October 14, 2021

As the $3.5 trillion federal spending bill slowly makes its way through the House and Senate budget reconciliation process, tucked inside is as much as $1 billion to help local journalism.

Specifically, lawmakers have picked up on one of three provisions of the proposed Local Journalism Sustainability Act — a payroll tax credit for journalists employed by local newspapers, digital-only sites or broadcast outlets. The government would subsidize half of salaries up to $50,000 the first year and 30% for four subsequent years.

Of course, what goes into the draft of the mammoth spending bill can also come out as priorities compete for inclusion — and the $3.5 trillion and the passage of the bill both remain in question.

Still, the potential impact on local journalism could be enormous. Imagine, for a very rough estimate, 50,000 qualifying journalists times an average tax credit of $20,000. That would be $1 billion.

Even assuming a smaller total in the hundreds of millions, that level of federal help would be a life-saving infusion of cash for some financially pressed newspapers and struggling digital startups. And an enhancement for local TV and NPR affiliates and commercial news radio.

Details — and by no means small ones — remain to be worked out in defining what media organizations and journalists are eligible.

Still, “right now, things are looking good,” said Dean Ridings, CEO of America’s Newspapers, which has been pushing the measure for more than a year.

Bipartisan support in the House was locked up months ago, he said. The Senate is more problematic with no formal backing by Republicans, Ridings continued. However, Sen. Ron Wyden (D-Ore.), the chairman of the Senate Finance Committee, has signed on as a co-sponsor, as did Sen. Joe Manchin (D-WV) and Sen. Kyrsten Sinema (D-Ariz.) earlier this month.

Sen. Maria Cantwell (D-Wash.) is quarterbacking the effort in the Senate and the budget reconciliation process.

A tough two years make a powerful case that now is the time to break with the long tradition that journalism should be financially independent of the government. Newspaper advertising has been in steep decline for years. Then came the COVID-19 recession of 2020 and some fresh hits to the remaining ad base as the delta strain emerged in the U.S. this summer.

The financial pressure is not as intense on other parts of the local news ecosystem, but all could get a huge boost if their news payroll gets a subsidy. The act provides a strong incentive to keep news staff intact — and even to expand it, since new hires would also qualify for the payroll tax credit.

On the other hand, it would take some digesting — and probably raise some First Amendment hackles — for journalists to have Uncle Sam picking up half the tab for their salaries as soon as next year.

Steven Waldman, co-founder and president of Report for America and founder of the Rebuild Local News Coalition, has been part of a leadership group advocating for the assistance. He emailed me:

“The payroll tax credit … would be the most significant help for local news in decades if not centuries — and it is targeted at the exact right place: encouraging the hiring or retention of local reporters”

He added, though, that “it’s crucially important that the Senate Finance Committee is very careful in the definitions for ‘local news organization’ and ‘journalist’ to eliminate or severely minimize the prospects for political manipulation. It’s very doable; we just need to see the language.”

The standards should be content-neutral and the credit automatically available to local news organizations, Waldman said, so that the government stays away from picking worthy outlets.

Going beyond those general goals to specifics gets tricky. Here are three issues.

Qualifying local news outlets

Local papers owned by chains like Gannett would qualify for assistance under the current definition of “local” in the Local Journalism Sustainability Act, part of the $3.5 trillion federal spending bill slowly making its way through the House and Senate budget reconciliation process. (AP Photo/Jacquelyn Martin)

Ridings, Waldman and other commentators are concerned about “pink slime” organizations. These fake news sites have already been springing up as right-wing, conspiracy proponents create dummy titles that sound as if they are local to build traffic and spread their theories.

But how to differentiate that from a legitimate conservative local site. Or, for that matter, what about one that does news along with a heavy portion of progressive advocacy?

“Local” has been defined to take in statewide organizations or those that cover a contiguous geographic area in several states. National outlets like The New York Times or CNN are out. Local papers owned by chains like Gannett or Alden Global Capital’s MediaNews Group are in (an inclusion some will find objectionable). The great majority of local broadcast stations are also chain-owned.

To qualify, an outlet must employ at least one locally based journalist. That leaves the remaining question of defining what size operation qualifies — big enough to include the Los Angeles Times, small enough to accommodate a legitimate local newsletter with one or two full-timers.

As negotiations and redrafting continue, it is conceivable that chain-owned newspapers or local broadcast would be dropped, though that could shatter the united front the industry is presenting.

Qualifying journalists

Who qualifies as a journalist is not as thorny as the question of qualifying organizations, but potentially problematic, too.

