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The Great Works at the Acton Institute Open House

Tuesday, Nov. 30 - 4pm to 8pm

Religion & Liberty: Volume 30, Number 2

The media do not deserve a government bailout

Traditional journalism has been imploding throughout the internet age. The coronavirus catastrophe threatens to deliver the financial coup de grace. Businesses that are closed don’t buy ads. Shuttered newsstands and stores kill street sales. Reduced income means fewer discretionary purchases. Papers and magazines that have been desperately searching for a sustainable economic model might use the global pandemic as an opportunity to downsize and reorganize. Instead, some American journalists are looking to the government for help. 

Publishers want guaranteed ad buys. The NewsGuild, a journalists’ union, called for a range of public subsidies tailored to its members’ financial and ideological interests. Such proposals would destroy media independence, undermine media accountability, and reinforce ingrained partisan bias, thus undermining democracy itself.

Last year, Canadian Prime Minister Justin Trudeau’s Liberal government provided $675 million Canadian (about $600 million U.S.) in subsidies to private publications. (See Bandow’s “A government bailout of newspapers threatens free speech and morality” in the Winter 2019 issue of Religion & Liberty—Ed.) Criticism of the measure was especially strong from the opposition Conservative Party, a frequent target of media ire.

No similar idea was broached in the U.S., though a decade ago there were proposals to make it easier for media firms to become nonprofits. The principle of journalistic independence, backed by the First Amendment, remained strong. National Public Radio and the Public Broadcasting Service were not seen as threats. They are editorially independent and deliver quality fare but, like the rest of the mainstream media, they are not objective. That should raise widespread concern, since those with disfavored views are essentially paying to be criticized.

Unfortunately, COVID-19’s brutal impact has created a sense of desperation among journalists. Some fear that coronavirus just might be the media “extinction-level event” that Matt DeRienzo, then-executive director of LION Publishers, warned of in 2017.

This has the Fourth Estate looking to politicians for salvation. “There is no market option here,” Victor Pickard of the University of Pennsylvania argued. He advocated going “bigger and bolder for the long-term,” which naturally meant “the government will have to intervene.” He proposed creating a special fund to pay for local news coverage in areas where nothing he deems acceptable exists. HuffPost’s Travis Waldron termed this industry slush fund “a public option for news.” Pickard insisted that “our democracy depends on it.” He said, “It’s either that, or we’re just going to write off entire communities across the states as having absolutely no access to any news or information whatsoever.” 

Yet that clearly is not the case. Waldron pointed out that “nonprofit journalism has been a particular success story,” citing the Texas Tribune as an example. He added, “a growing number of hyperlocal and regional outlets have popped up, too.” Pickard still might neither like the alternative sources nor believe them to be adequate, but the people themselves decided against the kind of media sources that he favors. 

However, journalists appear more than willing to belly up to the federal trough. The News Media Alliance, National Association of Broadcasters, National Newspaper Association, and America’s Newspapers issued a collective call for public assistance. Their first request was that Washington ensure the eligibility of local organizations under the Paycheck Protection Program. While it is reasonable that the media do not want to be treated differently, it also makes journalism dependent on federal funding.

Indeed, dubious political conditions could be imposed here. A group of Democratic senators called for a new stimulus bill to be “tailored to benefit aid recipients who make a long-term commitment to high quality local news.” What does that mean? How would it be measured? Who would decide whether the conditions are met?

Far more problematic, however, is the group’s desire that Uncle Sam turn advertising into a media dole. The newsies selflessly observed that “Congress can ensure that the people have the information they need most by directing current U.S. government advertising campaigns (such as those promoting the Census) to local news and media outlets, and providing the Department of Health and Human Services, the Small Business Administration and other relevant agencies with an additional $5 to $10 billion for direct funding for local media advertising.” Such an indirect subsidy would have the advantage of not really looking like a subsidy.

However, these groups are pikers compared to the NewsGuild, a media union that is part of the Communications Workers of America. In a recent press release, NG lamented the fact that “declining advertising revenue, leveraged corporate consolidations, and asset-stripping by vulture capitalists have put this industry under financial duress.” Now the viral crisis “is triggering business slowdowns and further eroding advertising revenues.” So, the union’s executive council called “for federal, state, provincial, and local governments to provide public funds to sustain news operations.” Although the demand is couched in terms of responding to the coronavirus, the desire is for a permanent financial commitment: “Public stimulus funds are quite possibly the only way to ensure long-term viability for these vital news-gathering operations.” 

