Gov't Shouldn't Fix Newspapers

The U.S. government seems to be nearly everywhere these days – from health care reforms and tax gimmicks to automaker and bank bailouts. One area that should be off-limits is the newspaper industry.

Simply put, government intervention to prop up newspapers should not be a preferred option under any scenario. Anyone who has studied U.S. history knows the Founding Fathers wanted government and newspapers to operate independently of each other, with the latter in a watchdog role.

So that’s what so disturbing about the U.S. Federal Trade Commission looking for ways to “support the reinvention of journalism,” according a report by The New York Times.

Possible measures to help the troubled U.S. news business include public subsidies, charity and stronger copyright protection. The first two measures should be dropped; the third one merits some consideration.

Nobody can deny that Internet alternatives and the Great Recession have taken a huge bite out of advertising and readership for traditional print newspapers which, for the most part, continue to struggle as they seek viable business models for online publishing.

From 2007 to 2009, newspaper industry revenue fell 30 percent in the United States, though much less internationally. In 2008, advertising contributed 87 percent of newspapers’ revenues in the United States, compared with 53 percent in Germany, 50 percent in Britain and 35 percent in Japan, according to the Times.

Not surprisingly, some 15,000 U.S. journalists were either laid off or bought out by employers as the recession’s grip tightened on American consumers since late 2007. Almost one in five journalists working for American newspapers in 2001 is no longer there, according to a 2009 report by the Pew Research Center, an independent, nonpartisan public opinion research organization that studies attitudes toward politics, the press and public policy issues.

"Newspapers do not expect a whole lot of help from the government," John Sturm, CEO of the Newspaper Association of America, tells Bloomberg Businessweek. "We've never sought or asked for anything like a bailout."

In response to severe financial decline, many papers, especially the bigger metros, shrank the number of pages and sections, increased cover prices, and scaled back reporting.

Pick up your local paper today and it’s sure to be smaller, with less content for your interests than an edition from early 2007. Publishers were forced to dump many things over the side in order to survive. In some cases, what’s left is a mere shell.

Most publishers were content to sit back and let things unfold before the bust, with the notable exception of Gannett Co., America’s largest newspaper publisher, including USA Today.

While the average operating profit in 2009 for most papers was 12 percent, publicly-traded Gannett in the pre-bust days pressed for upper teens, depending on the paper’s market and demographics. Sadly, many of these “boom” profits came at the expense of employees and quality. (Disclosure: I once worked for a Gannett newspaper).

The fact is fewer than half of all American adults now regularly read a daily newspaper. Recession, lifestyle and generational issues all factor into the swift decline of print media. Plus, newspaper executives have a well-earned reputation for making poor or questionable management decisions.

Why would government intervention make a difference?

The one exception for government oversight might be in copyright protection, especially with the Internet changing the rules of the game. Newspapers, the Associated Press, and Google have locked horns over establishing a balance between aggregation of credited content and outright lifting of material.

As Times reporter Eric Pfanner points out: “So far, newspapers have moved only halfheartedly to defend their copyrights online under existing legislation, because they have been held in thrall to the idea that giving away their content would make new revenue appear. Fortunately, this is now being reconsidered.’’

Public subsidies and charity aren’t solutions to what ails the newspaper industry. It’s up to newspaper executives to get beyond the “Chicken Little” stage and embrace changes in all forms which serve older readers while attracting younger ones. They need recognize there’s lots of brain power in the newsrooms, not just in the offices.

News Corp. Chairman and CEO Rupert Murdoch in December warned against the "heavy hand" of federal intervention, saying newspapers could be harmed by over-regulation or efforts to subsidize the industry, reports Bloomberg Businessweek writer Olga Kharif. WMB agrees with Murdoch, whose Dow Jones & Company, a division of News Corp., publishes The Wall Street Journal.

If the U.S. government crosses the line between it and the Fourth Estate, through financial incentives to bail out a shaken industry, there’s no going back. An independent press, free to criticize, question and report, will be seriously hampered. Whose interests will be served? Not taxpayers, that much is certain.

Imagine if the U.S. government controlled reporting on the oil disaster in the Gulf of Mexico. Would the rest of the country fully grasp the scope of the crisis and its impact if it were not for the unfettered media, in all forms? Would we really know how helpless and clueless our big government is to manage affairs right here at home?

Newspapers will survive because most journalists are resilient, determined to get the full story and working to earn the public’s trust – despite stupid decisions by owners and executives, shifting public interest, and competing alternatives.

As someone once said, “The pen is mightier than the sword.” In many ways, that still holds true. Let’s not allow the ink to dry up with yet another “government solution” to a problem that can take care of itself, warts and all.

As for me, I practice what I preach at writenowworks.com.