the last two centuries.
But I have to tell you, I used to be a student of medical
irony; now I am just a student of irony at large. Here we are a
year after the Bush bailout bill for which some of us still
bear the scars--I voted against it, just for the record--and we
are talking about a newspaper bailout. I would think that
people in the newspaper business would have gotten the word
that bailouts are not really a very popular concept in this
country right now. In fact, there is a significant backlash.
Not only did we do the Bush bailout in October, September/
October of last year, we did a stimulus bill in February and
obligated $787 billion of America's taxpayers' money toward
economic stimulus. Now, problematic that we have only spent a
small portion of that, problematic that we have not made
investments in what I would consider capital expenditures in
infrastructure, instead have gone for operational expenditures,
but nevertheless there is a significant feeling out there in
the country that this Congress, this year, has spent way too
much money, has spent way too much money on things that are of
questionable value, and so now the concept of bailing out the
fourth estate is one that is met with considerable skepticism.
There is no question about the contribution of newspapers
and journalism over the course of history, and even in my brief
lifetime things like the Watergate, like Iran-Contra, probably
would not have come to the surface of the public consciousness
had it not been for dedicated journalists and dedicated
newspapers and editors who were willing to listen to what the
problems were. But that separation between the world of the
journalist and the world of the legislative body, that is
something, in my mind, that really should be inviolate.
Now, I recognize that opinions are what right now drive so
much of the Internet and the blogs and the Twitters and what
have you, but for us to interject the legislative body into
what you do almost seems to--it almost seems to defy gravity.
And it is just something that to me is so repugnant that I
almost can't allow myself to think about it.
Couple that with the fact that the bailout, the whole
concept of a bailout right now--and, again, you guys are
journalists, you report on this stuff, you know what the
feeling out there is right now. You saw it during the long, hot
summer of what the feeling is of the American people on their
opinion of Congress, their opinion of the spending that we have
done, their opinion of how we have handled ourselves during
this recession. We should be focused, like Bill Clinton said,
we should be focused like a laser beam on jobs right now, and
we are having a hearing on bailing out newspapers.
Well, the American people are going to look at this and
say, what in the world are those guys thinking? There are
things that we could be doing, whether it is within our tax
code, whether it is within how we structure the spending in the
stimulus, that would drive job creation right now and not just
in the newspaper world, but would drive it in a way that would
be beneficial for all sectors of society, and yet Congress has
chosen to ignore that.
Now, I came to Congress in 2003. There was a recession
ongoing then. Then-President Bush received a great deal of
criticism because his recovery was a jobless recovery, and
obviously he was doing something wrong. He didn't understand
economics, or there would be jobs going on coincident with the
recovery. Well, here we are again. We are in a jobless
recovery, and Congress is doing nothing that would focus on the
number one issue that people out there are concerned about.
We hear about people losing their health care every day.
But they lose their health care every day because they lose
their job, and they can't afford the COBRA payments because,
oh, by the way, they just lost their job. Why are we not
focusing on that, Madam chairwoman, I, for one, cannot--it just
simply mystifies me why we would be spending our time on this
hearing, as valuable as it is this morning----
Chair Maloney. The gentleman's time has expired.
Representative Burgess [continuing]. When in reality the
American people want us to focus on job creation.
I will submit my statement for the record like my Ranking
Member, and I yield back the balance of my time.
[The prepared statement of Representative Burgess appears
in the Submissions for the Record on page 33.]
Chair Maloney. As this hearing is taking place, the
Financial Services Committee is having a hearing on regulatory
reform and job creation. This committee should not be partisan,
but I feel I should respond to the gentleman. When President
Obama came to office, he said if you are driving toward a cliff
and are about to fall off, you change course. And he came
forward with a series of actions that helped stabilize our
financial system so that our economy can move forward. He put
forward a stimulus package that saved jobs and created jobs,
and he took steps to reform the subprime crisis that caused
many other problems.
Lots of jobs have been lost, that is true. And there are
many jobs that have been lost in the publishing and newspaper
industry, well over 50,000 jobs, and hopefully now with the
economy turning around, the economy of the newspaper and media
will improve. But as all of us agree, the independence and
contribution of the independent press, which we all support, is
a fundamental part of our democracy.
Many Americans have become concerned that major
publications and their independent research, which has been a
check on government, a check on corruption and abuse of power,
is facing many troubling challenges that we are concerned
about. Hopefully with the improved economy, the economy of
journalism and the media will improve, too. So maybe we are
moving in the right direction.
But I think it is perfectly legitimate that Congress look
at what has been a fundamental part of our democracy since the
Bill of Rights, an independent, strong media. The entire system
has changed dramatically in ways that impact the economy. It is
appropriate that we look at the economics of the print and
media industry and what the changing implications are.
So with that I would like to introduce our panel. Tom
Rosenstiel is the director of the Project for Excellence in
Journalism for the Pew Research Center and serves as Vice
Chairman of the Committee of Concerned Journalists, an
initiative engaged in conducting a national conversation among
journalists about standards and values. A journalist for more
than 20 years, he is a former media critic for the L.A. Times
and chief congressional correspondent for Newsweek magazine. He
is the editor and principal author of ``Project for
Excellence'' in Journalism's Annual Report on the State of the
News Media, a comprehensive report on the health of American
journalism.
Paul Starr is the Stuart Professor of Communications and
Public Affairs at Princeton University's Woodrow Wilson School.
He received the 1984 Pulitzer Prize for nonfiction and the
Bancroft Prize of American History for ``The Social
Transformation of American Medicine,'' and the 2005 Goldsmith
Book Prize for ``The Creation of the Media.''
His most recent book is ``Freedom's Power: The History and
Promise of Liberalism.'' He is the cofounder and coeditor of
the American Prospect, and his article, ``Goodbye to the Age of
Newspapers (Hello to a New Era of Corruption),'' published in
the New Republic last March has received wide attention for its
analysis of the implications of the current crisis in the
press.
John Sturm is the president and CEO of the Newspaper
Association of America, the newspaper industry's largest trade
organization. NAA has more than 2,000 member newspapers in the
United States and Canada, the majority of which are daily
newspapers that account for almost 90 percent of U.S. daily
circulation. He joined NAA from CBS, Inc., where he was vice
president of government affairs in the CBS Washington office.
Prior to his 8 years with CBS, he was at the National
Broadcasting Company; he worked with them as senior counsel in
NBC's Washington office. He is a graduate of the University of
Notre Dame and holds a law degree from Indiana University
School of Law.
Denise Rolark Barnes is the host of Reporters Roundtable
and publisher of The Washington Informer, the leading newspaper
serving the African American community in Washington, D.C. She
joined the staff of The Washington Informer after law school
where she served as managing editor. After working with her
father, Dr. Calvin W. Rolark, who established The Washington
Informer in 1964, she took over as publisher of The Washington
Informer in 1994 and continues his important legacy serving the
residents of the District of Columbia. She is a member of the
board of the National Newspaper Publishers Association
Foundation. She received a bachelor of arts degree from Howard
University and a law degree from Howard University School of
Law.
Thank you both very much, and, Mr. Rosenstiel, you are
recognized for 5 minutes to place your entire statement in the
record and summarize your remarks.
STATEMENT OF TOM ROSENSTIEL, DIRECTOR, PEW RESEARCH CENTER'S
PROJECT FOR EXCELLENCE IN JOURNALISM, WASHINGTON, DC
Mr. Rosenstiel. Thank you, Madam Chairwoman, for the
opportunity to testify today. In the next couple of minutes, I
would like to offer an overview of what is occurring in the
newspaper industry and what it may mean for our civic life.
There are first a lot of misconceptions about where we get
our news. Only 54 percent of Americans say they regularly read
the print newspapers, but those surveys don't tell us much
about where the news actually comes from. Far more of what we
know about our communities today still originates in newspaper
newsrooms. A good deal of what is carried on radio, television,
cable, wire services begins in newspaper newsrooms. These media
then disseminate it to a broader audience.
In every community in America I have studied in 26 years of
being a press critic, the newspaper in town has more boots on
the ground, more reporters and editors than any news
organization in the community, usually more than all the other
media combined. When we imagine the news ecosystem in the 21st
century, the newspaper, with all its problems, is still the
largest originating, gathering source.
The second misconception about newspapers is that their
crisis is rooted in a loss of audience. It is not so. Weekday
print circulation last year for newspapers fell by 4.6 percent,
but the number of unique visitors to newspaper Web sites grew
by 16 percent, to 65 million. When you combine the print and
on-line audiences of newspapers, the industry is faring far
better than other legacy media, and many newspapers are seeing
their audiences grow for the first time in decades. What is
more, the Internet offers the potential of a more compelling
and more dynamic, more interactive journalism, a better
journalism than print, coming from these same newsrooms.
The crisis facing newspapers is a revenue crisis.
Advertising, the economic foundation of journalism for the last
century, is literally collapsing, particularly classified.
Print newspaper ad revenue fell by 25 percent in the last 2
years and in 2009 will certainly be worse. Meanwhile on-line
display advertising for newspapers is also now declining. Last
year the traffic to the top 50 news Web sites grew by 27
percent, but the price of an on-line ad fell by 48 percent.
The consequence is that the amount of our civic life that
occurs in the sunlight of observation by journalists is
shrinking. The number of city councils and zoning commissions,
utility boards and statehouses, Governors' mansions and world
capitals being covered on a regular basis even by a single
journalist is diminishing. One out of every five people working
in newspaper newsrooms in 2000 was gone at the beginning of
this year, and the number is doubtless much higher now. My old
newspaper, the Los Angeles Times, has half the reporters it did
5 years ago.
The problem is more acute at bigger papers than at smaller
ones, but no one is immune, and I venture metropolitan suburban
areas may be among the most vulnerable. Alternative news Web
sites such as Voice of San Diego, MinnPost in Minneapolis are
exciting innovations and offer options for the future, but the
number of people working at these places does not yet come
close to the lost numbers, and none of these sites has so far
found a sustaining business model.
More of American life now occurs in shadow, and we cannot
know what we do not know. The newspaper industry is more than
partly to blame. Like other legacy industries before them,
newspapers let a generation of opportunities slip through their
fingers, from eBay to Google to Realtor.com to Monster.com. The
industry is running out of options, though I believe some
remain, purely commercial ones. These include charging for
content, getting tough with aggregators, creating on-line
retail malls and much more. No one knows which one of these
options will prevail. I am an analyst, not an advocate. The
only thing close to a consensus among experts is that likely no
one revenue source will be sufficient.
So should we care whether newspapers survive? Perhaps not.
Typewriters have come and gone; we are still here. But I
believe we do have a stake as citizens in having reporters who
are independent, who work full time, who go out and gather
news, not just talk about it, and who try to get the facts and
the context right. And it is not just high-flying investigative
reporters that I have in mind, but perhaps, even more so, the
reporters who simply show up week after week, who sit in the
front row, who bear witness, and who simply, by their presence,
say to those in power, on behalf of the rest of us, you are
being watched.
Thank you.
Chair Maloney. Thank you very much.
[The prepared statement of Tom Rosenstiel appears in the
Submissions for the Record on page 33.]
Chair Maloney. Dr. Starr.
STATEMENT OF PAUL STARR, PROFESSOR OF SOCIOLOGY AND PUBLIC
AFFAIRS, STUART CHAIR OF COMMUNICATIONS AND PUBLIC AFFAIRS AT
THE WOODROW WILSON SCHOOL, PRINCETON UNIVERSITY, PRINCETON, NJ
Dr. Starr. Madam Chairman, thank you for this opportunity.
