Next up in the Great Amercian Bailout – Newspapers

January 2, 2009 by · Leave a Comment
Filed under: Opinion 

Booya (I love this word, so fun to say).  I have been saying this for months that now the precedent for bailouts is set, everyone would line up.  I just got finished watching the Newshour and now it looks like the Art Community is now looking for the bailout.  They mentioned that they employ 6 million Americans in their “highly fragmented community” is how it was put.  I did a little fact checking and Small Businesses employ between 21-56 million Americans, who wants to bet they don’t get a dime?

I agree that we do need the press for a functioning democracy but with that said, I believe we do have a decent amount of press (the coverage can always be better).  My thoughts are because the Internet is radically changing their business model and because they did not make the needed changes fast enough like our domestic auto-makers, they are using this as an opportunity to get access to some taxpayer money.  This will not stop until we chase out all the private capital in our economy and we are up to our ears in public debt.  Who would want to invest or start a business if you don’t know if a potential competitor will get bailed out and give them an unfair advantage.   Man, I miss the free(er) markets.


Connecticut lawmaker Frank Nicastro sees saving the local newspaper as his duty. But others think he and his colleagues are setting a worrisome precedent for government involvement in the U.S. press.

Nicastro represents Connecticut’s 79th assembly district, which includes Bristol, a city of about 61,000 people outside Hartford, the state capital. Its paper, The Bristol Press, may fold within days, along with The Herald in nearby New Britain.

That is because publisher Journal Register, in danger of being crushed under hundreds of millions of dollars of debt, says it cannot afford to keep them open anymore.

Nicastro and fellow legislators want the papers to survive, and petitioned the state government to do something about it. “The media is a vitally important part of America,” he said, particularly local papers that cover news ignored by big papers and television and radio stations.

To some experts, that sounds like a bailout, a word that resurfaced this year after the U.S. government agreed to give hundreds of billions of dollars to the automobile and financial sectors.

Relying on government help raises ethical questions for the press, whose traditional role has been to operate free from government influence as it tries to hold politicians accountable to the people who elected them. Even some publishers desperate for help are wary of this route.

Providing government support can muddy that mission, said Paul Janensch, a journalism professor at Quinnipiac University in Connecticut, and a former reporter and editor.

“You can’t expect a watchdog to bite the hand that feeds it,” he said.

The state’s Department of Economic and Community Development is offering tax breaks, training funds, financing opportunities and other incentives for publishers, but not cash.

“We’re not saying ‘Come to Bristol, come to New Britain, we’ll give you a million dollars,'” Nicastro said.

The lifeline comes as U.S. newspaper publishers such as the New York Times, Tribune and McClatchy deal with falling advertising revenue, fleeing readers and tremendous debt.

Aggravating this extreme change is the world financial crisis. Publishers have slashed costs, often by firing thousands in a bid to remain healthy and to impress investors.

Any aid to papers could gladden financial stakeholders, said Mike Simonton, an analyst at Fitch Ratings.

“If governments are able to provide enough incentives to get some potential bidders off the sidelines, that could be a positive for newspaper valuations,” he said.


Many media experts predict that 2009 will be the year that newspapers of all sizes will falter and die, a threat long predicted but rarely taken seriously until the credit crunch blossomed into a full-fledged financial meltdown.

Source: Reuters

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