Cities Funding Newspapers? What Could Possibly Go Wrong!


I've got a GWEAT idea! |||

The Columbia Journalism Review relays the news that two newspapers—The Fitchburg Star, near Madison, Wisconsin; and the Winston-Salem Chronicle—have recently taken money from their respective city halls in order to stay in print.

In Fitchburg, the city is paying $30,000 to revive and mail out free copies of a print edition that had been online-only since 2009. In Winston-Salem, the city council approved a $100,000 low-interest loan to an existing weekly that covers the black community, after rejecting the newspaper's application for a straight-up grant.

As the CJR's Corey Hutchins notes,

with many local media outlets around the country still struggling in the wake of major disruptions to their business models, it's worth asking: Is this going to be a thing now?

Your tax dollars at work. |||

I sure as hell hope not. Governments are not banks; they should not be in the business of lending money to businesses. Why? Because the loan decisions are definitionally politicized, lead to cronyism and favoritism, and have a miserable track record of both reimbursement and delivering the perennially over-hyped promises of jobs and social goods. If taxpayers wanted to capitalize a community bank, they could freely make that decision on their own, with the expectation that the investment would have a decent shot of paying personal dividends. Money extracted from their wallets by threat of force and then loaned out to politically favored businesses will never, ever, ever be repaid to the people from which it came. That's morally wrong.

Bad as government lending is, government grant-writing to businesses is even worse. Who is your biggest customer, when your very existence depends on the cash and good graces of City Hall? It certainly isn't the consumer of your product. Businesses for whom ostensible customers are second-class citizens will by definition not be run efficiently; markets in which government so bastardizes incentives will by definition be distorted. And to state the obvious, the journalistic ethics of such deals smell worse than a dog park after the snow melts.

Watch the utterly unconvincing protests to the contrary in Fitchburg:

Not David Enstad. |||

David Enstad, general manager of Unified Newspaper Group, said such worries are misplaced.

"It was understood from the get-go that we would require complete editorial independence,"he said. […]

In a draft memo of understanding set to be discussed Feb. 25 by the City Council, the two parties would agree to meet quarterly and "review content, costs and supporting sales." Enstad said he sought the language simply as a way to make sure both parties remain on the same page.


CJR provides some depressing context about government-journalism conmingling:

Not long after the Star ceased print publication, the USC Annenberg School for Communication & Journalism noted in a report that public support for print media has a long history, including postal subsidies, paid public notices, and federal and state tax breaks related to newspapers and magazines that totaled nearly $1 billion in 2008. The Newspaper Preservation Act of 1970 also made joint operating agreements possible by exempting papers from antitrust rules. In 2009, the state of Washington even passed a new $1.3 million tax break to help its struggling newspapers.

The report's authors urged policymakers to consider new ideas in that tradition, in response to the declining value of traditional subsidies and the crisis in the newspaper industry. 

I hold a different view, which can be read in such archival material as "Free at Last" (2005), and four pieces from 2009: "Bailing Out One of the 20th Century's Best Business Models," "A European Model for U.S. Newspapers?," "Your Money or Your Democracy," and "Ezra Klein: Better to Subsidize Big Media Than Let Them Experiment."