Ever since the founding of this country, newspapers have
been Americans' principal source of news. With the coming of
the Internet and other new media, we are now in the midst of a
great upheaval that is bringing us many advantages in access to
information. But chiefly because of its indirect effects on
newspaper advertising revenue, the Internet is also undermining
the financial basis of the press. And the question that we now
face is whether the Nation ought to provide support for
journalism not as a special favor to the news media, but to
advance the general interest in an informed public.
Although some people may consider support for the press to
be inconsistent with our national tradition, the Founding
Fathers would have disagreed. Besides guaranteeing freedom of
the press in the First Amendment, they used cheap postal rates
to subsidize newspapers in the creation of a national news
network. The British singled out the press for high taxes. The
United States Congress, beginning in 1792, singled out the
press for extensive subsidies through the postal system. If we
had not repudiated and reversed British policies, we would not
have had the extensive system of the free press that developed
throughout the country from the earliest days of the Republic.
In the United States, the press has not been regarded and
it should not be regarded as just another industry. Government
has sought to advance it because a democratic political system
just can't function without diverse, free and independent
sources of news.
Now, for a long time we have been able to take newspapers
just for granted because they came to occupy a strategic
position between advertisers and their customers, and, out of
the profits from that advertising, they were able to cross-
subsidize the production of news which really could never have
been justified on a strictly profitable basis. That system for
cross-subsidizing news has collapsed.
Unlike many other countries, the United States has
historically had a highly decentralized press spread through
every State and city as well as a multitude of smaller
jurisdictions. My concern is not so much that there will be a
shortage of national news coverage. The national news media, I
think, will be able to aggregate audiences of sufficient size
to sustain competition.
The situation at the state and local level is altogether
different. According to a recent survey, the number of
statehouse reporters has declined by one-third in the past 5
years and shows every sign of declining further. Some cities
are losing their last daily paper, and many more are likely to
do so. Resources for traditional journalism at this level are
disappearing far more rapidly than they are being created on
line, and those who are most closely involved in the on-line
news at the state and local level see no prospect that that is
going to become self-sustaining.
So increasingly, the production of news will require
subsidy, and the question is really--despite what we may think
right now, the question is going to be where and under what
condition those subsidies will come. But there is legitimate
concern that any subsidy, whether from government or private
philanthropy, will induce subservience and dependency in the
press. But we should take encouragement from the facts that
early in our history the Federal Government aided newspapers
through postal policy without impinging on their freedom; that
in recent decades government at both the Federal and State
level has helped to sustain a system of public broadcasting
that has become an important source of news and public affairs
discussion; and that besides supporting public service
broadcasting, democratic governments elsewhere in the world,
notably in northern Europe, have successfully used subsidies to
maintain competition and diversity in a free press.
Still, to avoid compromising press freedom, any public
support for journalism in the United States must be approached
with great caution, and it seems to me at least three
principles ought to be kept in mind. First, any subsidies must
be viewpoint-neutral. They cannot favor one viewpoint over
another. Second, they should be platform-neutral. They should
not favor print media over on-line media, for example. And
third, they should be neutral, or at least reasonably balanced,
as to organizational form. Taken as a whole, they should not
favor for-profit over nonprofit organizations or vice versa. To
be sure, some policies by their nature may benefit one type of
organization, but the sum total of policy should be indifferent
as to whether the news is provided via a for-profit or
nonprofit enterprise.
Nonprofit support of journalism is already increasing, and
many Americans would be more comfortable seeing support from
journalism come from a great variety of private philanthropies
than from government. To facilitate that development Congress
should seek to remove any legal obstacles that may stand in the
way of newspapers receiving tax-exempt support or becoming
nonprofit, tax-exempt organizations themselves.
But here we face a new question. From the founding of the
Republic, newspapers have played a central role in politics,
endorsing political candidates, for example. It would be a real
loss to freedom of the press if, in becoming nonprofit,
newspapers had to restrict their political expression. I
believe, therefore, Congress should consider creating a new
category of nonprofit journalistic organizations that are free
from traditional limitations of 501(c)(3) organizations. When
Congress originally subsidized numbers through the postal
system, it did not require that they be nonpartisan. In fact,
most of those newspapers were partisan. Neither should we
require newspapers to limit their political expression to gain
the advantages of nonprofit status.
Financial support of journalism could take a number of
other forms. Direct grants might allow for political
manipulation of the flow of funds, unless there was some
intervening professionally run organization strongly insulated
from political control. The public broadcasting system offers a
model, and rather than create an entirely new structure,
Congress might simply broaden the mandate of the one that
exists.
Indirect forms of subsidy through the tax system also ought
to receive consideration. As I mentioned, many other countries
do provide support. They exempt the press from the value-added
tax. The equivalent in the United States would be an exemption
from the payroll tax, or at least the employers' share, with,
however, the idea of replacing those contributions to the
Social Security Trust Fund with general revenue. To be
platform-neutral, this tax exemption would have to apply not
just to newspapers, but to journalist organizations more
generally. Defining eligible organizations and individuals
would be difficult, but the same problem arises in many other
areas, such as State ``shield'' laws that provide journalists
with an exemption from some demands to testify under subpoena.
The Founders were right to see a robust free press as a
bulwark of liberty, and they were right in their time to
provide assistance to ensure the press develop throughout the
country. We have to figure out how to keep that tradition going
in our own time as well.
Chair Maloney. Thank you very much.
[The prepared statement of Paul Starr appears in the
Submissions for the Record on page 34.]
Chair Maloney. Mr. Sturm.
STATEMENT OF JOHN F. STURM, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, NEWSPAPER ASSOCIATION OF AMERICA, ARLINGTON, VA
Mr. Sturm. Good morning. I am John Sturm, president and CEO
of the Newspaper Association of America, as mentioned, the
trade association representing most of the daily newspapers in
the U.S.
I think my colleagues and I agree today on this one point:
What is really at issue today is the preservation of local
journalism. And for decades newspapers have been the primary
source and financial support system for local news and
investigative journalism.
Among all local media, newspapers have the greatest
commitment to local news and information. As a result of the
longest recession in our Nation's history and intense
competition for advertising particularly from Internet-based
services, newspapers have experienced declines in advertising
revenue of now nearly 40 percent over the past 2 years,
including a precipitous decline in classified advertising,
which has had a severe impact on major market newspapers.
Overall, the newspapers' share of the local advertising
market has decreased to less than 15 percent when it was once
30 percent. Interestingly, as Mr. Rosenstiel mentioned, while
revenues have been shrinking, newspaper audiences are actually
growing. Print editions, combined with successful local Web
sites, have a larger audience than ever, and their content has
never been more popular.
Unfortunately, the dramatic decline in advertising revenue
has forced publishers in virtually every market, large and
small, to lay off highly valued veteran journalists and other
employees and to take other cost-saving measures. Since 2007,
thousands of jobs have been lost in the newspaper industry. So
what can Congress do to help newspapers maintain the type of
journalism that local communities deserve and expect? What can
they do now?
First, I want to make clear that the newspaper industry is
not seeking a direct financial bailout or any kind of other
special subsidy. We don't believe that direct government
financial assistance to newspapers is appropriate or wise for
an industry whose core mission is news gathering, analysis and
dissemination, often involving that very same government.
Second, we would suggest that you pass legislation that
would allow all businesses to carry back net operating losses
for 5 years instead of the 2 years under existing law, a bill
that the learned Chair and the learned Ranking Member have
cosponsored. Newspapers need cash now to preserve jobs next
year. It is really that simple.
Third, allow businesses to spread out future contributions
to defined benefit plans. If not extended, businesses will be
required to use cash reserves to fund pension plans to meet
statutory requirements instead of preserving jobs and
generating businesses. We suggest Congress give the markets
more time to recover and businesses more time to stabilize
their finances.
Chairman Maloney, we appreciate the bill that you
introduced last week, the Newspaper Revitalization Act, to
allow newspapers to organize as nonprofit entities while
continuing to generate some advertising revenue. I think your
heart is in the right place, and this is a step in the right
direction that could help in a few communities, but, candidly,
we don't see it as a comprehensive solution to the many
problems in the industry at this time.
In the near term we recognize that newspapers on their own
must adjust, as you said, their business models, to find a way
to monetize on-line content in a way that contributes to local
journalism. And our companies have been exploring new systems
that would allow newspapers to detect and license on-line
content which is being used by portals and aggregators for
their own commercial gain.
The creators of valuable content cannot survive without
compensation from those who currently use and profit from the
creative works of others. It doesn't work for music, books or
movies. In the long run it will not work for newspaper-
generated content either.
The industry is working on a variety of solutions to
address these issues, solutions that will make it quite
convenient for present unauthorized users of newspaper-
generated content to license and pay reasonable fees for such
use in the future.
I hope today's discussion will lead to practical actions
that will help support local public service journalism now and
to sustain it in the future. Thank you for this opportunity to
present the industry's views. I look forward to your questions
a bit later.
Chair Maloney. Thank you very much.
[The prepared statement of John F. Sturm appears in the
Submissions for the Record on page 36.]
Chair Maloney. And Ms. Barnes has indicated she has to
leave at 11 o'clock, but will answer any questions in writing
if we don't get a chance to get all our questions to her.
Thank you so much for being here. You are recognized for 5
minutes.
STATEMENT OF DENISE ROLARK BARNES, PUBLISHER, THE WASHINGTON
INFORMER, WASHINGTON, DC
Ms. Barnes. Thank you, Madam Chair, members of the Joint
Economic Committee for the opportunity to address you on the
future of newspapers, the impact on the economy and democracy.
I salute you for your interest in hearing from a diverse group
of newspaper publishers regarding our struggles and how this
very unique piece of legislation might impact the future of the
newspaper industry.
As you heard in my introduction, my name is Denise Rolark
Barnes, and I succeeded my father, Dr. Calvin W. Rolark, as
publisher of The Washington Informer when he died in 1994. He
and his colleagues in the Black press impressed upon me the
role and responsibility of the Black press, which was founded
by two freed men, Samuel E. Cornish and John B. Russwarm,
publishers of the country's first black newspaper established
in New York City in 1827. Freedom's Journal was published
nearly 123 years after the Nation's first continuously
published newspaper and nearly 40 years before the U.S.
Congress abolished slavery in America in 1865.
The Wisconsin Historical Society describes Freedom's
Journal as a newspaper that provided international, national
and regional information on current news and contained
editorials declaiming slavery, lynching and other injustices.
Freedom's Journal circulated in 11 states, the District of
Columbia, Haiti, Europe and Canada. Russwarm and Cornish wrote
in their first editorial to their readers, ``We wish to plead
our own cause. Too long have others spoken for us.'' The paper
published for only 2 years due to a lack of advertising
support, but it laid the foundation for thousands of newspapers
who shared a mission and purpose that was no different than
their white counterparts', to provide clear and truthful
information about the actions of those who we put in charge,
and to provide a voice for those who are affected by their
decisions.
Ten years ago I could confidently say that the National
Newspaper Publishers Association, the trade association serving
the Black press, had a membership of more than 200 newspapers
across the country. Today attendance at conventions indicates a
drastic decline in the number of papers that currently exist,
possibly half.
The Washington Informer has also joined the ranks of
publishers of other community and metropolitan ethnic
newspapers that serve a targeted audience who are also
exploring ways to keep their papers alive and viable during
these difficult economic times.
The one thing we all share in common is our dependence on
advertising. And as my dad used to say, advertising is the life
blood of every newspaper, and circulation is a necessary evil.
Minority or ethnic newspapers have always experienced a
recession when it comes to advertising. We are rarely top of
mind when it comes to ad placements made by advertising
agencies, nor are we treated equitably when it comes to
advertisers accepting and paying our rates. Our operations are
small. Our reporters cover a broad range of issues, often for
little or no pay, and the quality of our publication suffers
due to our inability to hire editors, to fact check and clean
up copy before it goes to print.