Reporters, editors and visual journalists qualify for sure. What about production and design teams for news organizations’ sites and newsletters? In broadcast, recording crews out in the field would make the cut. Which of the people manning cameras or producing shows back in the studio would, too?

Since the subsidy is in the form of an employment tax credit, Waldman suggested, administration and enforcement against bogus claims would likely fall to the Internal Revenue Service. News organizations would file, presumably honestly, with guidelines set forth in the legislation.

On the qualifying organizations question and to a lesser extent the journalists one, the IRS will likely need help.

“We want to minimize the opportunities for subjective judgments by the IRS (about which news organizations are eligible),” Waldman said. “We want the criteria to be as clear and concrete as possible. … If you end up with vague language, then IRS officials have to make subjective judgments — which opens the door to political mischief — and also leaves newsrooms not knowing whether they’re eligible.”

Costs

The Local Journalism Sustainability Act isn’t going to bust the Treasury, but that doesn’t mean costs are inconsequential. Put bluntly, supporters in and out of Congress could hit a wall if the proposed aid is deemed just too expensive.

There will be a formal estimate of cost by the Congressional Budget Office called “scoring.” I am told that the process is not complete, but has started.

In recent years, disruptions to local journalism have made it harder and harder to estimate the numbers employed in various sectors. Some, like newspapers, are shrinking. Others, like digital startups and public radio, are growing. And some, like local broadcast, are holding steady.

The Bureau of Labor Statistics does provide estimates, but they are rough and may lump news with other categories.

Carrying out the tax credit plan would go a long way to generating an answer on how many local journalists there are, but lawmakers would rather know going in than find out later.

Other considerations

Seattle Times owner and publisher Frank Blethen is known for his support of government aid to local newspapers. (AP Photo/Ted S. Warren)

For now, two other sections in earlier versions of the act — a credit for small businesses to place ads with local news organizations and a subscription tax credit for up to $250 for individuals — have been dropped. They could be added back in or taken up later.

On a parallel track, legislation is advancing to give newspapers an antitrust waiver to negotiate payments from platform companies like Google and Facebook for use of their content. That has been a top advocacy priority of the News Media Alliance for more than four years and has gained bipartisan support now in the House and Senate. However, it is unrelated to the spending bills.

Should Google and Facebook agree to a compensation plan, as Google has in Australia and a number of European countries, the industry would receive a double infusion of funds earmarked to support news.

For the Local Journalism Sustainability Act, it has been a long and winding road to get this far. As I reported a year ago, the idea originated with Francis Wick, whose Wick Communications owns a chain of small dailies and weeklies in 11 Western states.

He got the support of his representative, Democrat Ann Kirkpatrick, whose remote district in the Southeastern corner of Arizona has a small but vital roster of local newspapers.

Republican Rep. Dan Newhouse of Washington became a co-sponsor, and dozens in the House have signed on since. The bill does not have a Senate Republican sponsor, but supporters say there is no opposition either.

I spoke with Alan Fisco, president of The Seattle Times, and a member of the leadership group pushing the bill. He offered several insights into the process.

Seattle Times owner and publisher Frank Blethen is known for his all-in support of favorite causes, and government aid to local newspapers is one of them. But it took six to seven years to get the whole Washington delegation on board and expand Congressional interest, Fisco said.

People think that an advocacy group hands Congressional sponsors a draft, and then the only issue is getting it approved, Fisco added. “We wrote the original language,” he said, “and we are still here to answer questions. … But we are now at the point where they take over.”

(I have asked Sen. Cantwell’s office for a status report on progress and remaining issues and will add that if I get it.)

As I started reporting this story, I spoke with Danielle Coffey, executive vice president and general counsel of the News Media Alliance. While her top lobbying interest is the antitrust waiver to let news outlets negotiate with platform companies, the alliance has joined in the push for the jobs tax credit.

“Little windows of opportunity open, and that is happening right now,” she told me in late September, “so we need to move fast.”

The window has probably closed some since. The next few weeks should tell whether the local news industry gets some government help or is stuck with a new round of advocacy as economic pressures continue.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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Comments

  • It’s ridiculous that you think Government Funneled Taxpayer subsidies to journalists are a good thing. It directly compromises your objectivity and continues to feed the narrative that you are “in cahoots’ with the Democratic Party and eliminates any pretense of fairness in reporting on the part of Journalists.

  • It is shocking, to me, a journalist in the business of news for more than 30 years how this “reporter” would gush so about government gaining a check over newsrooms via funding them. How could any local reporter accurately report on federal policy when half his or her salary was being paid by the federal government without it being a glaring conflict of interest? This terrible idea would turn our local newsrooms into Pravda… which, sadly, it seems is exactly what Poynter wants these days.

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