Wednesday, July 22, 2009

Tax Exemption Proposal For Struggling Newspapers

In response to the quickly shrinking newsroom staffs and the alarming rate of papers going out of business, the idea of major newspapers turning into non-profits is not so far fetched.  According to an article in Media Shift, it was among the options discussed at a hearing before the Senate Subcommittee on Communications, Technology and the Internet.  One advocate, Arianna Huffington, co-founder and editor-in-chief of the Huffington Post, suggested a new revenue model to combat the industry’s economic problems and opposed trying to increase revenue by restricting access to online content.

"The great upheaval the news industry is going through is the result of a perfect storm of transformative technology, the advent of Craigslist, generational shifts in the way people find and consume news, and the dire impact the economic crisis has had on advertising," she testified. "And there is no question that, as the industry moves forward and we figure out the new rules of the road, there will be -- and needs to be -- a great deal of experimentation with new revenue models."

Another backer of broadening the options for the struggling papers was Senator Ben Cardin.  The committee discussed his proposal for legislation that would allow newspapers to transition to non-profit entities, thereby qualifying for exemption from certain taxes.  The catch is that, as non-profits, newspapers would have to refrain from endorsing political candidates.  His proposal is pending as S. 673 (111th Cong., 1st Sess. 2009).   Although the bill has been referred to a committee, no further action has been taken on it since its introduction in March.

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