Yet the demand from our readers is growing. They remind us
daily of how much we are needed to address their particular
issues and concerns that are often ignored by the mainstream
media, issues such as health disparities, housing and
employment discrimination, racial profiling and immigration
issues to name a few.
While I applaud you, Congresswoman Maloney, and Senator
Cardin and members of this committee's intention to address the
growing crisis that is affecting the entire newspaper industry,
I view the legislation before us as just one step towards
fixing a problem that is steadily growing worse. I would
suggest, however, that since there are no daily African
American newspapers, that you broaden the language in the bill
to include weekly publications. Also the term ``general
circulation,'' which is often used to exclude minority and
ethnic newspapers, should be broadened to ensure greater
opportunities for equal access to advertising revenue under the
legislation.
I appreciate the fact that you are considering a different
kind of business model that is reportedly being used by some
newspapers. It also suggests that you may be open to consider
other options that may prove effective as well. What papers
like ours need is legislation that will end discrimination on
the part of advertising agencies as it relates to ad purchasing
in minority-owned media, and that promotes diversity in
advertising agencies' hiring and promotions practices. We need
to run our businesses on a level playing field. Whether we are
for-profit or nonprofit entities, the decisionmakers need to be
incentivized to do business with minority- and ethnic-owned
media, or else, for us, there will be no end to the recession.
The country must maintain a free and independent press that
serves all the people, and as you consider the options, this
must be foremost in your mind.
I am open to taking your questions and sharing more of my
experiences, thoughts and suggestions if needed. Once again,
thank you for this opportunity to testify before you today.
[The prepared statement of Denise Rolark Barnes appears in
the Submissions for the Record on page 38.]
Chair Maloney. Thank you so much.
And I appreciate all of your testimony, and I would like to
ask a question beginning with Mr. Sturm, and then everybody
else jump in if you so wish.
You mentioned the intellectual property of newspapers.
Often the research done by reporters is very valuable, and
often the paper is not compensated for it. And I would like the
panelists to talk about a proposal that some have put forward
to charge for each individual story, similar to how iTunes
charges for each song now. And before the iTunes, the music
industry was suffering from its file sharing by users, but the
low prices and easy interference and simple payment system
seems to have given more economic strength to the music
industry.
Do you believe that a similar system would work for news in
really supporting the intellectual property of the research and
effort and time that went into creating stories that are now
just freely given across the country?
Mr. Sturm. Madam Chair, thank you. Indeed what is happening
now is a lot of stories that are going on line from newspapers,
the Associated Press, et cetera, are being taken by news
aggregators, used elsewhere, and ads are being sold around
them. The revenues from those ads do not go to the creator of
the content. They go to ad networks and the Web sites that use
the content.
Fortunately and presently, there are a lot of ideas out
there that have been brought forward of ways to compensate the
creator of that content. Some would charge or would make some
charge to the public. I think probably from a revenue
standpoint, the more potential is with systems that would
track, as I mentioned in my testimony, track the use of that
content that are used by news aggregators and large portals who
make millions and millions of dollars from that content. There
is a convenient way that is being developed now to have that
content licensed so it is used and it is available to the
public in a ubiquitous way. But, nonetheless, the revenue goes
back to the creators--that is indeed what I think would be of
great benefit to the industry. And there are a lot of ideas out
there, and that is something that we are working on very hard.
Chair Maloney. Also, Journalism Online, created by Steven
Brill, is planning to serve as an e-commerce platform
aggregator that news sources around the world can use to charge
daily, monthly or annual subscription fees, similar to charges
that cable or satellite TV companies charge. Do you think that
Internet users have become so accustomed to free use, or do you
believe that users will pay for on-line news? Again, I ask
anyone to comment, or everyone.
Dr. Starr. I think measures like this can work for the
elite press, particularly the financial press where the readers
have the resources and they have the interest to pay. But I am
much more doubtful that this will work for ordinary news at the
state and local level, where the demand is much less strong.
What I think is really crucial to understand is that the
people who have been reading newspapers have never really had
to pay for the full cost of the content. Most of that cost has
been paid by the advertisers. The readers have paid a very,
very small fraction of it. Now, if you shift more of the burden
on the readers, if, in effect, you raise the price to them, and
the price will be raised even more after this period where it
has been zero, there is unquestionably, I think, going to be a
significant drop in the consumption of that news. And so what
may be or look like a solution from the newspaper's point of
view is really not a solution from the point of view of civic
literacy.
Mr. Rosenstiel. A couple of points. First of all, to add to
what Paul just said, newspapers make only 20 percent of their
revenue from subscriptions and payments from the consumers. The
model is very different, particularly in Europe, where as much
as 70 percent of the revenue comes from subscriptions. We have
a model in the United States that depends more heavily on
advertising than other countries.
On the question of micropayments, paying per article, I
think there is a civic problem there which is you are
discouraging use. You are making it more expensive the more
knowledgeable, the more news people consume, and I am not sure
from a public policy standpoint or even from a civics
standpoint that is really where we want to go.
The problem that news companies had in charging for content
originally was that it was very difficult for one news
organization to charge for its content if similar content was
free from others. For this to work I think it is going to have
to happen en masse. As long as I can get the AP story, why
would I pay 15 bucks for the New York Times story? Is the
marginal difference between the two accounts so much greater?
Well, history would suggest consumers said no. So it is
going to have to be packaged probably to work. And that might
address Paul's concern about, well, people might have a high
demand for some kinds of content, but not others. The more you
can sort of bundle this stuff and say, here is a fee that you
pay on a monthly basis or an annual basis to the news, then you
are in Newsland, and you can consume what you want, that, I
think, may be a way of protecting the news that is important,
but maybe less titillating or fascinating than some other news.
Chair Maloney. Mr. Sturm, and then we will go to Mr. Brady.
Mr. Sturm. There are, as I mentioned--Journalism Online is
another one of the ideas that are out there.
Whether to put material behind a pay wall by an individual
newspaper is a matter of great discussion in the industry right
now, and there is no consensus. There are some who believe it
is the right thing to do to charge in some fashion the
consumer; others don't think it is the right thing to do. What
we are concentrating on, what the industry does agree on,
though, is those entities that use newspaper content for their
own commercial gain should be paying a fair and reasonable fee
for the use of that content. And that is what target one is
right now.
Ms. Barnes. If I can just add to that is that when your
content is particularly specialized, like minority publications
offer, that value is what is being sought after. We get phone
calls constantly from organizations that are setting up these
specialized sites so that they can draw diverse communities to
their sites, and so they want to use our content for their
sites with no compensation to follow. So, adding that on.
Chair Maloney. Thank you.
We have been called for a vote. I am going to recognize Mr.
Brady for his questioning, and then we will have to adjourn to
run and vote and run back as quickly as possible.
Mr. Brady.
Representative Brady. Thank you, Madam Chairman.
Like others, I want to make it clear I am not here today to
bail out the newspaper industry. I am here to learn what that
sustainable business model could be. And I think from the media
newspaper standpoint, too, there is caution, I think, from the
sense that when you feel like you are drowning, every lifeline
looks good, but you have be to careful whose boat you are being
pulled into, and if it is the government's boat, there are
really repercussions from your standpoint as well, and I think
we all recognize that.
You sort of answered part of the question I have, which is
why don't you charge what you are worth as an originator of
news? Most businesses--I come from a Chamber of Commerce/small
business background. Most businesses struggle when the demand
for their product goes down. Demand for news and information is
increasing, as you all rightly said. How do you capture the
revenue to do that is the question.
So who out there has that sustainable business model? Who
is getting closer to replacing classified revenue losses and
even some of the ad--the major retailers and others who are
advertising, which is also being impacted? Who is doing the
best job or getting closest that you know of to that
sustainable business model?
Mr. Rosenstiel. Well, where we are seeing some success is
in niche and elite publications where people are paying for
this material often out of their business expenses.
So on-line newsletters that are targeted at professional
audiences and in some cases elite magazines like ``The
Economist'' are having more success. But that is not addressing
this. None of those address the question of general civic
knowledge.
Dr. Starr. Can I just respond to this point? The Internet
is unbundling the package of things that were put together in
the local newspaper. And many people bought that local paper
not because they were interested in the public affairs or
political news, but because they were interested in lots of
other things, the sports news, business news. But the newspaper
was able to collect revenue from all those diverse sources.
On line, all that breaks apart. And, yes, there is going to
be--there is profitable business in sports, in finance, in all
these different areas, but there may not be a profitable
business in public affairs news. The demand specifically for
public affairs journalism is shockingly low. And so to expect
that we are going to have the kind of journalism that keeps
government accountable, that keeps a watch on potential
problems at the local and State level in particular, where in
my state, New Jersey, we have an endemic problem of corruption,
we have an endemic shortage of good news in the State, this is
the kind of thing where I think we have some public problem
that needs to be publicly addressed.
Mr. Rosenstiel. Let me add one other thing. In simplest
terms, the Internet is decoupling advertising from news.
Advertisers don't need the news to reach their audiences
anymore. And so the fundamental question is can the news
industry find other sources of revenue that aren't basically
display advertising and classified advertising?
Representative Brady [presiding]. Mr. Sturm, thank you.
Mr. Sturm. I would say, to your point about do people pay
for the whole amount, the answer, as Tom mentioned, is that
newspapers have traditionally only had 20 percent of their
revenue come from circulation. That actually may be changing a
bit for two reasons: One, advertising has dropped off, and
frankly, a lot of newspapers have had to, as a result, raise
the circulation prices. So that 80-20 ratio is changing. The
point I wanted to make about the Internet versus print from a
traditional standpoint, a print user, a reader, a subscriber
has always been worth a considerable amount of money on an
annual basis to a newspaper for viewing print ads. And all
traditional media have had some limit on the number of ads or
the amount of time they can sell, broadcast, magazines, radio--
there has always been a limit.
With the Internet there is no such limit. And as a result,
Internet pricing is very low. Advertising on the Internet is
extremely cheap. Now, it has some disadvantages and advantages,
but it is very, very inexpensive. So if you take that same
newspaper reader and you move them online, reading the
newspaper online, their worth as a source of revenue drops
considerably. In fact, well beyond half. So it is just a
difficult balancing situation right now because what newspapers
are doing in effect is they are replacing some of their print
readers with online readers. But, the money doesn't flow in on
an equal basis.
Representative Brady. Thank you.
Ms. Barnes. I just wanted to add also that the way minority
and ethnic newspapers have survived might be a model that might
work for others. I mean, when we approach an advertiser, many
times they have two pockets, they have got the advertising
pocket and then they have got this diversity pocket. And we
happen to always end up in the diversity pocket, which those
dollars are not as great as the advertising dollars. But that
is the pocket we end up in. And to meet their diversity needs,
this is where they spend money to advertise with us. But what
we find is that a lot of these advertisers are trying to reach
our communities in different ways. The advertising for them,
placing an ad in our publications may not be as important as
other ways in which to reach our communities. So we have gotten
involved in things that are really non-journalistic in some
ways that we have had to make journalism by sponsoring events
and town hall meetings and different things that are advertiser
sponsored, and there happens to be advertising that is attached
to that. And that has proven to be successful, because we are
still here. But we are still trying to figure out how to open
that other door so that we have an equal opportunity there. But
that is somewhat of a model that we have had to operate under
for many years.
Representative Brady. Right. We could go on for a while.
The chairman has gone to vote. Let's announce a recess. We will
come back right after this vote. Thank you.
[Recess.]
