Curing local news for good

Discussions of how to save local news now need to balance two awkward realities. On the one hand, local news organizations need urgent help in order to keep their doors open and provide information to residents. No, it doesn’t make sense to abandon the newspaper chains right now, as Ben Smith has argued in The New York Times. But it is true that before the coronavirus outbreak, the local news system was already teetering and twisted. Government policy must help develop a better local system, not just prop up antiquated models.

Many people have offered intriguing suggestions for what government should do. Here are mine, informed not only by my work leading the Federal Communications Commission’s 2011 report on Information Needs of Communities, which warned that the digital revolution would undermine local news,  but more recently my job running Report for America, a national service program that places journalists into local newsrooms.

The goal here is to get serious resources to local news organizations, quickly, but in a way that grows the non-profit news sector, emphasizes local control of media, alters toxic financial structures, and supports the reporters who are making commitments to public service journalism.

 

Urgent and Temporary

The government should funnel public health ads through local media.  I’ve seen great commercials from the Centers for Disease Control about proper hand-washing running on HBO. Those ads also should be running in Flint Beat and the Redding Record Searchlight. Before COVID-19, the government spent about $1 billion in public service ads, mostly for the military and the census. It should spend at least another $1 billion on public health ads to help alter behavior — and half of the spend should go through local media.

That would be at least $500 million quickly infused into the local media economy.  Half of the half should go through nonprofits. (More detail on this idea here). Apparently, Canada is beginning to try this approach.

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COVID Emergency Response Funds should include efforts to improve the quality and quantity of local information.  States are setting up COVID-19 emergency response funds, partly with federal money. Almost all of this money should go to respirators, testing, masks, and anything else to protect both the public and health care workers. But a small percentage should go to making sure the residents get accurate and trustworthy information. One idea: news organizations should each assign a community engagement reporter to hang out in Facebook groups or NextDoor sites to answer questions and also quash misinformation. COVID response funds could support that.

 

Urgent and Permanent

Now let’s tackle the massive, structural issues that had led to the spread of news deserts and “ghost newspapers” – a landscape that is making it harder for many communities to get the information they need now.

 

Newspapers

Whether we like it or not, many Americans still get their news from local newspapers that are parts of chains. If they were to go away right now, the situation would become catastrophically worse.

However, we should recognize that the commercial newspaper system model has been warped into a system that mostly does not adequately serve communities. The issue is not that they’re for-profit, or even necessarily that they’re chains. The problem has been that they are massive and publicly traded and often owned by private equity firms. A forward-looking strategy should push toward more local control in the commercial newspaper sector, along with major growth of the non-profit sector.

Create a De-Consolidation Fund.  Private equity or venture groups often have roll-up funds to finance consolidation. We need a “deconsolidation fund” (or, more loftily, a Community-Based Media Fund). Such an organization could provide transition capital or legal support to ease a newspaper into non-profit status, represent the public interest in bankruptcy proceedings, and even sometimes buy local newspapers from private equity firms, as part of a plan to transition to local ownership. The key here is that the mission would be maximizing the health of local news ecosystems, not private shareholder return.

Make it easier for a commercial news organization to convert into a nonprofit.  The conversions of the Philadelphia Inquirer, Tampa Bay Times and Salt Lake Tribune to non-profit status offers great hope. Structured as non-profits, they can remain strong and large. But it’s not easy to pull off.  “In the best of times, this is a royal pain in the ass,” says Jim Friedlich, chief executive of the Lenfest Institute, which managed the shift for the Inquirer and now owns it. In the case of the Salt Lake Tribune, the IRS acted swiftly and wisely to allow the move. The agency should quickly issue clear guidelines on how to make such expedited decisions the norm and should allow use of their EZ Form for newspaper-to-nonprofit conversions.

