Government to bail out newspapers?

The push to provide newspapers a government bailout to save “independent” media got another boost from a rather likely source yesterday.  As Danny Glover reports for Accuracy in Media, Rep. Henry Waxman (D-CA) spoke at an FTC seminar on the crisis in media markets, at which other speakers insisted that government has routinely intervened in media, even newspapers, and that opposition to it somehow violates the American tradition.  But first, Waxman said, newspapers had to ask Congress for a handout:

Rep. Henry Waxman trekked from Capitol Hill to Federal Trade Commission headquarters today to deliver a message to journalists and news consumers: All of you need to reach a consensus about working with the government in order to bail out the struggling news industry.

The California Democrat, who chairs the powerful House Energy and Commerce Committee, didn’t say it quite so bluntly, but his point was clear. “Government’s going to have to be involved, in one way or the other,” to save journalism from an ongoing “market failure” that will only worsen without intervention, Waxman said. …

Waxman bemoaned the demise of newspapers across the country, including in Denver and Seattle, and warned that the troubling media trends will continue. “This recent depression in the media sector is not cyclical,” Waxman said. “It is structural.”

“Congress can’t impose a solution” to that structural problem, he said. But the government should partner with the media industry to ensure a sound future for journalism. Waxman praised the record of “independent” reporting in U.S. history and said it has implications for democracy.

“There needs to be a consensus within the media industry and the larger community it serves” before the government acts, Waxman said. “We have to figure out together how to preserve that kind of reporting.”

Waxman exposes his own thinking here in proposing a bailout for a structural problem.  Previous bailouts acted on the conclusion that the financial problems they solved were cyclical in nature, not structural, and that taxpayers would get repaid once the cycle turned upward.  A structural problem would not get solved by a bailout anyway.  It requires a structural reform or an overhaul, which a bailout would delay.  A financial crisis should accelerate structural reform, as long as no one intervenes to delay it by subsidizing a failed business model.

What Waxman wants is control.  The founders put the press and the government at odds in the First Amendment for a reason.  They discovered first-hand how oppressive a government could be when it controlled the media, and they endeavored to avoid exactly what Waxman proposes.  Once government funds newspapers, it can easily dictate content, make editorial decisions, and essentially protect itself from any sense of accountability.  That kind of control doesn’t even have to come directly; all it takes is a threat to remove the subsidies that other papers receive, and editors and publishers concerned about making a living will eventually comply.

Mark Tapscott blasts Waxman and the entire handout mentality arising in his industry:

Newton, MacCarthy and McTaggart know better. Newton, for example, claims a government bailout won’t compromise media independence because of the same sort of “firewall” that separates advertising and editorial.

Firewalls can work in private businesses when management insists that they be respected, but it’s different when government is involved because nobody can say no to power-happy federal bureaucrats armed with regulatory authority or litigious Justice Department attorneys packing subpoenas and make it stick.

This is borne out by researchers at Harvard and Northwestern universities, who recently studied the effect of government advertising on the frequency and intensity of investigative reporting by four Argentine newspapers.

According to the Nieman Journalism Lab, “Harvard’s Rafael Di Tella and Northwestern’s Ignacio Franceschelli, analyze Argentina’s four largest newspapers and find a strong correlation between their willingness to cover government scandal and the amount of money they received from government coffers.”

In other words, the more government money there was, the less investigative journalism took place. And vice versa. It doesn’t take a multiple regression analysis by a couple of data jockeys at Harvard and Northwestern to figure that out.

An independent media that relies on government subsidies is no longer independent at all.  Many of these same newspapers will editorialize at length about the corrosive effect of lobbyists on politicians, because their contributions to election campaigns keep the politicians employed.  In fact, many of them supported the McCain-Feingold BCRA for that very reason.  If that’s true of politicians, how true will it be of reporters, editors, and publishers?

Waxman is right about one thing.  The problems in the newspaper industry are structural, not cyclical.  However, new structures to deliver valuable services will arise as long as those services remain valuable, and we are already seeing those new structures based on something more modern than the 19th-century technologies of newsprint and ink.  Maybe Waxman should focus first on the buggy-whip industry, which needed a bailout long before newspapers, and for whom a bailout would be just as effective.

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