Chair Maloney [presiding]. The meeting will come to order
again. And first of all, I want to be very clear that this
hearing is not about bailouts. We are not talking about
bailouts. We are through with bailouts. But we should always
talk about the best ways to have a tax and regulatory
environment that will help businesses thrive and create jobs.
Newspapers are an important business that plays an important
role in our economy and in our system of checks and balances.
But it keeps being characterized as a bailout. No one has
mentioned a bailout except for my colleague. And I want to make
clear that that is not the purpose of this hearing. Our last
questioner was Mr. Brady, so I will go to Mr. Cummings from the
great state of Maryland.
Representative Cummings. Thank you very much, Madam Chair.
And I apologize for not having been here to hear the hearing
earlier, and I have got to get to another markup. But I just
was wondering, gentlemen, what can we do to see that media
continues to serve the public interest as the newspaper
industry transitions to a new business model? Mr. Starr? Dr.
Starr?
Dr. Starr. Well, I am not entirely sure that the newspaper
industry as a whole will arrive at that destination of a new
business model. There certainly will be some. And I think
particularly the more elite newspapers with a national
audience. There will be those with niche audiences. They will
be able to survive very well I think in this new environment.
What I am much less confident about is that the ordinary
political, public affairs coverage at the State and local
level, that that will survive. Because it is not clear to me
there is going to be a business model for that.
Representative Cummings. Yeah.
Mr. Rosenstiel. It is worth probably noting that in the
20th century, with the development of radio and then
television, we had a rise in what social scientists called
incidental news acquisition, incidental knowledge about civic
life. In other words, if you watched a TV news show Walter
Cronkite started with his first story and his second story and
his third story, and you learned things because the
broadcasters wanted you to that you might not be interested in.
You would find out things that you would in a newspaper have
skipped. And the technology that we have now of the Internet,
which is putting more power into the hands of the end user, the
consumer, increases the consumer's ability to say I am not
interested in that. And it is extremely difficult to imagine
how we are going to change that. The age of force feeding the
public by the media is going away.
Representative Cummings. Mr. Sturm.
Mr. Sturm. Mr. Cummings, I am the trade association hack
here. And I have got members that need to make payroll sooner
rather than later. We are living through a very difficult
recession, as you know. And we are living through an enormous
drop in advertising revenues that support local journalism. As
a result, to answer your question on a very practical scale, we
would like to see the Congress pass some legislation that would
do things like let us write our losses back over a 5-year
period instead of a 2-year period. That was something that was
part of the stimulus bill, and at the last minute it was made
only for small business. We, like other businesses, would like
to have that ability because that would give us cash to save
jobs today. We would like to be able to spread our pension
funding obligations out over a longer period of time. That too
would give us cash to save jobs now. That is what is really on
our minds at the present time.
Representative Cummings. We watched the Sun paper in
Baltimore, I mean, it has been amazing to watch year after
year, or really month after month the loss of employees and to
see how the paper had shrunk. And when I talked to my
constituents, what they say is they read the Sun paper only to
try to get the local news. And other than that, they will go to
The New York Times or The Washington Post when they want to get
national news because they find that they can get much more
news. Now, you know, when I also look at the cable shows, and
it is not just the Internet, it is the cable shows, I mean,
they are constantly putting out news with commentary. And I
think that perhaps--I mean, when you look at--I am not going to
name any of the shows, but sometimes I think that commentary is
what attracts people, too.
So I mean, you know, it is one thing to get some straight
news. It is another thing to have a whole host of conservative,
moderate, liberal folk talking about that news and interpreting
it and giving people insight. Because the average person, if
you look at Jay Leno or some of those shows, a lot of people
don't know the difference between a city councilman and a
Congressman. But to have that kind of news, those news shows, I
think, is very helpful. I see my time is out. Thank you all
very much.
Chair Maloney. Would anyone like to comment back to his
question? Any comments?
Dr. Starr. Can I just add one further grim aspect to this
whole picture? And that is that newspapers are living off their
aging readership. They are not replenishing that readership
with younger people at the rate that they would require. And so
we are probably only seeing the beginning of this crisis. It
is, in fact, likely to intensify. There is a very sharp
difference today that did not exist 30 years ago in the rate at
which people in their 20s versus older people follow the news
in any media, whether it is online, print, broadcast, and so
forth. And we really are facing a future in which there is
likely to be a diminishing audience for news.
Mr. Rosenstiel. I would like to add something to that and
counter it slightly. And that is that what I see in the
research is that younger people have a different approach to
news. They are on demand news consumers. They want to know what
they want to know when they want to know it. And there has been
a big problem with the delivery system of old media with those
audiences, television and print. We have seen for 15 years or
longer younger people not gravitating to those old platforms.
They do get news on the Internet. And the chance that these
older media institutions can survive by attracting new
audiences is actually enhanced by the new technology, by the
Internet, because they can deliver news to a new generation of
people on a platform that that generation wants to receive it
if they can find a way to monetize that. So although this is a
dark aspect, there is some light on that horizon.
Mr. Sturm. Just one quick comment: newspapers have
traditionally been, in print, a one time a day operation. Now,
with the Web sites, newspapers can address and disseminate
breaking news as well. So it puts us in a different ball game.
Chair Maloney. Thank you. Mr. Burgess is recognized for 5
minutes.
Representative Burgess. Thank you, Madam Chairwoman. And I
apologize for having used the words newspaper and bailout
together in a sentence. I suppose I could be forgiven because I
read in the newspaper, Obama open to newspaper bailout bill. So
you only know what you read in the papers. And they wouldn't
print it if it wasn't true, doggone it. The chairwoman brought
up an interesting point. She talked about the taxing and
regulatory environment for print journalism. Valid concerns.
Last week we were back in town after a few weeks of being
gone, and a number of constituents, small businesses were
through my office. I had a lady who owned a saddle making shop
in Fort Worth, a cardiologist, someone who did financial
services, a man who rebuilt the compressors of automobile air
conditioners and exported them to countries in Latin America.
So it was sort of a varied group of entrepreneurs, small
businesses in my district. And I asked them how they were
doing. They obviously all are struggling, but maybe some things
are starting to turn around for them.
And I said, well, are you planning on adding any jobs?
Because I am really concerned about where the jobs are going to
come from. And every one said, no, because we don't know what
you, Members of Congress, are going to do to us with the
financial services bill, with the health care bill, with the
energy bill, the cap-and-trade bill. So a lot of anxiety out
there in the small business community about the next steps that
Congress is going to take and how that will affect their
ability to maintain their businesses and their profitability.
And I suspect the newspaper business is not immune to that.
And it likely is suffering from some of the same things. So
perhaps if we were to look at this critically, we might say how
do we set the regulatory and tax environment so all businesses
might benefit, not just picking winners and losers in the
equation. So let me ask you a question.
Dr. Starr, you have been a prolific writer on health care
and health policy. We are looking at bills on the House side,
the Senate is looking at bills on the Senate side, and the
President has committed to signing something if not this year,
this congressional term, but there is some anxiety out there
about what the impact of this will be. Now, if we sought to set
up newspapers, insulate them from some of the slings and arrows
of congressional regulation and taxation, should we go so far
as to insulate the newspaper business from the 8 percent
payroll tax that possibly could be enacted if the House bill is
followed to the letter?
Dr. Starr. I don't think the case for health care reform
ought to rest on its particular effects on one industry or
another. But I could make a case, although it is not really
appropriate for this hearing, that health care reform will be
good for the economy as a whole, that for example, many people
are reluctant to change jobs, face job lock because of the
potential loss of coverage if they go out and start a new
business, for example. And we would see an improvement in
productivity if people weren't limited in that way.
Representative Burgess. We could debate the merits, and
clearly not the scope of this hearing nor the time. But again,
the point is out there that there is concern, not just in the
newspaper industry, but in business across the board that what
is Congress going to do to us. And our future is uncertain
because of some of the things that we are observing in the
United States Congress. Mr. Sturm, I apologize, I was out of
the room when you gave your testimony. And certainly you dealt
with the concept of the bailout. But just for my edification,
perhaps you could just briefly run through that concept again
of what the newspaper industry is asking for and what they are
not asking for.
Mr. Sturm. Let me start with what we are not asking for. As
I said earlier, we don't believe direct government financial
assistance to newspapers is appropriate or wise for an industry
whose core mission is news gathering, analysis, and
dissemination often involving that very same government. That
was part of my original statement. And I went on to advocate
the NOL bill provisions, carry-back provisions that I mentioned
earlier that are cosponsored by two of the three folks here on
the panel, as well as a better opportunity, a lot longer
opportunity to fund pension plans as practical cash-generating
steps that would indeed help retain jobs in the newspaper
industry.
Representative Burgess. Thank you, Chairwoman. I yield
back.
Chair Maloney. Thank you. Thank you very much. The
newspaper industry is precluded by antitrust law from
developing sector-wide solutions, and antitrust exemptions may
allow newspapers to develop collective pricing policies for
online subscriptions without fear of government or private
industry antitrust suits. In your view, is this an exemption
needed or warranted? Let's start with you, Mr. Sturm.
Mr. Sturm. Dealing with the antitrust laws as currently
interpreted is a difficult situation for the industry right
now, principally because the Department of Justice has always
held the relevant market for newspapers to be other newspapers.
And that is a huge constraint. It is out of date. And indeed,
if other newspapers were the only competitors we faced, we
wouldn't be having this hearing today because we would be in
fine shape. So I would suggest to you that the antitrust laws
do need to be interpreted differently in order for industry-
wide solutions to emerge that would be pro-competitive and
could really help the newspaper industry.
Chair Maloney. Any other comments?
Dr. Starr. Yeah. I don't disagree with Mr. Sturm about that
point about reinterpreting the scope of the market. But I think
the experience that we have had with antitrust exemptions for
the newspaper industry should be a cautionary lesson. The
Newspaper Preservation Act of 1970 gave the industry an
antitrust exemption so more competition could be preserved. But
it really has been pretty much a failure in doing that. And I
would really be very concerned about giving the industry as a
whole the authority to set prices for news, which would
possibly lead to prices that would interfere with the
distribution of news throughout the society. And again, what
may look like a solution for the industry could actually be a
problem for the country.
Chair Maloney. Thank you. Mr. Rosenstiel, you mentioned
that young people are not reading newspapers or news as much as
others. And I recall in my eighth grade government class in a
public school, U.S. News and World Report gave free magazines
to every government student. And we were required to read it
and report on it every week. To this day I cannot get through a
week without reading the news magazines. My week is not
complete until I have read them and thought about them, a habit
that I got into in the eighth grade. Now in France, every 18-
year-old is offered a free one-year subscription to one of the
country's major newspapers. And do you think that this would be
an incentive? Would this work to get our young people reading?
What ideas do you have to engage younger people in a habit of
reading news magazines, newspapers, blogs, essential news to
analyze what is happening in their country and the word?
Mr. Rosenstiel. There is a growing movement in what people
are beginning to call news literacy, which is somewhat
different than media literacy in that it is focused
specifically on the consumption of news. The University of
Stony Brook, SUNY Stony Brook has developed a curriculum for
this that they are expanding to all the students at Stony
Brook. There are pilot projects to do it in high schools. And
for years, the newspaper industry was sort of trying to do this
on its own. There was a program called Newspapers in the
Classroom. But as newspaper business became more difficult, the
tendency was for newspapers to pull back on these. It was the
first thing to go since it didn't generate any revenue, and the
readers were, you know, not coming along for another 30 years
or 20 years after the program. So the newspaper industry has
pulled away from that and the educational industry has pulled
away from that. Journalism programs in high schools are now,
somewhat malnourished. I think that that is the area where it
would go. I would like to touch on one thing that Paul and John
just said, and that is that when it comes to antitrust
exemptions, that they are both correct in what they have said.
