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    No Newspaper Bailouts without Civic Representation

    by Guy Berger
    July 23, 2009

    Government money to bail out newspapers is a rather “un-American” suggestion. It has been put forward by various commentators who feel that emergency circumstances call for drastic measures. After all, it’s not just jobs at stake, but the survival of a key pillar of democracy. If newspapers go under, the argument goes, so too does the bulk of professional journalism.

    The same proposal has been roundly condemned by people whose knee-jerk reaction is that government money means government control. For this camp, government control engenders the oxymoron of “government journalism.” Ergo, a bailout is not a solution for saving an industry that’s central to democracy because its independence allows it to question government.

    Fear of government money for media is not universal. Many democracies, notably in the Francophone world, have long-standing traditions of public funds for the press, without compromising editorial independence. Sweden subsidizes second papers in small towns so as to preserve a degree of pluralism. Scores of democracies have fine public broadcasters that receive parts of their budget by way of the state. Even the US hasn’t been entirely hostile to publicly funded journalism — as shown by entities like PBS and NPR.

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    A further point is that an American tradition of keeping state and media finances separate ought not to be seen as ossified and frozen in time. Cultural change happens, period.

    So, moving beyond emotional reaction and self-imposed limitations on what’s possible, there’s a need to look more closely at what it means to have the government giving funds to the press. (For a look at various proposals to change U.S. laws to help newspaper companies, check out this story by Jeffrey Neuburger at MediaShift.)

    Political Influence

    In the U.S., the concern seems to be mainly about the blurring of boundaries between political power and the private economics of providing public information. The worry is about opening a channel for political power to influence a realm that has historically treasured its independence of the state.

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    Some might say, with cause, that much of this independence is more myth than reality. In their analysis, the press has generally been uncritically aligned with the two-party political duopoly and with the spin of corporations whose lobby strength anyway determines governmental policy and practice.

    Yet even if newspapers to an extent have been in cahoots with established power, that’s not been a formally imposed requirement of their institutional make-up. So, it’s not a small matter to worry whether government money would turn out to be a government leash on relatively independent watchdogs.

    This concern is why a number of commentators have proposed forms of government aid that stop short of direct cash injections. These range from tax breaks and postal subsidies to guarantees of state advertising.

    Governments can play tangential (and impartial) roles that can benefit the newspaper industry at large. But while everything helps, there is still the key question of funding. So, how dangerous is it really, and can systems be designed to avoid political control coming with cash?

    South African Case Study

    The case of South Africa’s public broadcaster is salutary in this regard. When the country won democracy in 1994, it needed to transform a noxious governmental mouthpiece into an impartial and independent public broadcaster.

    To that end, the power to appoint members to the board of the South African Broadcasting Corporation (SABC) was put into the hands of parliament and a charter setting out political independence was enshrined in legislation. Although the institution was later corporatized, with the state as sole shareholder as represented by the Minister of Communications, its board still reported mainly to Parliament and to a constitutionally independent regulator.

    Some small sums of taxpayers’ funds went into SABC over the years, but the bulk of its budget was met through advertising. In consequence, rather than meeting the lofty criteria of public service broadcasting, much of its programming output was indistinguishable from commercial broadcasting — but the institution at least was not a government mouthpiece.

    Two years ago, this model began to unravel when the ruling African National Congress (ANC) asserted political control over what it saw as a potential government apparatus. As the dominant party, it was able to railroad its choice of board members through parliament. The Minister of Communications also assumed the power of final say (as shareholder representative) over the top executive appointments at SABC.

    But then the ANC fractured. And so too did the SABC, with different elements within the agency supporting different factions. In short, a previously politically independent institution fell prey to utter politicization. In the resulting infighting, what had been a viable commercial enterprise was mismanaged into near bankruptcy. The result today is pressure on the South African government to bail out the SABC to the tune of almost $300 million.

    The moral of this story is multi-fold:

    > Despite best intentions, it is pretty hard to design a politically fire-proof system.

    > Furthermore, it was the fact of state ownership — not governmental funding as such — that allowed for political interference.

    > The likelihood of a bailout could further reduce autonomy at the broadcaster, because any institution receiving taxpayer money needs to account closely to the representatives of the payers.

    That’s not to say that the government will use this new relationship for political purposes, but it’s also not to say that it won’t. The bigger point is that there is no structural counter-balance which could check and limit its potential to do so.

    Bringing in Accountability

    What could make a difference in South Africa would be to institutionalize an accountability system that includes public constituencies over and above the political ones of the minister and parliament.

    This could be by restructuring the board to follow the European practice of constituencies — like labor, churches, universities, cultural groupings, etc. — directly electing representatives separately from the politicians. It could also be through setting up standing fora for citizens in general.

    Overall, the potential of SABC to survive as an independent public broadcaster will be a function of the civic culture of South Africa. Fortunately, there are numerous and vocal civil voices who increasingly form an alternative pole of influence to political power.

    How is all this significant to the matter of public funds, administered by government, going to newspapers in the U.S.?

    It goes without saying that any such injections ought not to reward managers who failed to reinvent newspapering nor to benefit external shareholders who condoned bad business decisions like over-leveraging and huge debt ratios.

    Neither should there be support for particular papers at the expense of damaging competitors who do not qualify for aid. It is also self-evident that any state funding should be conditional on attempts to create a new business models, rather than shoring up one that no longer works.