Change bankruptcy and pension laws to help community-ground newspapers.  Better policies in these areas could profoundly help local news. Bankruptcy courts are allowed to put only minor emphasis on whether a proposed restructuring deal is good for the community (as opposed to the creditors). But new law could change those old judicial habits. Courts overseeing bankrupt newspapers should be allowed to give greater weight to whether the new owners intend to invest in local reporting. Same with pensions. Firms like McClatchy should have been allowed more time to rework their massive pension obligations if they committed to invest in local reporting.

Anti-trust and tax law should limit consolidation and “financialization” of local news.  Since the 1980s, the federal government has taken the view that the consolidation of newspapers was fine as long as it didn’t suppress competition in any given community. But in hindsight the creation of publicly traded mega-chains changed the incentive structure within media companies, requiring local papers to not just break even but clear hefty profits. Then, changes in the financial industry allowed the growth of private equity firms that bought many of the chains. Congress should alter antitrust laws to restrict those mergers that lead to less investment in local reporting. And it should get rid of the “carried interest” tax provision that has allowed private equity firms to flourish by paying lower rates than others.

  

Public radio and TV

The role of public radio and TV is often forgotten in discussions about how to save local news. As of 2011, about 70 percent of local public TV stations aired zero minutes of local news. But many local public radio stations are now pushing hard to cover their communities. In many cases, radio stations have the business model (member support) and reach to deliver real impact. The budget for the Corporation for Public Broadcasting should be doubled. But if that new wine is put into the old wine skins, it will sour. We need structural reform.

Allow the Corporation for Public Media to fund non-profit websites.  Right now there are two types of non-profit media. 1) Radio/TV and 2) online news organizations. The government funds the former but not the latter. That makes no sense. The Corporation for Public Broadcasting should be renamed the Corporation for Public Media and put at least $100 million into non-profit websites, using the same nonprofit, non-partisan approach that it has taken in the past.

Stop putting the lion’s share of “public broadcasting” money into TV.  About 67 percent of spending by the Corporation for Public Broadcasting has been earmarked for public TV.  But radio stations are the ones now trying to improve local news. We should remove the cap and funnel more money to public radio – if it’s used for local reporting that reaches the broad community, not just the public radio donor class.

The “public interest obligation” for local commercial TV stations should be enforced – and emphasize local reporting.  The Federal Communications Commission ostensibly requires local broadcast stations to meet “public interest obligations.” These are a joke. Stations that do no local reporting at all are passing muster. This rule should either be enforced with an emphasis on stations providing real local information provision or stations should be able to buy out of the obligation by funding non-profit news in the area.

 

Direct Aid to Journalists

All of the above ideas help news organizations. We also need a strategy to directly help journalists.

Local journalism should be treated as a public service profession and journalists should be eligible for federal loan forgiveness.  The main public service loan forgiveness program enables graduates to wipe out their debt if they’ve made 10 years of payments and work for a non-profit. It’s a horribly structured program that few people can access. In addition to removing the red tape, the program should be changed to allow a debt wipe out if you work for two years in a public service profession, including as a reporter at a local nonprofit news organization. The government provides special loan forgiveness programs for lawyers, nurses, teachers, and veterinarians.  Let’s have one for journalists in local, nonpartisan, nonprofit news.

AmeriCorps should include local journalism programs. I worked at AmeriCorps. I wrote a book about AmeriCorps. I love AmeriCorps. And yet when I co-founded a national service program of my own – Report for America – I decided not to ask that Report for America become an AmeriCorps program.  The reason was that they only funded programs that met the government’s “grantmaking priorities”  (“economic opportunity, education, veterans and military families, disaster services, healthy futures, environmental stewardship and capacity building.”) Addressing news deserts should count as a national priority. This more flexible approach would enable Report for America to field hundreds if not thousands more reporters and reduce the college debt of the corps members. Of course, AmeriCorps leaders would need to develop a certain tolerance for corps members writing articles critical of local officials or governments.

