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AIP Column: No Non-Profit Status for Newspapers

My latest AIP column is up and today I address Senator Ben Cardin's bill that would endow newspapers with non-profit status as a means to help out the struggling industry. Cardin's bill was introduced back in March and didn't gain any traction until President Obama ignited debate when he told editors from Toledo and Pittsburgh newspapers that he'd be happy to look at bills that would help the newspaper industry.

Cardin's bill is a bad idea for a number of reasons, the most important of which is the free market has spoken. More and more Americans are getting their news from sources other than newspapers and for good reason. A portion:

Technology is gradually relegating traditional newspapers to the same fate as the proverbial buggy whip. With 24 hour cable news and around-the-clock news websites and blogs, breaking news and events are delivered to consumers' Blackberrys, iPhones, cell phones, and laptops within minutes after their occurrence. Take as an example Michael Jackson's death. The website TMZ broke the story before any news organizations and within minutes the news was broadcast all over Twitter, Facebook, over various websites and blogs and through email. By the time newspapers got their stories printed and delivered to its newsstands (let alone to consumers' doorsteps) the following day, news websites had already published pages and pages of background on Michael Jackson's life, YouTube videos of his best music videos, and reaction from friends and relatives. Newspapers simply cannot compete with the instant reporting of news.

This technological shift benefits consumers because it gives them a larger market from which to obtain their news. Americans in smaller towns are benefiting in particular because they are no longer dependent on local papers for information. Instead, the internet puts consumers in large cities and small towns on an equal footing when it comes to getting information. They can access international, national, and local news from a variety of online and television sources, and more of them are doing so every day.

Nonetheless, some are fighting this inevitable technological evolution. Maryland Senator Ben Cardin introduced legislation that would allow smaller newspapers to restructure their operations so they can operate as 501(c)(3) non-profit corporations, giving them tax-exempt status. The bill has been around since March of this year but did not receive any real attention outside the newspaper industry until President Obama said just a few days ago in an interview with the editors and publishers of the Toledo Blade and the Pittsburgh Post-Gazette that he would be "happy to look at" any bill in Congress that could offer assistance to the struggling newspaper industry.

President Obama's support of a bailout of sorts for newspapers is one that will not sit well with taxpayers who are already on the hook for trillions of dollars in automobile company bailouts, Wall Street bailouts, Fannie Mae and Freddie Mac bailouts, an unpopular attempted government takeover of health care, possible cap and trade spending, and other government subsidies and entitlements. Cardin's bill is meant to artificially prop up an industry that does not serve its customers well enough to keep them coming back.

When you're finished reading, feel free to leave a comment here or at the column. While you're at AIP be sure to stop by and check out the other columnists and bloggers who write there. TJ Brown also discusses the controversy surrounding the possibility of bailing out newspapers and doesn't think it will happen. I agree with him. Michael Lewis examines Obama's message to Americans and the world at the UN and G-20. Ed Morrissey writes that the president taxes our patience when he tries to argue that an individual mandate requiring every American to purchase health insurance isn't a tax.


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Comments (22)

Hmm, a non-profit status fo... (Below threshold)

Hmm, a non-profit status for newspapers?

In such case, it would seem, they could be under serious legal jeopardy of being fined if not shut-down if it can be proved an editorial or news report was advocating a political policy (or political party) regardless of which political party suggested the policy.

Actually - wouldn't that no... (Below threshold)

Actually - wouldn't that non-profit status apply to blogs as well? After all they report more news than the news media does. Maybe this bill will bring stimulus money to the blogosphere. Now that would be a good thing.....

Non-profit status?<... (Below threshold)

Non-profit status?

Hmmmm, can we say Government news?

Why yes, yes we can.

You can lead a horse to wat... (Below threshold)

You can lead a horse to water, but you can't make him drink.
And here's more.

Knock, knock
Huh! Who's there?
Acorn who?
When did you join the mainstream media?

Psychics to hold séances for those who insist on contacting the mainstream media.

11 year old Grade School reporter steps into mainstream media's shoes for a day to interview Obama... And because of his softball questioning nobody knew the difference. 11 year old reporter responds....... "Oh! is that what I stepped in?" (As he shakes his shoe)

NY TIMES Poll Showing 72% Support for Obama's Health Care Plan -- Was Stacked With Obama Supporters...
Found drunk stuck in hospital's ER revolving door and asked him the same poll question every time he stumbled around to the opening and was only able to achieve 72 % support for health care plan.

Mexican tycoon to buy NYTimes? New Yorkers polled for their response to a foreigner buying the Times.
3% said they had no opinion on the matter
5% said it didn't matter to them who owned the newspaper.
7% said that's one crazy foreigner
10% said anyone would be better then the present owners.
15% said they thought a foreigner already owned the New York Times.
20% said it might be better then the foreign government that now owns the New York Times.
40% said I no speaka da English.

1) The mainstream media, who did everything under the sun to see that Obama got elected, can now say the Devil made them do it.

Ideal as a conversation piece in your home or can be used as a home safe. Purchase one of our old New York Times newspapers for an additional 10 cents. Place it in the box in front of your stored valuables and what burglar in his right mind would go near it? As a second layer of security the burglar would have to have exactly 75 cents to get into the newspaper box/safe. You can rest peacefully at night knowing your valuables are safe and secure in your New York Times newspaper box safe.

BULLETIN: Obama to step in ... (Below threshold)

BULLETIN: Obama to step in and fund horseshoe manufacturers....too!

and non--profit status woul... (Below threshold)

and non--profit status would help them how? by not having to pay tax on their (non-existent) income? by letting them mail at subsidized rates issues they don't mail?

