Rebuilding Local News
How government can help revitalize local journalism while preserving editorial independence
Local news coverage is collapsing. The number of newsroom employees has declined 60 percent since 2000, a job decline similar in scale to the coal industry. Some 1,800 communities now have no local news outlet, and thousands more have “ghost newspapers” barely providing local news coverage. Now, an average of two newspapers close each week.
This is not a partisan issue. The decline of local news is associated with higher polarization, decreased voter turnout, less cross-party voting, increased corruption and more government waste. The decline of local reporting means residents are less well informed about schools, government effectiveness, economic development, criminal justice, health care, the environment, crime, religion, issues facing small businesses and the basic elements of community life. A well-informed citizenry is essential to solving local problems. Local news knits together communities.
One of the few industries mentioned in the Bill of Rights, the free press, is fading away on the local level. Yes, philanthropy must continue to help local media, and media organizations must evolve and innovate their business models. But the scale of the crisis is overwhelming. From 2008 to 2018, US newspaper revenue decreased by more than $23 billion.
Many journalists are skeptical about government assistance for news—for good reason. Poorly designed government policies would undermine editorial independence and threaten the free press. But given the scale of this crisis—and the consequence for our communities and democracy—our coalition has concluded that government must play a role. We further believe that it is most certainly possible to create public policies that both help local news publishers and preserve editorial independence—if they follow a few principles. These policies should:
- Be content-neutral, nonpartisan, and ensure editorial independence.
- Be future-friendly, potentially helping both existing local players and innovators.
- Be platform-neutral. Help local news organizations develop sustainable models.
- Especially help locally-grounded, diverse or nonprofit media.
- Result in communities having more local reporters.
Taken together, the proposals we endorse achieve these goals and would significantly help American communities. This plan would deliver approximately $3-5 billion into the local news economy from philanthropy, businesses, consumers and the government, mostly through tax credits. Of course, not all support would be used to hire or retain journalists but if a meaningful fraction was, local news would be transformed. The number of local reporters would likely double. Most local news deserts would be eliminated resulting in a local news system more geared to serving communities.
The local news ecosystems of the future will look different than what we have today, and will consist of a variety of players, some old, some new. Our coalition represents publishers, journalists, and policy advocates in all sectors of the local media economy, including major newspapers, small weeklies, nonprofit news organizations, Black newspapers, Hispanic newspapers, public radio stations, and funders of journalism innovation. These policies would allow for the growth of different types of local media.
At several crossroad moments in American history, smart public policy initiatives dramatically assisted the development of a free and vibrant press. The Founding Fathers helped create the free press by subsidizing postal rates for newspapers. In the 1930s, Congress designed a broadcast licensing system emphasizing local control and the creation of “educational” broadcasting. In the 1960s, Congress breathed life into a network of frail radio and TV stations to create a vibrant public broadcasting system.
This is one of those historic moments. Local news—an institution of paramount importance to democracy—is dying. But if we act quickly and creatively, we can help rebuild a local news system that better serves communities and democracy.
Empower Americans, through their own choices, to financially help local media
The best way for the government to support local news is to help Americans themselves to pay for the local journalism. That’s why our plan builds on the excellent new bipartisan bill called the Local Journalism Sustainability Act, proposed by Democrat Rep. Ann Kirkpatrick of Arizona and Republican Dan Newhouse of Washington.
- A $250 refundable tax credit that taxpayers can use to pay for a subscription to a local news source, or make a donation to a local nonprofit local news organization, or a membership in a local news organization.
As a refundable credit (as opposed to a tax deduction) this will pump new money into the local news ecosystems without requiring the federal government to pick winners and losers among news organizations. This approach would also force local news organizations to make their case to the public. France and Canada have implemented similar ideas. The legislation does need a few improvements. The tax credit must be refundable and available to those who don’t itemize their taxes so Americans of modest means can benefit.
- A $2,500-$5,000 credit for small businesses to buy local advertising. This could be used for commercial or nonprofit news organizations (as underwriting sponsorships), with special efforts made to ensure that the public is aware of eligible small media organizations as well as large. This would both help local news and help businesses ravaged by COVID to get back on their feet safely.
Grow nonprofit local media
Although the commercial media will be an important piece of the puzzle—especially locally-grounded organizations—the local media ecosystem of the future will need more robust nonprofit media. This includes both public radio as well as independent digital websites, like the more than 300 that have been created in the last decade. The most successful provide high quality, civic journalism. They survive through a combination of earned revenue (e.g. events, sponsorships) and philanthropy (large and small donors).
We should view this critical sector as Congress did the small collection of educational radio stations existing before the passage of the Public Broadcasting Act of 1967. It’s worth noting that before 1967, only 292 educational FM stations existed in the US. These stations were small and mostly connected to universities. Today, because of the Public Broadcasting Act, there are more than 900 FM stations, including content powerhouses like WGBH and WNET. Government policy now should help nonprofit websites scale in the same way.