 

Non-profit local media

Hundreds of promising non-profit local news organizations have sprouted up in recent years. But they’re often fragile and small. Philanthropy needs to substantially increase its support, and many of the government spending programs outlined here – advertising, Corporation for Public Media funds, the FCC changes – should fund non-profits. But there’s one other change that would help.

Change the IRS rules so that nonprofit local journalism organizations more easily qualify for tax-exempt status.  In the past, the IRS has sometimes advised non-profit news organizations to remove the word “journalism” from their application, and instead emphasize “education.” It’s time to end that charade. Local non-profit journalism is a charitable purpose if the organization is set up through a non-profit structure. For years, the IRS has assessed whether a journalism entity could be a non profit by scrutinizing whether its operational practices were different from for profit entities. Nonprofits got penalized for having subscriptions or advertisers, for instance – the very earned-revenue approaches that would make them more likely to succeed. It’s a ridiculous approach. Lately, the agency has been doing better but the policy has never been clarified and could easily revert, with catastrophic results. The IRS should even consider allowing subscriptions to non-profit news organizations to count as a tax deductible charitable contribution.

 

Online

Ban cookie-based targeted advertising.  The internet has harmed local media in part because cookies allow for ads to follow consumers around the internet. Many reformers are now advocating a dramatic step: improve privacy by banning this type of targeted advertising. This step could also help local news. To reach local consumers, local businesses would need to focus on local news sites, instead of just Google or Facebook.

Create thousands of mini-SPANs.  The cable industry created C-SPAN. It’s time for state and local governments to make all public meetings available online. Many do it already, but many do not. Google and/or Facebook could make this a reality.

 

Direct Government Cash to Media Organizations

I’ve left this for last because most discussions of government policy usually start with it. And it’s the most controversial and problematic approach. But it’s time to tackle this question head on: should the government directly fund local journalism?

In my view, the Trump presidency has demonstrated the economic need for government help – and the perils. Just imagine if we had a United States version of the BBC in place when Donald Trump came in. Do we really think he would have restrained himself from turning a USBC into a propaganda machine?  Do we want the federal government exerting that kind of influence over the content of local media too?

Having said that, the scale of the collapse of local news – and the destructive consequences for democracy – are so severe that the philanthropic sector alone probably is not sufficient. So we should ramp up government support, with a vigilant eye toward structures that guarantee independence and strict non-partisanship.

We should create more non-partisan, local journalism funds with firewall protections against ideological influence.  Free Press has made some creative proposals on how to finance a big effort to help media. A tax on some internet advertising, for instance, could generate $2 billion a year that could be spent on the local media. Journalism schools in each state should take the lead in designing independent structures that could distribute money locally.

Of course, I’m fond of the Report for America model. We have a double firewall because we select the reporters and gather the national funding but the local newsroom employs the reporter and decides on the stories. It also builds in a sustainability goal, as we help the local newsrooms to draw new dollars off the sidelines. But, of course, ours is only one model. There are encouraging experiments in New Jersey, Colorado and Ohio. What we cannot do is view this as a way to fund “the resistance” or the Tea Party. Conversely, we’ll all have to develop a certain tolerance that “my tax dollars” will go to journalism we may not like.

 

Most of these are reforms that could have happened if we’d had a functional Congress. But, ironically, COVID-19 – and the need for fast-moving bailouts – has briefly made it possible to make major legislative reforms.  Let’s use this moment to create a local media system that will help us survive the pandemic and better serve communities in the decades to follow.

Correction: a previous version of this story misstated funding and coverage figures for public television and radio. The statistics have been amended. 

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Steve Waldman is President and co-founder of Report for America, an initiative of The GroundTruth Project. Previously, he was the lead author of the Federal Communications Commission’s report Information Needs of Communities, and chair of the Council on Foundations’ Task Force on Nonprofit Media.

TOP IMAGE: A newspaper in a live preserver. | Photo: Adobe Stock