It is also worth noting that the players here that the news
industry is going to increasingly deal with, aggregators,
Internet access providers, and who they are going to consider
either becoming partners with or battling with, that those are
highly oligarchical industries. When we are talking about news
aggregators, we are talking about two or three companies that
control almost all of the market. And that is an issue on the
horizon. You have got a very dispersed news industry, or
relatively dispersed compared to an industry of 4 or 5
companies.
Chair Maloney. Any other comments?
Mr. Sturm. For the record, whatever we might seek at the
Department of Justice in terms of the antitrust laws will not
include trying to set prices or rates or anything like that. We
understand the antitrust laws. And that is not on the program.
Chair Maloney. Thank you for your clarification. And my
time is expired. Mr. Brady.
Representative Brady. I enjoyed the discussion today. I
think you are going to solve the distribution problem. I think
you already are. Whether we are getting it from our BlackBerry,
getting it from our Kindle, it is getting easier and easier, or
our Internet, to access the information, and it is on a timely
basis. I am not an expert, but it is the pricing issue that
needs to be solved. And I still think--I know I have heard
today sort of a thought that for the public, good pricing may
not be the option that you desire, and that it will only be the
elite that will pay for it. I disagree with that.
Consumers are smart. They are even getting more
knowledgeable every day on news sources, information,
credibility. You know, there is a check and balances out in the
Internet that is amazing today, almost immediate, real time.
And I think that consumers in the end will always pay for
value, at every level pay for it.
So I was going to ask you is there, among the general news
publications, any industry leaders or innovators that you look
to as pushing the envelope in those areas that you are going to
be watching as we move forward? Yes, sir.
Mr. Sturm. Since you mentioned the devices at the beginning
of your question, let me say that there are a lot of devices
out there now. There will be more in the future. There is a lot
of development going on both in the U.S. and in Europe. For
example, several companies are working on a flexible tablet
which would be very thin that would reload on a fairly quick
basis. It would lay out both newspapers and magazines, and
indeed books, in a manner that you are more familiar with that
is more comfortable. It was described to me one time, I think
accurately, that the devices you are talking about now tend to
be a lean forward device. This would be more of a lean back
device like you are used to with a newspaper or magazine or
book.
And so these things are coming. They will be in color. So
there will be ways to distribute the news that will be more
comfortable for everybody and provide better business
opportunities for those who create the news.
Representative Brady. Is there anyone out there pushing the
envelope?
Mr. Rosenstiel. Well, I would say, and I think this year is
going to mark a change, but the real innovation in news in the
last couple years has been on the content production side in
news rooms exploring how to produce news that is more
compelling online. In a newspaper you only have a limited
number of options of how you can cover an event. You have a
main narrative, a headline, graphic. Online, and I have a slide
and a presentation I do, my slide currently has something like
51 different ways that you could create content that would be
appealing to a user to describe an event. The potential exists
for a better journalism online. And that I think is where, if
you look at The New York Times Web site, you see interesting
use of the technology. That is where the energy has been. The
efforts to try and innovate on the business side have been
swamped to a significant degree, at least in the last year-and-
a-half, by the recession.
Companies are, as John said, just trying to cope with how
to deal with the next quarter and the next year. And that has
certainly made it more difficult to try and innovate and
experiment. You know, the pilot projects that you were going to
try and give them a couple years to see how they worked, when
your revenues are dropping 30 percent in a quarter it is very
tough to do that.
Representative Brady. Sure. By the way, just a
parenthetical point, you don't really pay reporters worth a
damn. I am amazed, and every profession has its numskulls, but
you have got some amazingly bright people who, around here,
back home, are so knowledgeable on the issues, institutional
knowledge is amazing. I mean, they match any Members of
Congress plus some, any local leader plus some. And when you
finally figure out what their salary range is, it is hard to
figure out how they are still in the profession. I don't know
how that fits in the overall model. But boy, you got to pay
people to keep good people. And in this day and age, with other
options they can go to, I am sure that is a worry of the
panelists, but it is sort of appalling what those salary levels
are.
Dr. Starr. And Representative Brady, they are going down.
Because what has been happening with the change in the
financial condition of newspapers is not only that newspapers
have been cutting newsrooms, but they have been firing or
buying out their oldest employees, their veteran reporters, and
often replacing them with junior reporters, with interns in
order to cut their labor costs. And there is a real question as
to whether or not there is going to be a career in journalism
of the kind that many people have had that will enable them to
support a family.
Representative Brady. Great. I just wanted to add that.
Thank you.
Chair Maloney. Mr. Burgess.
Representative Burgess. Can anyone give me an idea, if we
were to proceed with either the House or Senate bill on the
creation of the nonprofits for the news industry, what sort of
savings would the newspapers be looking at, or a contrasting
way of looking at that, what would be the cost in revenue to
the IRS? Does anyone have an idea about that?
Mr. Rosenstiel. I don't think we were here to comment on
the specific bills.
Dr. Starr. We are not the CBO.
Mr. Sturm. Most assuredly.
Representative Burgess. Part of me wonders, although it is
not a hearing on the legislation, the legislation is still a
backdrop for this hearing, and would that in fact even be
enough? Or like we faced with the automobile industry in
December, when we were asked to pump some more money in that
direction, is there enough money available in the taxing and
regulatory environment to save the industry?
Mr. Rosenstiel. I can tell you--I don't know if this is
helpful or not--but the newspaper industry last year took in,
if you take in subscription and advertising revenue, about $45
billion in revenue, and made on average about 11 percent
profit. So it costs, with current expenses, about $39 billion
to operate the industry. If you go entirely online, you would
lose 90 percent of your revenue, but you would also reduce your
costs by roughly, we can debate it, but maybe 40, 45 percent by
not having to print and deliver. Those are big numbers. And the
industry is trying to figure out how can you have an industry
that has improved over the last 50 years.
I mean, we all complain about the press, with good reason.
I am a press critic. I make my living doing that. But the
reality is that in the last 50 years we began to have more
journalism because we had more commercial advertising. And that
is rapidly collapsing. But even now the size of news rooms,
even diminished, are probably a little bigger than they were in
the 1960s still, and when we saw journalism improving
significantly at a rapid pace.
Representative Burgess. Mr. Sturm, let me ask you from your
trade association, clearly not everyone is in the same shape,
and there are some news organizations that are doing better
than others. And to the extent that you can tell us, are there
any unique features to those that are doing better than others?
Is there a best practice concept emerging from those that are
remaining profitable in this harsher environment?
Mr. Sturm. Well, I think even in this most difficult
environment it is fair to say that individual properties have
maintained at least some profitability. And that is
particularly true with regard to medium-sized and small market
daily newspapers and community newspapers have weathered the
storm a lot better or easier, if that is a good word, I am not
sure, as opposed to the major market dailies. And principally,
it is because the major market papers did very, very well with
classified advertising for a very, very long time.
And it was low cost, and the revenue from classified
advertising tended to drop pretty much to the bottom line, or
an awful lot of it to the bottom line. And then along came the
Internet, and particularly Craig Newmark, and suddenly you
could get classified ads for nothing. And that really did
attack the revenue base of classified advertising. So where,
once upon a time, for example, not so long ago, newspapers sold
classified advertising in print, and then for an extra little
bit you could get the classified ad on your Web site, that is
now turned around.
Newspapers are selling on their Web sites classified ads
and then, for an add-on, you get the print ad with it. So that
is a demonstration of how the world has been flipped upside
down by the Internet.
Representative Burgess. You have mentioned, though, the
smaller markets, the medium-sized market, but in a big market
New York City you have two side by sides, the New York Times
and the Wall Street Journal. Is one doing better than the other
from a financial perspective?
Mr. Sturm. Well, the two papers you cite are both really
national papers. They have a broad audience across the country.
Representative Burgess. I prefer to think of them as New
York papers.
Mr. Sturm. Interestingly enough, if you looked at their
subscriptions and where the people buy those papers, you would
be surprised what a large percentage of the New York Times
audience is outside the City of New York.
Representative Burgess. Sure.
Mr. Sturm. Of course The New York Times covers New York
local news; but the local papers in New York are probably the
Daily News and the Post.
Representative Burgess. Can you make a statement about the
financial status of those two national New York papers, Wall
Street Journal and New York Times? Are they comparable?
Mr. Sturm. I think they are both public companies and they
report their earnings, et cetera, as do other public companies.
I don't have that data in front of me.
Mr. Rosenstiel. They are notably different business models.
Roughly--these numbers may be a little out of date, but roughly
half the readers of The New York Times are around that
metropolitan region of New York and half are dispersed around
the country. So some of their revenue is national advertising
and some is local. The Wall Street Journal is a national
newspaper and has financial, a lot of financial advertising
that wouldn't appear in any other newspaper, but that is
relevant to investors all over the country. So it is very hard
to compare them in terms of businesses. And then if you take
any local newspaper, its business model is drastically
different than that of The New York Times because their
circulation and advertising base is almost always entirely
local.
The Internet is a challenge to that because if you are a
local newspaper and you have got readers suddenly in Europe,
your advertisers think, well, what do I care that you have got
readers in Europe?
Representative Burgess. But within that environment,
clearly there are institutions that are doing okay and there
are institutions that are not. And is there any sort of general
observation that you have within the industry that leads you to
believe that----
Mr. Rosenstiel. In general, the big city metro papers that
are not national and are not hyper-local are the most
vulnerable because they are caught in between The New York
Times and The Wall Street Journal on one end and a community
newspaper on the other.
Representative Burgess [continuing]. You have models of
those that would be successful in this environment?
Chair Maloney. Mr. Sturm, you wanted to comment?
Mr. Sturm. No. Actually, I was sort of going to make the
same point that Tom just did.
Chair Maloney. The gentleman's time has expired. Mr.
Rosenstiel, earlier you said that commercial advertising is
collapsing in newspapers and television stations and so forth.
And it is now tax-deductible as a business expense if a
business is buying advertising they can deduct it. There have
been a number of proposals before Congress to change that
status, to have the advertising taxed. And I would like to ask
what kind of impact would that have on the industry if business
advertising was no longer tax-deductible? There are several
bills before Congress now to change that status.
Mr. Rosenstiel. We haven't studied to see what the
financial impact of that would be. But obviously, anything that
creates a further disincentive for advertisers to spend money
on newspaper advertising would probably depress those revenues
further. There are a lot of reasons that advertising is
vanishing from newspapers, because there are many different
sectors of advertising in newspapers. John talked about what
happened with classified. Changes in retailing had a huge
impact on newspapers. The department store and competitive
grocery stores were major advertising sectors. They have been
largely replaced by big box stores like Wal-Mart and others
that don't advertise in newspapers because they discount all
their prices every day, and people know that.
So if you look at the advertising that was in a newspaper
20 years ago, who those advertisers were, and you look at the
same newspaper today and who is advertising there, you would be
shocked at the difference of who is not there anymore and who
has replaced them.
Chair Maloney. Mr. Sturm, you had your hand up?
Mr. Sturm. Yes. The answer, I think, to your question about
denying the deductibility of advertising across all media: it
would be devastating. It would be essentially the end of much
of media. It would be a horrible thing. The only bills I have
seen in the past, and I don't think there is anything live
right now, have been to deny the deductibility of a certain
category of advertising--prescription drug advertising was the
one that has popped up.
Chair Maloney. That is the beginning.
Mr. Sturm. Right. But I think the Congress might want to go
very carefully and view those ideas with some concern not only
as to the effects on the media, but the fact that it would be
favoring one kind of business deduction over another kind of
business deduction. And I would suggest that that is probably
not fair.