    But there’s also the question of how potential recipients would account for their use of public funds, which returns us to the thorny issue of political pipers calling the tune.

    If South Africa’s experience is anything to go by, then the answer lies in civil society coming to the fore. The U.S. has a fine tradition of citizen participation, and the consequential slogan should be: “No bailouts without direct representation in governance.”

    If the price of a newspaper getting taxpayer money is opening up newspaper governance to some form of external accountability, then let this be to more than just government.

    Editorial independence in this model may be more constrained as compared to previously. But at the very least there would still be newspapers around to practice journalism — and a journalism that is not tainted by exclusive governmental power.

    By becoming accountable to broader society, some newspapers might also benefit in ways other than just keeping politicians off their backs. They could rediscover public and civic journalism as values in their own right — as well as recognize the community as an important component of inventing themselves anew. The result could be the enrichment of newspaper journalism as a sustainable pillar of democracy.

    Tagged: bailout business models journalism newspaper industry sabc south africa
    • hugh

      In advance of bailouts, National and Provincial governments subsidise print media with extensive advertising. Amusing when these are job appointments when an ANC cadre is most likely to be accepted or deployed.

    • Over at http://www.SaveTheNews.org we are promoting a range of policy ideas that fall along the spectrum from what you call “tangential” to more direct funding and reimagining of our public media system. We have outlined five overarching policy responses that we think could help reshape American journalism to reorrient it around a public service model, and away from a commercial consolidated model.

      However, your point about public accountability is key. While we lay out a set of principles to guide public policy around the future of journalism including protecting the First Amendment, producing quality coverage, providing adversarial perspectives, promoting public accountability, and prioritizing innovation – we need to think more about concrete ways to build systems of public accountability.

      In the age of “the people formerly known as the audience,” as the public becomes participants, collaborators and creators of news we have a unique moment to imagine new forms of community engagement beyond traditonal advisory boards.

      Looking forard to continuing the conversation.

    • Karen Fullenwider

      First, the absence the author calls government funds for newspapers has not produced a press that questions, irritates or even does the basic job of serving as a government watchdog. There are exceptions of course, but many newspapers are poorly managed and for years have championed mediocrity in its newsrooms.
      Further, government subsidies do exist, had have for years in the forms of sanctioned joint-operating agreements, states requiring publishing of public notices, postal rate requirements regarding what constitutes a newspaper, and even a shrug when it comes to child labor laws (remember when carriers were kids on bikes?).
      The answer might be in the creation of a New Deal-type program that encourages both laid-off and budding journalists, incentives for creating local news sites covering the economy, education, energy, agriculture, etc. Writers and photography projects during the Great Depression put writers, editors and shooters to work and as a result, left a legacy of great works of both fiction and non-fiction and an image library that photographers admite and emulate today.

    • diane

      Government funds should not be used to subsidize the press in any fashion. Even though ideally, government is representative of the people, the fact is, that the healthy competition promoted by political parties can result in bias in a government subsidized press. Such then, in counter-intuitive to a truly democratic society. It is inevitable that screening, advising, prompting, and censoring will happen no matter how little or well intentioned.

    • Don

      The goal in a democracy is to keep press freedom alive. It is a an important control on government and corporate access. Inestigative reporting is costly and sometimes needs some good lawyers to back it up. Therefore the survival of newspapers is important for they have access to information that bloggers cannot hope for and in depth reporting that is not as well done in TV journalism.
      Subsidies to the press should not be politically controlled, but should be an independent source of revenue, like the BBC license for TV set ownership. Since there has been loss of advertising revenue to the internet, perhaps there might be a fund set up based on a small percentage of internet ad revenue to go to the newspapers. But I will excuse myself from suggesting how this might be allocated. Maybe we should just hope that someone like Bill Gates would take an interest and set up a foundation to handle the matter.

    • Dean Calbreath

      I believe it would be wrong for the government to directly subsidize newspapers, or for newspapers to accept the money if it were offered to them. It would damage our credibility.

      On the other hand, I don’t see anything wrong with indirect subsidies. In France, for instance, one of the biggest subsidies is a program that buys college students or recent graduates a subscription to the newspaper of their choice – which can be seen as an extension of the education program (encouraging kids to read more) besides helping the newspapers extend their circulation and make inroads into a lucrative advertising base. I don’t see anything wrong with that type of program, especially since the students – and not the government – decide which newspapers they will subscribe to (probably within certain limits. I doubt the government would pay for a subscription to Penthouse. But it is France, so you never know.)

    • USC Annenberg Center on Communication Leadership & Policy – http://annenberg.usc.edu/AboutUs/News/090701CCLP.aspx – is now researching “What is government’s role in the digital revolution?” which deals with some issues in this column.

      In a preview at the AEJMC conference in Boston 2009, David Westphal circulated a document that reads in part:

      “The idea that government should have no role in the news business would be a first for the United States. Government support for the news business, direct and indirect, was present at the country’s founding; it continues today.”

      BUT, he continues, “In significant ways, government’s subsidies have been falling, and could decline even more in years to come.”

      His study examines policy options like:
      – antitrust regulations and copyright
      – publication requirements for public notices
      – tax policies
      – postal rates and regulations
      – subsidies to expand broadband
      – public broadcasting support, including international broadcasting

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