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Press in Distress

A USC report shows that government support for the news media, long a tradition in the United States, has declined with the press’ fortunes.

New USC research shows that government support for the news media, long a tradition in the United States, has declined with the press’ economic fortunes.

Government financial support that has bolstered this country’s commercial news business since Colonial days is dropping sharply and likely to fall further, according to a report released by the USC Annenberg School’s Center on Communication Leadership and Policy (CCLP). Because these cutbacks are occurring at the height of the digital revolution, they will have an especially powerful impact on a weakened news industry.

Public Policy and the Future of News” reveals just how involved the government has been in subsidizing the news business throughout American history to foster an informed citizenry, and what this support has meant for publishers, journalists and news consumers. The report analyzes some of the financial tools that government has used to support the commercial press over the years — from postal rate discounts and tax breaks to public notices and government advertising. It also documents cutbacks across a range of sectors and considers policy options that could place the industry on a more secure financial footing.

“It is a common myth that the commercial press in the United States is independent of governmental funding support,” says report co-author Geoffrey Cowan, Annenberg School dean emeritus and director of the CCLP. “There has never been a time in U.S. history when government dollars were not helping to undergird the news business,” he adds.

“Certainly, the U.S. has never supported news-gathering the way some European and Asian countries have,” notes report co-author David Westphal, CCLP senior fellow and Annenberg School executive in residence. “The point here is that it’s time all of us, outside and inside the industry, realize that tax dollars support the American news business, and those dollars, which throughout our history have been critical in keeping the news media alive, are now shrinking quickly.”

The late 1960s were a high-water mark of government support for the news. The postal service was subsidizing roughly 75 percent of the mailing cost of newspapers and news magazines (roughly $2 billion in today’s dollars). Today, however, publishers’ mailing discounts for printed news products are down to 11 percent, or $288 million.

Paid public notices (government-required announcements that give citizens information about important activities) have also been lucrative for newspaper publishers, providing hundreds of millions of dollars to publications ranging from local dailies to The Wall Street Journal. For example, researchers studied a four-week period and found that the government was the top purchaser of ad space in the Journal. Public notice income is especially important to weekly and other community newspapers; in 2000 it accounted for 5 percent to 10 percent of all revenue. But now proposals are pending in 40 states that would allow agencies to shift publication to the Web.

Tax breaks given to news publishers are also likely to decline, because many are tied to expenditures on paper and ink, and cash-strapped states are seeking new sources of revenue. Federal and state tax laws forgive more than $900 million annually for newspapers and news magazines, with most of that money coming from the state level.

Of course, reduced government subsidies are not the primary problem afflicting the news business. At most, government assistance has dropped by a few billion dollars, while newspapers alone have lost more than $20 billion in revenue over the last three years. Yet government support represents a critical element of economic survival.

Policymakers can’t afford to be mere spectators to these changes, according to the researchers. American government doesn’t work well if the citizens lack a reliable supply of news and information.

The Center on Communication Leadership and Policy report tackles a range of possible policy solutions:

  • allowing newspapers to become nonprofits
  • tax credits for taxpayers who subscribe to newspapers
  • expanded federal investment in digital research and broadband access
  • an antitrust law timeout, to allow publishers to form a common strategy
  • significant new government funding for public radio and public television

“We live in an era of profound technological change that threatens many forms of news media. We do not favor government policies that keep dying media alive,” Westphal says. “But we do believe government can help to provide support during a period of transition.”

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