Dr. Starr. Chairman Maloney, in my written testimony, I
emphasized the unwritten precedent that developed right at the
founding of the Republic as a result of the resistance to the
British Stamp Act in 1765, the precedent that there would be no
special taxes imposed on the press. And if you look through
American history, that has actually been our practice. Very
different from other countries. We have not singled out the
press for particular taxes. And a tax on advertising would in
effect be a tax on the media. And therefore, I think it really
would run against what has been this unwritten precedent.
Chair Maloney. Thank you. And I agree with all of your
testimony in that respect. I was talking to a reporter earlier
this week who works for a paper in a major city that is facing
tremendous economic challenges. And he was telling me how
expensive reporting is. They started on a story involving the
e-mails of government officials at city hall, and that it was
extremely expensive to get those e-mails, extremely time-
consuming, but resulted in a story that was important in some
people's minds towards government reform and public policy that
is important to the locality.
And he was emphasizing how important independent, creative,
original research is and how very, very expensive it is, and
that a great deal of it comes from the media. Most of it comes
from the media. All of it comes from the media. Most of it
certainly in newspapers and televisions and magazines. And many
people are concerned about keeping that independent, strong,
vigorous activity going. It is part of our democracy. It is
very important. And one proposal that has come to me to help
news organizations is the establishment of a blind trust that
would accept donations from foundations and other individuals,
and the pooled funds collected by the trust would be shared
among news organizations, profit or nonprofit, that meet
certain criteria. And the government could also provide some
funding or matching funding as they do for public television.
In your view, would this work? What would be the pros and cons?
And we will start with Mr. Sturm.
Mr. Sturm. I think I, with all due respect, would like to
take a close look at something like that and analyze it
carefully. But I would make one comment in terms of scale. And
this probably applies as well to the idea of funding and
nonprofits. If you take a news room, and a gentleman on our
board of directors from the Dallas Morning News testified
before Senator Kerry's committee in the Senate in June along
these lines, I recall his testimony: The Dallas Morning News
spends about $30 million a year on their newsroom. And if you
look at scale that is a lot of money.
And that is an every year kind of thing. And it is probably
not going to go down, it is probably going to go up. So if you
are talking about foundation support and all of that, a typical
foundation gives what, 5 percent of their corpus per year? They
are required to. So if you looked at it from just a scale
standpoint, that would require $600 million of foundation
corpus to support--and all of that would be directed to one
news room--to support on an annual basis a news room the size
the Dallas Morning News has.
So again, I think there might be some great ideas out
there. We would like to take a look at them. But there is a
scale issue here.
Mr. Rosenstiel. I would add, because we have looked at
this, even those estimates are low. Because you mentioned the
news budget, but you didn't mention the H.R. department and all
the other things that are required to support the news budget.
So the numbers actually are even higher than most of the
estimates.
Dr. Starr. But I don't think anybody is suggesting, or
perhaps shouldn't suggest that this would completely replace
all other sources of revenue. I think what we are talking about
is adding to revenue that hopefully will not totally disappear.
And that might be the difference, enabling a news organization
to undertake the kind of investigative projects that you
mentioned. And I think there certainly is a role for nonprofit
foundations, and I would say possibly also for some kind of
government subsidy. We do already have a mechanism with public
radio and public television. And maybe we should think about
expanding the mandate for those organizations.
Chair Maloney. And broadcast television is provided free
access to the public airwaves. In exchange for licenses to use
the public spectrum, broadcasters are expected to provide
programming in the ``public interest.'' However, the
requirements to meet the public interest standard are quite
lax, and some people have suggested charging broadcasters for
use of the public spectrum, and the fund could be used to
support local journalism and independent news gathering. Do you
think a fee system could support the industry? What is your
response to that idea? Anyone?
Mr. Rosenstiel. Well, the television industry is full of
sort of vestigial rules and regulations also. To an 18-year-old
news consumer of the future, the distinction between broadcast
and cable doesn't really exist. They all come through the cable
system, but they have drastically different business models.
The broadcasters are getting no fee from the cable operator.
There is no subscription for NBC and CBS. So all of their money
has to be made from advertising. But every cable news channel
generates roughly 50 percent of their revenue from subscription
fees that are embedded in the cable fee. But they are now
direct competitors in many ways, in many practical ways through
a single delivery system. So, I mean, I think that business in
many ways is looking at a landscape that strikes them as
illogical in its design even more than the newspaper industry
may be.
Dr. Starr. In 1927, when Congress passed the first Radio
Act, or 1934 when it passed the Communications Act, I think
that idea would really have been an excellent idea. But we are
near the end of the era of broadcasting. Already very few
people who watch television are actually getting the signal
over the air. They are getting the signal by cable or by
satellite. And so the question has really arisen among a lot of
the networks whether they need their local stations. Maybe they
would be better off being a cable channel. I think the notion
of charging for the spectrum, you know, may just be too late.
Chair Maloney. Thank you.
Mr. Sturm. My only comment is, having represented
traditional media for 30-some years, both broadcast television
and now newspapers, is I would respectfully suggest that the
government, broadly speaking, be very careful about continuing
regulation of traditional media, yet actually in some ways
insulating new media from any kind of similar treatment. For
example, the Congress has chosen to insulate the Internet from
taxation. I don't disagree with that. But I do think that
traditional media is still burdened with regulation that others
don't encounter. And that makes life for the traditional media
that much harder.
Chair Maloney. Well, I want to thank the panelists for your
time. You have certainly given us a great deal to think about.
I would say that members on both sides of the aisle support an
independent, strong, vigorous news-gathering organization that
has been equally critical of Democratic presidencies and
Administrations and Republican Administrations, and caused
equal pain on both sides of the aisle, and raised very
important issues that need to be considered and thought about.
You play a vital part in our democracy, and we thank you. And
this meeting is adjourned. Thank you very much.
[Whereupon, at 12:17 p.m., the committee was adjourned.]
SUBMISSIONS FOR THE RECORD
Prepared Statement of Carolyn Maloney, Chair, Joint Economic Committee
I want to thank our witnesses for joining us today to discuss the
future of newspapers and their impact on the economy and our democracy.
The newspaper industry has experienced serious financial problems
resulting from dwindling advertising revenues, falling print
subscriptions, and a fundamental change in the way people get their
news.
Recently, the plight of the newspaper industry has been punctuated
by substantial job losses, downsizing at various bureaus and the
halting of either printed editions or business-wide operations.
According to the Bureau of Labor Statistics, newspaper publishers
cut nearly 50,000 jobs between June 2008 and June 2009, a record rate
of job cuts representing 15 percent of its workforce.
Regional outlets like the Seattle Post-Intelligencer and the
Detroit Free Press have either scaled back or halted printed editions,
while others like the Rocky Mountain News and the Cincinnati Post were
closed entirely.
Though a decline in printed newspaper readership is partly to blame
for recent developments, there are multiple factors contributing to
newspapers' declining quality and profitability.
Technological change has created structural challenges for
newspapers which were reliant on subscription and classified ad
revenues to cover operating costs.
On top of that, the current recession has eroded advertising
revenues substantially. Between 2006 and 2008, ad revenues declined 23
percent from $49.5 billion to $38 billion and are expected to fall
further during 2009. The way information moves today can make even the
tech-savviest New Yorker's head spin.
Today's Kindle-clutching, iPhone toting subway rider who braves the
rush hour commute spends every waking hour in a world of nonstop news
and information which none of us could have ever imagined just a few
years ago.
Digital media, bloggers, news aggregators, and citizen journalists
all on the Internet have forever altered the speed at which news and
ideas are disseminated.
And while there are many out there chronicling what ails our
country's newspapers, community newspapers continue to shut down their
presses, and not nearly enough is being done to find ways to preserve
these institutions that are so critical to our democracy.
Last week, I introduced H.R. 3602, a bill which will enable local
newspapers to take advantage of non-profit status as a way to preserve
their place in communities nationwide. Since the ratification of the
Bill of Rights, the federal government has acknowledged that the press
is an institution which is afforded special protections by name.
In this spirit, I think that the government can help foster
solutions for this industry in ways which protect the independence of
newspapers and enables their objective reporting to thrive in a new
economic and media climate.
In so many ways, the change brought about by the digital media
amplifies what is written in newspapers. The Internet and mobile
devices extend news and information in a way that opens dialogues to
more and more aspects of our life.
The Internet has allowed anyone, regardless of background or world
view to express themselves, connect with others, and access an entire
world of electronic information.
Journalists play a critical role in monitoring the activities of
individuals and institutions that are supposed to be working in the
public interest. As our witness Dr. Starr put it, they provide a
``civic alarm system.'' The absence of a vigilant media may even allow
corruption to flourish unchecked.
In addition, studies show that journalism fosters civic engagement
by the population at large.
A recent study showed that when the Cincinnati Post shut its doors,
voter turnout in local elections dropped precipitously. Without our
newspapers, we lack a critical uniting feature which fosters broad
participation in our democracy and community functions.
Minority-owned publications are among the hardest hit by recent
trends and more must be done in order to ensure that these institutions
continue their important public service. The reporting done by
minority-owned newspapers is a critical voice in communities across the
nation that must be preserved.
It's clear that we need to explore alternative business models to
ensure an independent and vibrant press in the 21st century.
I look forward to the testimony of our witnesses in helping this
committee to do so.
__________
Prepared Statement of Representative Michael C. Burgess, M.D.
I was surprised to hear President Obama on Monday say he is not
opposed to bailing out newspapers. We have two stimulus bills--both of
which I have voted against--the first having cost the American taxpayer
over $2.5 trillion dollars and the second having cost the American
taxpayer $787 billion dollars of which less then 10% has been spent and
none has been accounted for.
Now, President Obama wants to bail out newspapers and/or turn them
into non-profit entities so they are free of politics and partisanship.
He stated that news today is all opinions and no serious fact-checking,
and he would consider Senator Cardin's bill to give tax deals to
newspapers if they become non-profits like broadcasting.
But despite all the important contributions of our journalists--
without whom we would not have heard about Iran-Contra during President
Carter's Administration--journalism as a business should not be given a
bailout by the American taxpayer.
Sure the industry is suffering. Craig's List, undoubtedly hurt the
classified ad revenue, and the downturn in business has lead to less
advertising buys as a whole. But marquee names like The Wall Street
Journal are not only surviving, but thriving.
Furthermore, there is nothing wrong with newspapers being political
and partisan. Sure, we fight about the fairness in coverage and the
rampant liberal bent of the opinion section, but to have the federal
government interject and turn these organizations into 501(c)(3)
entities like churches fails to realize the inherent value in
conversation and discourse.
Newspapers report the facts, but nothing in the language of either
Senator Cardin's bill or our honorable chairwoman's bill H.R. 3602
would allow the opinion section to continue, and without the ability
for newspapers to be political, there isn't exactly a reason for us to
rely on them just for the box-score after college football Saturday.
This would only further decimate the industry--not make them better.
Thank you.
__________
Prepared Statement of Tom Rosenstiel, Director, Pew Research Center's
Project for Excellence in Journalism
Thank you, Madam Chairwoman, for the opportunity to testify today.
In the next few minutes, I'd like to offer an overview of what's
occurring in the newspaper industry and what it may mean to our civic
life.
There are a lot of misconceptions about where we get our news. Only
about 54% of Americans say they regularly read print newspapers. But
those surveys do not tell us much about where news comes from.
Far more than that of what we know about our communities today
still originates in newspaper newsrooms. A good deal of what is carried
on radio, television, cable and wire services comes from newspaper
newsrooms. These media then disseminate it to broader audiences. In
every community in America I have studied in 26 years as a press
critic, the newspaper in town has more boots on the ground--more
reporters and editors--than anyone else--usually than all others
combined.
