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Time to bailout journalism? No way, panel says

Should traditional journalism, both electronic and print, receive some form of government assistance to ensure that despite tough economic times at many media organizations citizens remain fully informed on issues of vital public interest?

That was the question posed March 31 to a panel of lawyers and journalists assembled at the Newseum in Washington, D.C., the broadcast of which was carried live on C-SPAN. During “The Future of Journalism: Is it time for a Bailout?” panel discussion, moderated by RTDNA President Emeritus Barbara Cochran, the answer was “no,” with a few caveats.

Participants included Andrew Schwartzman, Media Access Project, president and CEO; Steven Waldman, FCC senior adviser; Barbara Wall, senior counsel for Gannett; Gene Policinski, VP of the Freedom Forum’s First Amendment Center; and Susan DeSanti, Federal Trade Commission Office of Policy Planning director.

Three factors have contributed mightily to the economic decline of traditional media, said DeSanti, whose agency has conducted workshops in December 2009 and March 2010 to gather facts about the economics of the news business. According to DeSanti, they include:

• Substantial financial difficulties caused by overleveraged purchases of newspapers while profit margins ranged from 20 percent to 30 percent and their subsequent decline;
• The impact of the recession on traditional advertisers, such as auto dealers, retail stores and real estate, which produced significant reductions in ad revenues; and
• The development of online classified advertising, particularly craigslist, which has hit newspapers particularly hard.

The Internet has “unbundled” traditional news packages, such as newspapers and TV newscasts, into discrete elements that allow people to access stories they find interesting and disregard the rest, Waldman said. “Newspapers were able to create this overall bundle that worked in totality, but if you break it apart and start applying supply and demand economics to each component, everything changes,” he said.

“It culls the question of what are you willing to pay for news, and the answer may be, ‘not much.’ Then you have some interesting dilemmas. People are not willing to pay for what we deem has an important social value,” he said.

While DeSanti rejected poor business decisions and the impact of the recession on ad spending as rationales for a government bailout of journalism, she said the move away from traditional media to online advertising may “upend the business model of news organizations, especially newspapers and broadcast news” and be cause to consider indirect government support for news organizations.

“There are reasons to believe that the free market for news, especially public affairs news, is susceptible to market failure. That means there is a possibility that a new business model will not emerge,” she said.

According to Schwartzman, there is precedent for indirect assistance. Pointing to postal subsidies of newspapers in the early days of the republic, Schwartzman said the government has played a role in promoting a well-informed citizenry. He suggested government may fund a national endowment for journalism “to assist people with new models for journalism.”

While he might favor public funding for a news laboratory and development, when it comes to government assistance for news organizations, the answer is “no and never,” Policinski said. “We are talking about a crisis of mechanics, of the corporate suite, that is of acquisitions and expansion versus the product of news,” he said. Applying a quote from Rev. Jerry Falwell to the idea of a government bailout for the news media, Policinski said “The shekels are the shackles.”

Wall echoed Policinski’s sentiment. Citing the results of a study of four Argentine newspapers over 10 years, Wall said the amount of information critical of government was inversely proportional to how much advertising the government placed in each paper. “Government subsidies of journalism are pretty radical when smaller steps are available,” she said.

Editor’s note: “The Future of Journalism: Is it time for a Bailout?” panel discussion is available for viewing on the C-SPAN Web site.

Phil Kurz is a contributing editor to TV Tech. He has written about TV and video technology for more than 30 years and served as editor of three leading industry magazines. He earned a Bachelor of Journalism and a Master’s Degree in Journalism from the University of Missouri-Columbia School of Journalism.