The idea of journalists finding and keeping an audience would no longer apply if the NewsGuild got its way. Uncle Sam would guarantee publications’ survival and workers’ jobs: 

The federal government should establish a publicly-financed fund to support newsrooms and media workers to prevent layoffs. 

Such a fund would also serve to promote journalism in news deserts in all 50 states and territories to supplement or fund additional positions in private-sector news organization, but not be used to replace existing employees. This fund would also support independent reporting in partnership with other news organizations.

That’s not all. The news union also insisted on: creating “an indefinite program of no-interest loans for the creation of news start-ups, including nonprofits and employee-owned co-ops” from the Small Business Administration, “making tax-deductible the cost of subscriptions for any news product,” creating undefined “incentives for local ownership,” and “establishing a nationwide advertising purchasing program to promote the public health, participation in the federal census and other topics of national interest.” Is that all?

The union justifies its proposal by claiming that “reliable local, regional and national journalism is an essential service.” But that is not what the NewsGuild wants Washington to fund. Instead, the plan would offer a massive subsidy for everyone in the mainstream media, reinforcing its ingrained biases. And the plan would underwrite start-ups seemingly irrespective of merit. Unlike the rest of the economy, journalism enterprises would no longer face a market test. As in Canada, the media enterprise, which generally (though not entirely) leans left, would force its targets to pay their tormentors.

Such a system could not help but encourage the use of press coverage as a political pay-off to the legislators most instrumental in ensuring the media’s continued funding. After all, it would not behoove any publication dining at the federal trough to criticize those who assure it remains full. Even modest shifts in coverage could undermine the fairness of elections.

Nor would the NewsGuild’s proposal do anything to promote quality. Rather, it assumes every existing publication is an “essential service” providing “accurate, reliable” information. Of course, every publication believes that about itself. And at least a few people dispute that about every publication. The bailout is incumbent protection for the media.

NG is determined to take care of number one, namely itself and its members. The union would be empowered help choose one-quarter of company board members. Any aid recipient would be “prohibited for five years from engaging in mergers and acquisition activity or leveraged buyouts that result in job losses or pay reductions.” For a similar period of time, firms could not use “public money for executive bonuses, dividends or stock buybacks,” stock options, or golden parachutes. Executive pay could not be more than double the editor-in-chief’s earnings.

Moreover, there would be “no layoffs, no furloughs, no buyouts or pay cuts” since it is “essential that we invest in and retain journalists and other media workers.” Most important, any firm collecting a federal check “must not interfere” with (read: oppose) a union organizing campaign. The requirements here would be quite detailed: no hiring of consultants, no mandatory meetings on unionization, mandatory acceptance of signed cards rather than employee elections, compulsory arbitration over first contracts, and no abrogation of bargaining agreements for a period of time. 

Finally, the NewsGuild’s proposal ostentatiously flags its political nature. Recipients would have to “remain independent from partisan influence.” That sounds fair, but who gets to decide if a news source is partisan?

Moreover, there is the usual “diversity” boilerplate, with the demand that “any employer taking public funds should be required to implement plans intended to advance diversity across their staff and report their annual diversity statistics.” It doesn’t take a genius to realize that those collected statistics likely would turn the exercise into a quota system. And who would get to decide whether plans had been implemented satisfactorily?

Thoughtful journalists have criticized such proposals to turn journalism into essentially a federally-subsidized public utility. Freelancer Jen Gerson complained to HuffPost that “in a time where we’re shoring up our credibility and making sure people have faith that they can trust the information coming from us, taking a media bailout is absolutely fatal to those efforts.”

Even politicians sympathetic to the idea of government subsidies remain wary. “We cannot do anything that would in any way undermine the integrity and independence of the media, and I worry that if there is government assistance, in terms of money, you begin to blur those lines,” allowed U.S. Rep. David Cicilline, D-R.I., who introduced legislation to allow joint rate-setting for advertising. John Stanton, co-founder of the Save Journalism Project, warned that any case approved by Congress would likely “come with a lot of weird, terrible strings.”

Waldron talks up the idea of a special fund “overseen by independent actors and accountable to local communities and journalists themselves.” However, the ideological and political biases of such parties should be obvious. Even if the system were not corrupt per se, it almost certainly would be ideologically biased. That might not bother those who end up in control and receive the funds, but those of us paying the bills could rightly complain.

I rue the collapse of traditional journalism, especially the dead-tree publications which I once eagerly consumed. However, putting journalists on a federal dole is dangerous for liberty and democracy. At some point Congress must say no to new industry subsidies. This is that point.

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Doug Bandow is a Senior Fellow at the Cato Institute and former Special Assistant to President Ronald Reagan. He is the author of Foreign Follies: America’s New Global Empire.