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Congressmen to Newspapers: Sorry, No Bailout

Committee hears dire warnings about the fate of papers and the potential impact their decline.

A Congressional committee Thursday heard dire warnings about the fate of newspapers and the potential impact their decline could have on public discourse — but also a clear suggestion that no government bailout is in the wind.

“This hearing is not about bailouts,” said U.S. Rep. Carolyn Maloney, D-N.Y., chairman of the House-Senate Joint Economic Committee. “That is not the purpose.”

She suggested the proper role for Congress is to instead examine tax incentive or ownership structures changes that could encourage newspapers “to thrive and create jobs.”

Her comments came as Tom Rosensteil, a former Los Angeles Times reporter who now is director of the Pew Research Center’s Project for Excellence in Journalism, Paul Starr, a Princeton University professor and sociology and public affairs, and John Sturm, president of the Newspaper Association of America, all delivered devastating assessments of the state of American newspaper business.

They all warned the committee that the old economic model is broken.

Dramatic drops in ad revenues, especially in classifieds, the switch of readers from print to the web and changes in the retail industry are combining to force drastic staff cutbacks, even as interest in the news itself is growing, they said.

“The press should not be looked at as just another industry,” said Starr. “The system for cross subsidizing news has collapsed.”

He warned the problem wasn’t national news, but state and local news coverage.

He alone called for a federal subsidy, suggesting it had to be carefully tailored and not discriminate between views, platforms or whether a newspaper if for profit or nonprofit, but noted Congress now funds public TV and public radio.

“The resources for journalism are disappearing far more rapidly than they are going to be created online,” he said. “There is going to be a need for a subsidy.”

Sturm said the newspaper industry flatly rejects a government bailout.

“We don’t believe direct government financial assistance is appropriate or wise,” he said, noting that newspapers cover the government.

He said newspaper publishers agree that web consolidators who take newspaper stories and then sell advertising against them should have to compensate the newspapers that created the stories, but are otherwise still working through compensation models for their own sites.