When we imagine the news ecosystem in the 21st century, the
newspaper is still the largest originating, gathering source.
The second misconception about newspapers is that their crisis is
loss of audience. Not so. Weekday print circulation last year fell by
4.6%, but the number of unique visitors to newspaper websites grew by
15.8% to 65 million. When you combine print and online audiences of
newspapers, the industry overall is faring better than other legacy
media--and many newspapers are seeing audience grow. One study, by
Scarborough suggests audience gains of 8.4% from online. What's more,
the Internet offers the potential of a more compelling, more dynamic,
more interactive journalism--a better journalism than print--coming
from these newsrooms.
The crisis facing newspapers is a revenue problem. Advertising, the
economic foundation of journalism for the last century, is collapsing,
particularly classified. Print newspaper ad revenue fell by roughly 25%
in the last two years, and 2009 will likely be worse. Meanwhile, online
display advertising for newspapers is now declining, too.
Last year, the traffic to the top 50 news websites grew by 27%. But
the price of an online ad fell by 48%.
The consequence is that the amount of our civic life that occurs in
the sunlight of observation by journalists is shrinking. The number of
city councils and zoning commissions, utility boards and state houses,
governor's mansions and world capitols being covered on a regular
basis, even by a lone journalist, is diminishing. One out of every five
people working in newspaper newsrooms in 2000 was gone at the beginning
of 2009, and the number is doubtless higher now. My old newspaper, the
Los Angeles Times, has half the reporters it did a decade ago. The
problem is more acute at bigger papers than at smaller ones, but no one
is immune--and I venture metropolitan suburban areas may be most
vulnerable.
Alternative news sites such as Voice of San Diego and MinnPost are
exciting innovations, but the number of people working there does not
yet come close to the lost numbers--and none of these sites has so far
found a sustaining business model.
More of American life now occurs in shadow. And we cannot know what
we do not know.
Newspapers are more than partly to blame. Like other legacy
industries before them, newspapers let a generation of opportunities
slip through their fingers--from E-Bay to Google, to Realtor.com to
Monster.com. The industry is running out of options, though I believe
some remain. Those include charging for content, getting tough with
aggregators, creating online retail malls, and more. No one knows which
will prevail. I am an analyst, not an advocate. The only thing close to
a consensus is that most likely no one revenue source will be
sufficient.
So should we care whether newspapers survive? Perhaps not.
Typewriters have come and gone. But I believe we do have a stake as
citizens in having reporters who are independent, who work full time,
and who go out and gather news, not just talk about it, and who try to
get the facts and the context right. And its not just the high-lying
investigative reporters I have in mind, but perhaps even more so the
reporters who simply show up week after week, sit in the front row, and
bears witness, and who, simply by their presence, say to those in power
on behalf of all the rest of us, you are being watched.
__________
Prepared Statement of Paul Starr, Woodrow Wilson School, Princeton
University\1\
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\1\ For purposes of identification. This testimony represents only
my own views, not those of Princeton University or any other
organization.
---------------------------------------------------------------------------
Madam Chairman, I appreciate the opportunity to discuss the crisis
affecting the nation's newspapers and the implications for democracy
and a broadly shared prosperity.
Ever since the founding of this country, newspapers have been
Americans' principal source of news. After broadcasting developed--and
even as new media have emerged in recent years--newspapers have
continued to do most of the original reporting in states and cities
around the country. They have put most of the journalistic ``boots on
the ground'' to find out the facts that citizens require to hold both
government and business accountable.
The Internet, to be sure, has many advantages as a medium of free
and open public discussion. Among other things, it provides access to a
wide variety of opinion, original data and documents, and distant
sources of news that would otherwise be inaccessible. But chiefly
because of its indirect effects on newspaper advertising revenue, the
Internet is also undermining the financial basis of the press. The
question that we now face is whether there ought to be changes in law
and policy to provide support for journalism not as a special favor to
the news media, but to advance the general interest in an informed
public.
Although some people may consider support for the press to be
inconsistent with our national tradition, the Founding Fathers would
have disagreed. Besides guaranteeing freedom of the press in the First
Amendment, they used postal policy to subsidize newspapers and promote
the circulation of news. As a result of legislation adopted in 1792,
newspapers received two distinct subsidies in the early republic:
cheap, below-cost rates for sending copies to subscribers and a
franking privilege that allowed newspaper editors to exchange copies
with one another through the mails at no postal charge. These subsidies
encouraged the establishment of newspapers throughout the nation on a
decentralized basis, and they created a national news network linking
those newspapers together--all without censoring or controlling the
content of the news itself.
American policies stood in dramatic contrast to European practice
at that time. European governments not only censored newspapers but
also taxed them with the express aim of making them more expensive and
thereby preventing the rise of a popular press that could make
political trouble. The principal levy on newspapers in Britain was the
stamp tax--its opponents called it a ``tax on knowledge''--and you will
recall that it was Britain's attempt in 1765 to impose the stamp tax on
the American colonies that the colonists denounced as ``taxation
without representation.''
The resistance to the Stamp Act helped to crystallize the sense
among our forefathers in the era of the American Revolution that the
press was a vital bulwark of liberty, and it left an important legacy--
an unwritten presumption in American tax policy against any special
taxes on the press. And with only minor exceptions, both the federal
and state governments have historically avoided imposing taxes
specifically on the news media--indeed, many states have exempted
newspapers from general sales taxes.
So the press has not been regarded, and should not be regarded, as
just another industry. Government has sought to advance it because a
democratic political system cannot function without diverse, free, and
independent sources of news.
For a long time, however, we have been able to take newspapers and
other news media more or less for granted because they were able to
prosper commercially. During the nineteenth century, as advertising
expanded, newspapers became increasingly self-sufficient and
profitable. News is a ``public good'' in both the strict economic and
ordinary-language meaning of that term, and public goods tend to be
systematically underproduced in the market. But newspapers were able to
thrive because of the strategic position they came to occupy between
advertisers and their markets. For certain kinds of advertising, such
as classifieds, newspapers were virtually irreplaceable, and as the
industry consolidated during the 20th century, the surviving papers
enjoyed an extraordinary degree of pricing power. Out of their profits
from advertising, they were able to cross-subsidize the production of
some kinds of news that probably could never have been justified as
profitable in themselves.
That system for cross-subsidizing news is now collapsing because
newspapers have lost the strategic position they once enjoyed. In the
online world, the lion's share of revenue from advertising goes to paid
search, and newspapers cannot reproduce the advantages they have long
enjoyed in print because Craigslist, eBay, and other sites provide
efficient platforms for advertising without bearing the cost of news
production. Moreover, it is difficult for any single news organization
to capture the full returns from investing in a costly journalistic
project. Even if newspapers begin to charge for content, they will not
be able to prevent other news organizations or web sites from reporting
the same information almost immediately after it is published. Neither
would we want them to be able to exercise that kind of control.
Increasingly, the production of news will require subsidy, and the
question is really from where and under what conditions that subsidy
will come. The problems that this challenge raises are difficult
because of the legitimate concern that any subsidy, whether from
government or private philanthropy, may induce subservience and
dependency in the press. But we should take encouragement from three
experiences.
First, as I've mentioned, early in our history, the federal
government aided newspapers through postal policy without impinging on
their freedom.
Second, in recent decades, government at both the federal and state
level has supported public broadcasting, which has become an important
source of news and public-affairs discussion. On radio, in particular,
as commercial stations have abandoned news, the public stations have
performed an especially valuable service by continuing to offer
reported journalism of a high quality.
And, third, besides supporting public-service broadcasting,
democratic governments elsewhere, notably in northern Europe, have
successfully used subsidies to maintain competition and diversity in
the press without limiting its freedom. Indeed, the Scandinavian
countries have preserved more newspaper competition through subsidies
than we did by giving newspapers an antitrust exemption in the
Newspaper Preservation Act of 1970--legislation whose failure ought to
be a cautionary example against extending any new antitrust exemptions
to the news media. Today those countries in northern Europe that have
invested public funds in news have higher levels of newspaper
readership and civic literacy than we do in the United States. Some
other European countries today also provide tax advantages to the
press--excluding newspapers, for example, from the value-added tax.
Still, to avoid any loss of press freedom, any public support for
journalism in the United States must be approached with great caution,
and it seems to me at least three principles ought to be kept in mind.
First, any subsidies must be viewpoint-neutral; they cannot favor
one viewpoint over another.
Second, they should be platform-neutral--they should not favor
print media over online media, for example.
And, third, they should be neutral or at least reasonably balanced
as to organizational form. Taken as a whole, they should not favor for-
profit over nonprofit organizations, or vice versa. To be sure, some
policies by their nature may benefit one type of organization, but the
sum total of policy should be indifferent as to whether news is
provided via a for-profit or nonprofit enterprise.
Nonprofit support of journalism is already increasing, and many
Americans would be more comfortable seeing support for journalism come
from a great variety of private philanthropic sources than from the
government. To facilitate that development, Congress should seek to
remove any legal obstacles that may stand in the way of newspapers
receiving tax-exempt support or becoming nonprofit, tax-exempt
organizations themselves. But here we face a new question. From the
founding of the republic, newspapers have played a central role in
politics--endorsing political candidates, for example. It would be a
real loss to freedom of the press if, in becoming nonprofit, newspapers
had to restrict their political expression. I believe, therefore,
Congress should consider creating a new category of nonprofit
journalistic organizations that are freed from traditional limitations
on 501(c)3 organizations. When Congress originally subsidized
newspapers through the postal system, it did not require that they be
nonpartisan; indeed, most of them were partisan. Neither should we
require newspapers to limit their political expression in order to gain
the advantages of nonprofit status.
Financial support for journalism could take a number of different
forms. Direct grants might allow for political manipulation of the flow
of funds, unless there was some intervening, professionally run
organization strongly insulated from political control. The public
broadcasting system offers a model, and rather than create an entirely
new structure, Congress might simply broaden the mandate of the one
that exists. All the old distinctions among media--print, broadcast,
and so on--are breaking down in the online world, and Congress should
begin to consider the implication of that change for all manner of
policies that were adopted when clear lines separated different types
of media.
Indirect forms of subsidy through the tax system also ought to
receive consideration. As I mentioned, many other countries exempt the
press from the value-added tax; the equivalent in the United States
would be an exemption from the payroll tax, or at least the employers'
share (with the idea of replacing those contributions to the Social
Security trust funds with general revenue). To be platform-neutral,
this tax exemption would have to apply not just to newspapers, but to
journalistic organizations more generally. Defining eligible
organizations and individuals would be difficult, but the same problem
arises in many other areas, such as state ``shield'' laws that provide
journalists with an exemption from some demands to testify under
subpoena.
Finally, we ought to bear in mind the implications of this
development for American federalism. Unlike many other countries that
have strong national news media but relatively weak media at the
regional and local level, the United States has historically had a
highly decentralized press, spread through every state and major city,
as well as a multitude of smaller jurisdictions. My concern is not so
much that there will be a shortage of national news coverage. The
national news media will, I believe, be able to aggregate audiences of
sufficient size to sustain competition and diversity. The situation at
the state and local level is altogether different. According to a
recent survey, the number of statehouse reporters has declined by one-
third in the past five years--and shows every sign of declining
further. Some cities are losing their last daily paper, and many more
are likely to do so. Resources for traditional journalism at this level
are disappearing far more quickly than they are being created online,
and some of those most closely involved with online news at the state
and local level see no prospect of being able to generate sufficient
revenue, either from advertising or charges to readers, to make state
and local online news self-sustaining.