Make it easier for nonprofits to develop sustainable models
While the philanthropic world has helped nonprofit news organizations to get launched, the newsrooms need help in creating sustainable revenue models.
- The refundable tax credit in the Local Journalism Sustainability Act would enable Americans to easily and more generously donate to local nonprofits.
- The IRS should clarify that nonprofit local news organizations can take advertising, have subscriptions, or deploy other revenue-generating approaches without losing their tax-exempt status. Removing these obstacles will make it more likely they create sustainable business models not entirely dependent on philanthropy. ( More detail here)
- Have the government subsidize a super-sized Newsmatch fund, providing at least a 3 to 1 match against funds that local nonprofit news organizations raise from their communities. The current Newsmatch fund—a private effort launched by foundations—enables newsrooms to earn up to $25,000 extra, as a match against donations. Some $3.2 million from the original participating foundations led to an additional $43 million being donated. If the federal government put $300 million in such a fund, it would ultimately allow for the cap to be raised to $500,000 per newsroom, and would likely stimulate hundreds of millions more in private donations. We could consider other matching-oriented, formula-based ways to support nonprofits, perhaps tied to the number of donors or journalists. To avoid this becoming a way for the government to exert political influence, this subsidy could be initially in the form of a one-time payment to an independent nonprofit group, to set up an endowment that could fund this approach over time.
- Ensure that government advertising spending on local media can and should include sponsorships or underwriting for nonprofit news organizations
Make it easier to create a nonprofit news organization
Current IRS rules often make it difficult for communities to create nonprofit news organizations. In the past, some applicants for tax exempt status were told to remove the word “journalism” from their applications. This approach must end. Providing civically important information must be clearly deemed a charitable purpose, as long as the organization is abiding by the essential practices of nonprofit organizations.
Have the IRS allow public service journalism to be a valid purpose to earn tax exempt status. ( Possible language was included in legislation by Rep. Tim Ryan )
Encourage the “re-planting” of newspapers into community-based nonprofit organizations and locally-owned Public Benefit Corporations
More than half of daily newspaper circulation in America is now owned by private equity firms or hedge funds. More than half of the 6,700 newspapers are owned by big chains. Many of these newspapers still do essential work; the editors and reporters at these newspapers still work hard to provide great journalism to their communities. But from an operating perspective, they often have dramatically cut back on local reporting.
Fortunately, some models have emerged for replanting these newspapers into more hospitable soil. For instance, privately owned newspapers have been donated to local nonprofit groups or converted into Public Benefit Corporations. Supportive government policies can help make it more likely these replantings multiply and succeed. A “replanting strategy” could allow large chains, private equity firms, hedge funds or family-owned chains to benefit from tax incentives if they donate a newspaper or its assets to a legitimate local nonprofit group committed to providing significant local reporting. This strategy would require the creation of a new nonprofit organization—a “replanting fund”—to manage the transfer, ensure that the newspapers are viable, and require communities to maintain ethical standards, a strong business plan and broad based community support.
This strategy would be far more likely to succeed if the government also provided tax incentives to encourage the donation of newspapers. Some possible tax changes to consider:
- Provide an enhanced federal charitable deduction for donating a newspaper. Allow owners to use the value of the “tax cost basis” rather than the current market value. Allow sellers to carry forward the value of those tax losses for 10 years. Increase the annual percentage limitations on deductibility of charitable deductions for both corporations and individuals. Make the conversion a tax-free transaction.
- Eliminate capital gains and other transaction taxes when a newspaper is being sold or donated to a nonprofit organization
- For conversion to Public Benefit Corporations, allow an income tax credit equal to the amount that would otherwise be deductible as a charitable contribution
- Make a one-time payment to seed a replanting fund.
Other ideas to consider here
Make it easier for public radio and television to do local journalism
Public radio and TV stations have long demonstrated that local media can be both nonprofit and sustainable. Local radio, in particular, can be a crucial part of the local journalism solution. In recent years, many local public radio stations have increased their commitment to local reporting. But currently, the Corporation for Public Broadcasting has limited funds and restrictions that limit their ability to support public radio.
- Give the Corporation for Public Broadcasting more funds to specifically support local journalism and the flexibility to give more money to high quality public radio stations
Strengthen commercial media by incentivizing local ownership and investment in local reporting
Commercial media will likely not be as dominant in local media as it once was, but it often will play a crucial role in many communities. The Local Journalism Sustainability Act provisions mentioned in section one will strengthen the revenue streams of commercial as well as nonprofit media. In addition, government policy should especially encourage local ownership and incentivize commercial local media to invest in local reporting:
Incentivize consumers and businesses to support local news
- Provide a $250 refundable tax credit for Americans to buy subscriptions to local news and a $2,500-$5,000 tax credit for businesses to advertise in local media (similar to that proposed in the Local Journalism Sustainability Act).
- Provide a tax credit pegged to hiring or retaining newsroom employees (as in the Local Journalism Sustainability Act). This would change the internal economics for newsrooms, providing incentives for hiring and retaining reporters.
