May 06, 2009

THE FUTURE OF JOURNALISM

STATEMENT TO THE SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

MR. CARDIN:  Chairman Kerry, Ranking Member Ensign, and members of this Subcommittee, thank you for the opportunity to appear before you today.

Today, newspapers across the country are closing their doors, slashing their staff, and shuttering bureaus in the United States and around the world.  The Philadelphia Inquirer, The Seattle Post -Intelligencer, The Rocky Mountain News, the Philadelphia Daily News, the San Francisco Chronicle, The Boston Globe and my own Baltimore Sun are either in bankruptcy, or facing bankruptcy and closure.  Newspapers and the investigative journalism they provide play a critical role in our society.  Watergate.  AIDS.  Tobacco.  ENRON.  AIG.  These are all news stories, uncovered by journalists, which brought the most important stories of our nation's history to the front page and into public debate.  Newspapers provide a form of accountability.  They provide a "check" on local governments, state governments, the federal government, elected officials, corporations, school districts, businesses, individuals and more.

Despite the 24/7 availability of news from print, broadcast and digital sources, there remains one clear fact: when it comes to original in-depth reporting that records and exposes actions, issues, and opportunities in our communities, nothing has replaced a newspaper.  Google, Yahoo!, blogs and even most local and national broadcasters, pull their original news from the laborious and expensive work of experienced newspaper reporters diligently working their beats over the course of years, not hours.  Newspaper reporters forge relationships with people; they build a network, which creates avenues to information.

These relationships and the information that follows are essential in a free, democratic society.  Without it, accountability is lost.  In a 2003 study published in the Journal of Law, Economics, and Organization, the relationship between corruption and "free circulation of daily newspapers per person" was examined.  The study found that the lower the circulation of newspapers in a country, the higher it stands on the corruption index.  Just recently, Princeton University released a report, entitled "Do Newspapers Matter? Evidence from the Closure of the Cincinnati Post" This report found that while "The Cincinnati Post was a relatively small newspaper, with circulation of only 27,000 when it closed…its absence appears to have made local elections less competitive along several dimensions: incumbent advantage, voter turnout and the number of candidates for office."  The Princeton University study concluded that "if voter turnout, a broad choice of candidates and accountability for incumbents are important to democracy, we side with those who lament newspapers' decline."

The economy has caused an immediate problem for newspapers, but their business model, based on circulation and advertising revenue, has been weakening for years.  At the end of 2008, advertising revenue was down by about 25% and according to a December forecast by Barclays Capital, advertising revenue will drop another 17% in 2009.  According to the Pew Project for Excellence, during 2008, U.S. newspapers eliminated 5,000 newsroom jobs, approximately 10% of total newsroom jobs in the industry.  Circulation is down 13.5% daily and 17.3% on Sunday since 2001.  The Project for Excellence in Journalism surveyed 259 newspapers in early 2008 and found that 59% reported reductions in staff, but even more disturbing was that 61% said that less space was being devoted to news.  The impact has had an especially severe effect on overseas bureaus, in state capitals, and in Washington.  Half the states no longer have a newspaper covering the U.S. Congress.

While the newspaper industry is in the midst of major transition, we need to protect and nurture the information gathering abilities that currently reside with newspapers.  The Newspaper Revitalization Act could help some in the news industry continue their vital role of newsgathering and investigative reporting.  My bill would allow newspapers who choose to operate as non-profit organizations under 501(c)(3) status for educational purposes.  It would create a new category under the Internal Revenue Code for a "qualified newspaper corporation."  This would be the same IRS status that is utilized by churches, hospitals, educational institutions, public broadcasting and other non-profit entities.  Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.
              
A change to non-profit status would not mean government control of the media.  It would not bring about the end of the First Amendment and free speech.  Religious and educational groups operate as non-profits without government interference.  A newspaper operating as a non-profit would continue to freely report on all issues, including political campaigns, it just would refrain from making political endorsements.  Whether conservative, liberal, or middle-of-the-road, each newspaper would maintain its editorial voice and be able to clearly state its position on issues affecting their community - local and national.

I also want to make this point very clear -- this is not another government bailout of a failing industry.  Taxpayer funds will not be used to buy shares or an interest in any media corporation.  This legislation should cause minimal revenue loss to the federal government as most newspaper profits have been falling for years.

While this may not be an optimal choice for some major newspapers or corporate media chains interested in profit, it should be an option for many smaller, local newspapers fast disappearing in our states, cities and towns.  In this economic climate, and with the real possibility of losing community newspapers, this would be a voluntary option for owners to save their paper.  It is also a model that could enable local citizens or foundations to step in and preserve their local papers.  However, this is only an option that would be made available, not a requirement.  The decision would be made by the paper and the members of the community who are interested in preserving the paper as a non-profit entity.
                
Thomas Jefferson, a man who was vilified by newspapers daily, once said, "If I had to choose between government without newspapers, and newspapers without government, I wouldn't hesitate to choose the latter."  Like Jefferson, I believe that a well-informed public is essential in our democratic society.  We need to save our community newspapers and the investigative journalism they provide.