The premise of federalism is that by devolving significant areas of
public decision-making to government at the state and local level, we
bring them closer to the people. But if there is no independent
journalism at those levels, the people will be in the dark about much
of what those governments are doing. This is not a liberal or a
conservative issue. The Founders were right to see a robust, free press
as a bulwark of liberty. And they were right in their time to provide
concrete assistance to ensure the press developed throughout the
country. We must figure out how to keep that tradition going in our
time as well.
__________
Prepared Statement of John Sturm, President and CEO, Newspaper
Association of America
Good morning. I am John Sturm, President and CEO of the Newspaper
Association of America, a trade organization representing nearly 2,000
newspapers with more than 90 percent daily circulation in the United
States.
I appreciate this opportunity to talk about the future of
newspapers and how the industry can continue to provide high-quality
public service journalism, which is critical to a functioning
democracy. What we are really talking about here today is the
preservation of local journalism. Newspapers have traditionally been
the primary source and the fundamental support system for local
journalism--providing the financial underpinning for local news and
investigative journalism.
Chair Maloney, you recently noted that ``newspapers are an
essential component to our free democratic society.'' We couldn't agree
more, and the reason newspapers are essential to a well-informed
citizenry is relatively simple: Newspapers are the primary source of
credible, professional journalism that has a positive impact on our
communities and our nation. Indeed, in most markets, the local
newspaper has more reporters on the street than all other local media
combined. Newspapers have a continuing commitment to local news and
information.
The challenges facing the newspaper industry are well documented.
As a result of the longest recession in our nation's history and
intense competition for advertising, particularly from Internet-based
services, newspapers have experienced a dramatic loss in advertising
revenue--which is the lifeblood of our editorial content. Newspaper
advertising revenue has decreased nearly 40 percent over the last two
years, including a precipitous decline in classified advertising, which
has had a severe impact on major-market newspapers. Overall, the
newspaper share of the local advertising market has decreased to less
than 15 percent from over 30 percent.
Interestingly, while advertising revenue is down sharply, newspaper
readership is actually growing. Newspapers' print editions, combined
with their Web sites, have a larger audience than ever, and their
content never has been more popular--even among young people. Although
print circulation has fallen, the audiences for newspaper Web sites
continue to grow at a rate that outpaces the losses in print. Nielsen
Online recently reported that newspaper Web sites had over 70 million
visitors in June alone--which accounts for nearly one-third of all
Internet users.
Unfortunately, the dramatic decline in advertising revenue has
taken a severe toll on the industry. Seven major newspaper companies
have declared bankruptcy. Publishers in virtually every market--large
and small--have been forced to lay off highly valued, veteran
journalists and other employees and to take other drastic cost-saving
measures. Since 2007, nearly 30,000 jobs have been lost in the
newspaper industry.
If daily newspapers were unable to continue their in-depth
reporting, analysis and investigative journalism, we see no other
comparable news provider with the resources and commitment to provide
truly professional journalism at the local level--certainly in the
medium term. While online news sources and citizen journalists
certainly add perspective to the news, very few provide original, in-
depth reporting and analysis, and even fewer ascribe to the same
professional journalism standards.
What can Congress do to help maintain the type of journalism that
local communities deserve and expect?
Let me attempt to be as clear as possible on this point:
The newspaper industry is not seeking a financial ``bailout'' or
any other kind of special subsidy. We don't believe direct government
financial assistance is appropriate for an industry whose core mission
is news gathering, analysis and dissemination. From a business
perspective, we are happy to be treated no differently than other local
businesses.
However, there are certain steps that Congress can take, in the
short term, that will assist all businesses--including ours--that are
attempting to stabilize their financial situations.
In his Fiscal Year 2010 Budget, President Obama proposed allowing
businesses to carry back net operating losses for 5 years instead of 2
years under existing law. This would allow businesses to apply current
losses to prior year taxable income, providing a much needed infusion
of cash at a critical time. While Congress included this provision in
the economic stimulus package, it was significantly scaled back in
conference and applied only to very small businesses. Most businesses,
like many newspapers, do not qualify for this assistance.
Legislation has been introduced in the House and Senate which would
correct this problem and expand the net operating loss provision for
the benefit of all businesses--large and small. Chair Maloney and Rep.
Brady, we sincerely thank you for cosponsoring this legislation, H.R.
2452, and we look forward to working with you and with other members of
the Committee to see it enacted into law this year. The NOL proposal
will provide businesses with an incentive to go from cutting to
stabilizing and, eventually, to expanding operations--steps that are
absolutely essential to a sustaining recovery.
According to a recent paper by the ubiquitous Mark Zandi, chief
economist and cofounder of Moody's Economy.com, ``extending and
expanding the NOL carryback to benefit larger firms would provide a
meaningful boost to the economy.'' And, for financially strapped
companies, expanding the NOL provision ``may provide some more time to
reduce their costs, raise sales and stabilize their financial
situations.'' \1\
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\1\ Zandi, Mark. ``Assessing the Economic Benefit of Accelerated
Depreciation and Net Operating Loss Carryback.'' September 17, 2009.
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Another step that Congress can take to provide short-term economic
relief is to allow businesses to spread out future contributions to
defined benefit plans. The decline in the stock market has caused
valuations for defined benefit pension plan assets to fall below the
funding requirements established under the Pension Protection Act (PPA)
of 2006. As a consequence, newspapers and other businesses may not be
able to meet the funding requirements of the PPA, which mandates
minimum funding thresholds of 94 percent in 2009 and 96 percent in
2010. Relief provided earlier this year by the Treasury Department was
a nice ``patch,'' but it simply moves the pension funding problem out
to 2010 and 2011. Businesses will be required to use cash reserves to
fund pension plans to meet statutory requirements; cash that could be
used now to preserve jobs and generate much needed business activity in
this sluggish economy. We urge Congress to pass legislation that would
spread out these obligations to give markets more time to recover and
businesses more time to stabilize their finances.
Chair Maloney, we appreciate the bill that you introduced last
week--the Newspaper Revitalization Act--to allow newspapers to organize
as non-profit entities while continuing to generate advertising
revenue. While we believe this proposal has merit and could work in
certain situations, it would require local citizens and civic leaders
in a community to commit a significant volume of resources to fund
newspapers' journalistic functions. This is a step in the right
direction and could help in a few communities, but, candidly, we don't
see it as a comprehensive solution to the problems in the industry at
this time.
In the near term, we recognize that newspapers--on their own--must
adjust their business models to find a way to monetize online content
in a way that contributes to local journalism. Newspaper companies have
been aggressively examining new business models while also exploring
new systems that would allow newspapers and other news content creators
to track, detect and license online content which is being used by
portals and aggregators for their own commercial gain.
Simply put, some Internet operators routinely free-ride on the
investments that newspapers are making in local journalism by copying
or summarizing newspaper content in order to drive audiences to their
Web sites--and gain revenue through the selling of their advertising
around our content. The concern is not the personal use of newspaper-
generated content, but the use of newspaper-generated content for
someone else's commercial benefit. The original reporting that is done
by newspapers each and every day cannot be sustained over the long run
if newspapers are not able to obtain fair and reasonable compensation
for the content that they produce. The creators of valuable content
cannot survive without direct compensation from those who use their
creative works. It doesn't work for music, books or movies; in the long
run, it will not work for newspaper-generated content either.
As noted, the industry is working on a variety of solutions to
address these issues, solutions that will make it quite convenient for
the many unauthorized users of newspaper-generated content to license
and pay reasonable fees for such use. We expect that these solutions
will be in the marketplace within the next 6 months.
Thank you for this opportunity to represent the newspaper
industry's views. It is my hope that the discussions we have here today
will lead to practical actions that will help support local, public
service journalism now--and to sustain it in the future.
__________
Prepared Statement of Denise Rolark Barnes, Publisher, The Washington
Informer
Thank you Madam chair and members of the Joint Economic Committee
for the opportunity on ``The Future of Newspapers: The Impact on the
Economy and Democracy.'' I salute you for your interest in hearing from
a diverse group of newspaper publishers regarding our struggles and how
this very unique piece of legislation might impact the future the of
the newspaper industry.
As you heard in my introduction, my name is Denise Rolark Barnes,
and I succeeded my father, Dr. Calvin W. Rolark, as publisher of The
Washington Informer when he died in 1994. He and his colleagues in the
Black Press impressed upon me the role and responsibility of the Black
Press which was founded by two freedmen, Samuel E. Cornish and John B.
Russworm, publishers of the country's first black newspaper established
in New York City in 1827.
Freedom's Journal was published nearly 123 years after the nation's
first continuously published newspaper was established in Boston,
Massachusetts in 1707, and nearly 40 years before the U.S. Congress
abolished slavery in America in 1865.
The Wisconsin Historical Society describes Freedom's Journal as a
newspaper that provided ``international, national, and regional
information on current events and contained editorials declaiming
slavery, lynching, and other injustices. Freedom's Journal circulated
in 11 states, the District of Columbia, Haiti, Europe, and Canada.''
Russworm and Cornish wrote in their very first editorial to their
readers, ``We wish to plead our own cause. Too long have others spoken
for us.'' The paper published for only two years due to a lack of
advertising support, but it laid the foundation for thousands of
newspapers who shared a mission and purpose that was no different than
their white counterparts--to provide clear and truthful information
about the actions of those who we put in charge and to provide a voice
for those who are effected by their actions.
Ten years ago, I could confidently say that the National Newspaper
Publishers Association, the trade association serving the Black press,
had a membership of more than 200 African American newspapers. Today,
attendance at conventions indicates a drastic decline in the number of
papers that currently exist, possibly half.
The Washington Informer has also joined ranks with publishers of
other community and metropolitan ethnic newspapers that serve a
targeted audience who are also exploring ways to keep their papers
alive and viable during these difficult economic times.
The one thing we all share in common our dependence on advertising.
As my dad use to say, ``Advertising is the lifeblood of every newspaper
and circulation is the necessary evil.''
Minority or ethnic newspapers have always experienced a recession
when it comes to advertising. We are rarely top of mind when it comes
to ad placements made by advertising agencies, nor are we treated
equitably when it comes advertisers accepting and paying our rates.
Our operations are small, our reporters cover a broad range of
issues, often for little or no pay, and the quality of our publications
suffers due to our inability to hire editors to fact-check and clean-up
copy before it goes to print. Yet, the demand from our readers is
growing. They remind us daily of how much we are needed to address
their particular issues and concerns that are often ignored by the
mainstream media, issues such as health disparities, housing and
employment discrimination, racial profiling and immigration issues, to
name a few.
While I applaud Congresswoman Maloney, Senator Cardin and members
of this committee's intentions to address the growing crisis that is
affecting the entire newspaper industry, I view the legislation before
us as just one step towards fixing a problem that is steadily getting
worse. I would suggest, however, that since there are no daily African
American newspapers, that you broaden the language in the bill to
include weekly publications. Also, the term ``general circulation''
which is often used to exclude minority and ethnic newspapers, should
be broadened to ensure greater opportunities for equal access to
advertising revenue under the legislation.
I appreciate the fact that you are considering a different kind of
business model that is reportedly being pursued by some newspapers. It
also suggests you may be open to consider other options that may prove
effective, as well. What papers like ours need is legislation that will
end discrimination on the part of advertising agencies as it relates to
ad purchasing in minority-owned media, and that promotes diversity in
advertising agency's hiring and promotion practices.
We need to run our businesses on a level playing field. Whether we
are a for-profit or non-profit entity, the decision-makers need to be
incentivized to do business with minority and ethnic-owned media, or
else, for us, there will be no end to this recession.
This country must maintain a free and independent press that serves
all of the people and as you consider the options, this must be
foremost in your minds.
I am open to taking your questions and sharing more of my
experiences, thoughts and suggestions if needed.
Once again, thank you for this opportunity to testify before you
today.