WASHINGTON – Sen. Benjamin L. Cardin gave the faltering newspaper industry a boost Tuesday, introducing a bill to keep communication open in towns by allowing their papers to become nonprofits.
The Newspaper Revitalization Act proposed by the Maryland Democrat would allow 501(c)(3) status for newspapers as educational endeavors, making advertising and subscription revenue tax exempt.
“This is not going to be an option that a lot of papers will choose,” Cardin said in a Senate session, indicating that larger, for-profit news organizations will be unlikely to opt for nonprofit status.
The federal government won’t lose tax revenue, either, Cardin said. Profitable papers won’t choose the option and papers operating at a loss aren’t paying taxes, he said.
Choosing nonprofit status would prohibit newspapers from making political endorsements but they would be allowed to report on political issues and campaigns.
Yet even this government intrusion into the realm of First Amendment free speech doesn’t sit well for some.
“I think it really puts the role of censor or critic with the IRS,” said George Rahdert, legal counsel for the St. Petersburg Times. “So the IRS would be able to say, ‘This isn’t fair or critical reporting.'”
The Florida newspaper was donated to the Poynter Institute, a nonprofit school for journalists. The Times still pays taxes on its profits, so it has no governmental restrictions on what it can print.
Rahdert said the last thing a newspaper wants is to have the government involved in judging the content of a news report and whether it can be considered an endorsement for an issue or candidate.
Kenneth Rossignol, editor and publisher of Southern Maryland’s St. Mary’s Today, was the subject of governmental restriction of free speech and won a First Amendment case against the St. Mary’s County Sheriff’s Office in 2003.
Rossignol said political endorsements are an essential service to readers and this proposal is asking newspapers to stop acting like newspapers for a tax break. The financial reprieve isn’t worth it.
“People always have a thirst for news,” Rossignol said. “And someone will be there to quench it. We don’t need the government to step in.”
Roy Peter Clark, vice president of the Poynter Institute, is more ambivalent.
“It’s hard to imagine a viable newspaper fulfilling its journalistic mission without the ability to editorialize, to investigate deeply and to act as a political watchdog,” Clark said.
But Clark also acknowledged that losing 10 percent of the paper, in the area of political endorsements, is perhaps better than losing the entire paper to bankruptcy.
The loss of local news content and venues prompted Cardin to introduce the measure. He cited the bankruptcy filing by the Tribune Company, owners of The Baltimore Sun, and the closing of the Baltimore Examiner in February (although its sister paper, The Washington Examiner, continues to publish).
The bill might give groups interested in running a paper a chance to purchase a failing paper out of bankruptcy, Cardin said.
Papers will still be able to editorialize, said Cardin, pointing to IRS cases and public broadcasting models that have defined the boundaries of political advocacy.
“You can express opinions — opinions are fine,” Cardin said. “There are pretty clear lines as to what is specific advocacy for a candidate.”
Rick Edmonds, media business analyst of the Poynter Institute, said Cardin’s bill is probably a good thing. For Edmonds, endorsements are part of newspaper history, not a part of their future. The bill creates options for those interested in running a newspaper, he said, but it’s not a panacea.
As the industry looks for answers, some are ready to embrace new policies.
“Options are good,” said Brent Jones, Newspaper Guild vice-chairman at the Baltimore Sun. “Certainly, at this juncture, anything that would help newspapers to thrive we would support.”
The executive director of Maryland-Delaware-DC Press Association, Jack Murphy, said the nonprofit model has worked for the St. Petersburg Times, but it would require a lot of change where adopted.
“I don’t know if it would work for others or not,” Murphy said. “If I knew the answer to how newspapers could best save themselves, I’d make a lot of money.”