Articles

Why Not Bail Out Newspapers, Too?
A modest proposal for a lobbying campaign to save America's battered dailies
By: Jon Fine
Article appeared in the November 24, 2008 edition of BusinessWeek

TO: Senior executives at U.S. newspaper companies

FROM: Tongue & Cheek Lobbying Innovations LLC

The post-Election Day landscape brings great change for America and its governing philosophy, and this is why we must move quickly to craft a federal bailout for the newspaper industry.

I know from some previous discussions that not all of you agree. Unlike with banks, the collapse of American newspapers does not endanger the world's financial system. Unlike car companies, the newspaper industry does not lose billions of dollars each month. No matter. We can position this as a proactive move to save the only industry prominently mentioned in the Bill of Rights. (Our message team likes that last bit. You'll hear it a lot.) This industry employs over 52,000 journalists, thousands of other workers, and it faces unprecedented challenges. It takes more than a quadrennial sales spike from a closely watched election to save newspapers. Also, the bailout money is there, and—ask any struggling retailer or chain of hair salons soon to claim that they, too, are banks—it won't be there forever.

An Obama Administration will likely show little love for the workaday press, as a simple holler out to your reporters that covered his campaign will confirm. (If you still employ campaign reporters, that is.) But Barack Obama is a civic-minded man. He will appoint civic-minded staffers. They may not love reporters, but they grew up with newspapers. They won't want them to go away, especially since we will paint a news paradigm without papers as being dominated by Fox News and bloggers banging on spittle-flecked laptops.

Decades ago, legislation passed to allow joint operating agreements between competitive local papers, in order to preserve diverse editorial voices. Our mission today will be cast as preserving educational voices.

Two potential Newspaper Rescue Acts:

Debt Relief/Subsidization. The U.S. assumes all outstanding debt at all newspaper companies. At midyear that was $14 billion for the publicly traded players (excluding News Corp., which only owns two U.S. newspapers, but more on them later), $12.5 billion for the Tribune Co., plus more for other private players. The U.S. may take equity stakes in all companies, should the government deem this wise. This plan also includes a onetime sum to offset current revenue shortfalls. Newspapers took in $45 billion from advertising in '07; let's assume ad declines this year and next will total $15 billion. Cost: Around $45 billion.

Industry Digitization. Think of the "license fee" British households pay to the BBC. Government will subsidize Amazon's (AMZN) Kindle (or equivalent device) and mandate that each household purchase one for $50. (Households below the poverty line will get one free.) This plan also provides several billion dollars to develop new digital news products, retrofit or dispose of obsolete assets (like printing presses), and roughly maintain existing newsroom staffs. Government again has the option to secure passive equity stakes. We will stress this plan's "green" aspects. Cost: Approximately $55 billion.

To paraphrase incoming Chief of Staff Rahm Emanuel, never let a crisis go to waste—it allows you to do big things. Tongue & Cheek can guide the lobbying push essential for our mutual success, but we will require the participation of industry leaders who can navigate Washington with finesse and charm. In other words: Sam Zell, please stay home and tend to Tribune. (By the way, Tongue & Cheek has cultivated News Corp. (NWS) executives. Having Rupert Murdoch on board will defang those who howl about liberal media bias.)

Should our proposals fail, we can still shake loose much low-hanging fruit. For starters, a special—and substantial—tax credit for daily newspapers, given our "educational" rebranding. Consumers' subscriptions will win tax-deductible status as well. I'm less certain than some of you that lifting laws preventing newspapers from owning radio or TV stations in the same market will fatten bottom lines. But here, too, a persuasion campaign can reap benefits.

I recognize some may perceive all this as an admission of defeat. But let's feel a sense of opportunity, not shame. And always remember how your business differs from the other supplicants. No newspaper ever bankrupted a country or peddled a product as patently putrid as the Pontiac Aztek.

Copyright 2008 BusinessWeek.

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