This is all so much crap. ... (Below threshold)

This is all so much crap. Changing tax status will not help the face that people REFUSE to buy the product.

Oooops! Well if Barry can make the purchase of health insurance MANDATORY, what's to stop him from pushing a law MANDATING that you MUST PURCHASE AT LEAST 1, 2, 3, newspapers each day. Of course, being as we're so stupid, the government will also furnish a list of "approved" reading sources.

This proposed law wouldn't ... (Below threshold)

This proposed law wouldn't happen to be aimed at certain states with high corporate tax rates would it. States that have newspapers like "The Boston Globe" or "The New York Times" or "The Los Angles Times" would it. You know, print media that has been called "Mouthpiece for the DNC".

But then, Barry always repays his "friends". Chicago Style.

Declare them non-profit? I ... (Below threshold)
Bloody Stupid Johnson:

Declare them non-profit? I thought their financial statements already took care of that.

Pravda!!Fre... (Below threshold)


Free from the need to even ATTEMPT to make a profit, "news"papers won't even have to consider accuracy or impartiallity!!

Onward Comrades...onward!

I thought newspapers were a... (Below threshold)
James H:

I thought newspapers were already nonprofits. (Rim shot!)

A couple things, in no particular order:

1) It's perfectly hunky-dory to have a nonprofit in a newsgathering role. There are certainly plenty of them out there outside public broadcasting. The St. Petersburg Times or Voice of San Diego, for example. I don't see anything inherently good or bad about such organizations functioning as nonprofits.

2) I don't know the relevant law. Is it possible for a for-profit corporation to restructure as a non-profit under current law? If so, are there barriers that prevent a newspaper from doing so? IMO, it should be no more or less difficult for a newspaper to go nonprofit than for a company in another industry to do so.

What James H said. There a... (Below threshold)

What James H said. There are already NFP newspapers, so this wouldn't be a huge shift. Now they have to show that they provide a public benefit to be exempt; the effect of the change would be to codify that. Nothing major.

Marc, though, is right: they couldn't endorse candidates anymore (although they could endorse positions on issues)

NFP status won't solve the ... (Below threshold)
jim m:

NFP status won't solve the problem for the newspapers.

The big papers are getting more revenue from circulation than from advertising and that is a huge reversal of he traditional revenue model for the industry.

The WaPo loses $1.10 per paper. The NYT loses $0.54 per paper. What they need is not a tax break, but federal subsidies.

So really this is merely a prelude to federalizing the news media. It will quickly become apparent that this measure will not have protected these papers from folding and the demand will be to fund them and how could anyone be against the government helping some troubled charities?

jpe - if they provided a pu... (Below threshold)
jim m:

jpe - if they provided a public benefit people would be willing to pay for it.

The issue really is not whether papers are allowed to restructure (although from a legal standpoint many large news organizations are publicly traded so that would have to change and it might prove difficult for many), but really whether or not they are going to get government money to cover their operational losses.

Leave it to Obama to latch ... (Below threshold)

Leave it to Obama to latch onto a lamebrained crummy idea like this.

The problem is circulation,... (Below threshold)

The problem is circulation, not tax status.

The solution is obvious to everybody outside the journalism machine: sell more papers.

The way to do that is to make their product more desirable to more readers. Unfortunately, most of the flagship newspapers in the country have actively offended half the country by slanting their editorial voice to the left to the point where no conservative can stomach reading their tripe.

All they have to do is to return to solid journalism, and do it right, and they can double their circulation.

Actually, SMALL newspapers ... (Below threshold)

Actually, SMALL newspapers (mostly weeklies in small communities with circulation of 20,000 or so or less) already get subsidies to remain in circulation. They are, in some instances, the only coverage of local events of interest to local taxpayers. The one I subscribed to for several years printed the monthly budget meetings of the county, a weekly wrap-up of criminal and traffic violations, and coverage of such mundane events as school board meetings, small social events (even some folks' family reunions)and other such events not necessarily "newsworthy" to anyone not residing in the area, or extremely familiar with it. These newspapers are quite heavily subsidized through several current government agencies.

Jim: I should've been more ... (Below threshold)

Jim: I should've been more clear that I meant "public benefit" in the sense that the law uses it re: charities.

I agree that newspapers are... (Below threshold)

I agree that newspapers are important. Web sites come and go, and an article on a site can be "taken down" if it is found to be incorrect, or just not favorable to a certain party or organization. The newspaper is permanent. It can't be "taken down".

But I have a problem with bailouts of any kind. Newspapers have got to figure it out. the Kindle will not replace books, and the web will not replace newspapers.

It seems pointless to attem... (Below threshold)

It seems pointless to attempt any restructuring of newspapers supported by government (taxpayer!) money. I agree that the free market has spoken, and while we should not forget the benefit of the newspaper to our society, we should think realistically. It's like the big 3 bailout. They had their chance for DECADES to restructure, to enlist greater fuel economy, to ensure the survival of their companies in a global economy, and to explore alternative energy formats in their vehicles. While it is wrong to say that these enterprises are underserving of public support (In fact they have contributed incredible amounts to our society) we should see the big picture that their continued existence as a 20th century establishment is no longer viable. Newspapers should be seen the same way.

The NEW YORK SLIMES,WASHING... (Below threshold)

The NEW YORK SLIMES,WASHINGTON COMPOST,ALANTA URINAL.CONSTIPATION,CHICAGO TRASHBIN are all losing readers to the internebt and their own biased lies

The FIRST amendment gives n... (Below threshold)
Jeanne Shoemaker:

The FIRST amendment gives news publications the right to print whatever they want. God gives us the right to not purchase news publications. Who's going to pay the bills for these "non-profit" publications?!?






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