- Half of what federal agencies already intend to spend on advertising should be directed toward local media —with a big chunk going to smaller organizations (200 employees or fewer). During the COVID-19 crisis, Congress should also add an additional $500 million in grants to state public health departments for public health advertising related to COVID-19, with half going through local media, including small media. Nonpartisan oversight would be provided to ensure no political interference.
Amend policies to emphasize local ownership
The Federal Communications Act has long emphasized the importance of “localism” in the development of the TV and radio industries. It governs everything from ownership rules to the distribution of licenses. Localism is the concept that democracy flourishes when media is controlled locally, and many different voices participate in community conversations.
- The Justice Department, the Federal Trade Commission and the courts should issue new guidance making it clear that agencies should consider the effect of newspaper mergers on localism. Mergers leading to less local control of the news could be rejected, delayed or required to add conditions helping support local news production.
- Amend the Worker Adjustment and Retraining Notification Act (the “plant closing law”) to require six months notice of a local news organization closure having a significant negative impact on the information health of a community.
Help create local news systems that better cover marginalized communities
As we rebuild local news, we must take care to not repeat some of the maladies of “the good old days,” most especially the ways in which many local newsrooms did not cover fairly, accurately or persistently communities of color and other marginalized communities. New policies should help ensure that newsrooms better reflect diversity, equity and inclusion.
In the past, government spending on advertising has often not made its way to news organizations in communities of color. When the Center for Community Media in New York City worked with the Mayor’s office to ensure that government public service advertising was spread equitably the results was that many more news organizations serving and run by people of color earned revenue.
- Ensure that a portion of government advertising goes to locally-owned and nonprofit newsrooms, including Black and Brown-owned newsrooms having sometimes not benefited from government advertising campaigns.
Many Black newspaper owners, facing daunting economics, face the difficult choice of shutting down or selling to a chain. Efforts to “replant” newspapers (see above) should be attentive to the urgent need to ensure that communities of color are well served by targeted media.
- Ensure that efforts to help “replant” newspapers also help Black newspapers and other media serving communities of color to become Public Benefit Corporations or nonprofits.
One limitation of the Local Journalism Sustainability Act is that many ethnic publications do not have paywalls or subscriptions, relying rather on advertising.
- Ensure that a subscription tax credit can be used for memberships in local for-profit media not having paywalls, which is the case for many Black newspapers and ethnic media publications.
National service programs have proven to be an effective way of putting more journalists of color into the field. For instance, more than 40 percent of Report for America’s corps are Black, Hispanic, Native American or Asian.
- Support national service programs placing hundreds of journalists of color into newsrooms and improving coverage of minority communities.
Support journalists who pursue careers in local public service journalism
The government currently indirectly supports public service professionals such as nurses, veterinarians, and teachers, through programs that forgive student loan debt, or through AmeriCorps. Reporters who work in local news, especially in mission-driven publications, are public service professionals, too, often taking low paying jobs in order to help communities.
- Put 5,000 local reporters into local newsrooms through national service programs for journalists, such as Report for America. This can be done through a special allocation to the Corporation for National and Community Service, which selects programs based on a neutral, competitive process.
- Offer loan forgiveness for journalists who work at local nonprofit news organizations or Public Benefit Corporations.
Safeguard editorial independence and nonpartisanship
Many journalists oppose government support for journalism, fearing that the media cannot hold the government accountable if, at the same time it receives funding from the state. We take this concern very seriously and believe that any policies must ensure editorial independence and prevent the government from advancing partisan or ideological agendas. Indeed, government policy that does not have this as a central principle would do more harm than good.
In the past, the United States has sometimes crafted policies helping the news media thrive without endangering press freedom. The biggest media policy successes have been the postal subsidy allowing the birth of a vibrant newspaper industry in the 19th century; the broadcasting laws requiring broadcasting to be highly localized; and the creation of the Corporation for Public Broadcasting. In all three cases, government support was diffuse, neutral, and mostly formulaic.
The proposals above would not require a new nonprofit organization or government-funded agency to distribute discretionary grants to news organizations. If it ever did become necessary for a new or existing entity to have a greater administrative function (for instance, to help manage a Supersized Newsmatch) our view is that it should be an independent non-profit, with bipartisan governance, and that it must be funded through a dedicated revenue stream that would remove it from the annual appropriations process.
These are not, of course, the only policy areas to consider. Policymakers should also look at how local journalism can be affected by digital privacy rules, public broadcasting policies, the need for digital platforms to better compensate local news organizations for content, labor protections, and antitrust law. Moreover, this group has not attempted to designate revenue sources for these plans, though several public plans do so. Rather, we have attempted to offer policies that would most directly help rebuild local media, and help stimulate conversation on still other ideas that might address this crisis. Doing so would help not only fill the massive, democracy-threatening gaps that have opened during the past two decades, it will also allow for the creation of a new local news ecosystem better serving the needs of communities. It would do this in a way relying mostly on the ingenuity and commitment of the residents of those communities. The government policies would focus on removing obstacles and amplifying the efforts of the residents themselves.