Newspaper Bailout

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ASU Journalism professor, Tim McGuire shares his thoughts on proposed legislation to bail-out newspapers that are struggling in the current economy.

Ted Simons: A bill's been introduced in the Senate aimed at helping newspapers survive. The bill would allow newspapers to reorganize as educational nonprofit. They would get tax breaks, but be prohibited from making political endorsements. Here now to share his views on this type of bailout is professor Tim McGuire, from ASU's Cronkite school of Mass Communication and Journalism. Before we get to that particular idea, the President even showing concern on the help of newspapers. A good thing?

Tim McGuire: Yeah, I think it is. What he was really talking about is the quality of the debate. He's worried that the current Web environment is making the debate a lot harder than it has to be.

Ted Simons: He mentioned concerns that if papers close and leave journalism in the hands of amateur bloggers, he worries about journalism ethics and these sorts of things. A valid concern?

Tim McGuire: Absolutely. I know there are a lot of people who think that much evil is rooted in newspapers. But the fact is, newspapers have been where we have relied for the last 50 years on all the important news breaks, the important investigative stories, the perspective. Newspapers have been a terrifically important part of the country for a long time.

Ted Simons: When you mentioned the debate, it sounds to me if it's all blogs and opinions, if the fact-checking takes a backseat to the columnist type of writing, then you've lost a major part of what these bloggers are writing about.

Tim McGuire: Absolutely. They won't have anything to talk about. So many people are rubbing their hands in glee at the demise of newspapers. The fact is most news is still produced in this country is produced by newspapers. TV isn't producing it, blogs are doing very little journalism reporting. Without newspapers, the news ecosystem explodes.

Ted Simons: A quote from what the president said a few days ago was, papers are critical to the health of democracy. Do you think most Americans feel that way?

Tim McGuire: No, they don't. And one hopes that we won't have to see the demise of newspapers before people realize it. But he's absolutely correct, it's what I teach practically every class that I'm in. What we're trying to do in my business and future of journalism class, is figure out how we find a business model to preserve that service to democracy.

Ted Simons: I want to ask you what you've found out and have been hearing about some of the newer and more interesting ideas. But back to the president's idea of at least paying attention to legislation that would perhaps move newspapers into the nonprofit category, educational nonprofit category. Does that make sense to you?

Tim McGuire: No, this piece of legislation frightens me no end for a couple of reasons. I don't think newspapers want to be beholden to Congress in any way. But second, just look at the debates going on on health care and other things. I don't want newspaper sausage made by Congress. I think it would be a horrible thing. I mean, you made the point that already in legislation he proposes that newspapers not be able to make endorsements. Well, you can just imagine the line that would form with Congressmen saying, I want this in there, I want to restrict newspapers this way. My hometown newspaper made me mad, I'll get them here. Oh, it could be ugly.

Ted Simons: Could there be a roster of nonprofit out there, a galaxy of nonprofit that a newspaper could pick stories and ideas from?

Tim McGure: There are nonprofits now, MinnPost, the nonprofit webnews operation, the Saint Pete Times is nonprofit, the Christian Science Monitor was nonprofit and the paper went out of print and they are now Web only. It didn't help. Nonprofit is not the answer. It would be much like your operation, having to beg for money all the time. That's not the best way to go. Free enterprise is a wonderful thing.

Ted Simons: Yes, it is. So with all that in mind, and I mean all of that in mind, are newspapers going to survive?

Tim McGuire: I think they will for a time. What people are not focusing on is, you've got a newspaper in this town that's still stopping at about 330, 340,000 homes every day. That's a business, a lot of customers. People are just kind of dismissing that and saying, let's go to the Web. Whoa! A lot of newspapers are still quite strong and in small towns, Victoria, Texas, New Mexico, Kansas, those papers are doing very, very well.

Ted Simons: And hundreds of thousands of people are still looking at getting the newspaper thrown on their driveway. But the newspaper companies themselves are bleeding money. It's one thing to say that these people are getting papers. But if they don't survive, no one's going to get a paper.

Tim McGuire: But it's spelled d-e-b-t. They took on way too much debt. Is that unique to newspapers in this economy? I think not. Everybody got way too much in debt. Newspapers are still making money above that debt line. They've just got to -- so bankruptcy may in fact be the answer for many. That may not be the bad news. Reorganizing may be the good news.

Ted Simons: All right. You referred to it earlier. Let's get to it real quickly here. Are there ideas out there? What are you seeing as far as delivery systems that make sense and can turn a profit?

Tim McGuire: It's not about delivery systems really. What's happened to the business is the advertising model blew up. Advertising subsidized newspapers to the tune of 80% of the revenues. Macy's was paying for the Washington Bureau and never really appreciated it. Classified advertising has absolutely blown up. That advertising problem is at the root of all of this. Will it come back? It's going to come back a little bit when the recession ends. It's a secular problem. If it comes back, say, some people think 40%, you could start to reorganize newspapers on that basis and start recalibrating your profit expectations.

Ted Simons: So there is a way to keep newspapers alive and growing, even if we don't know what that way is yet.

Tim McGuire: I think people are going to find a multiplicity of ways to make a business of it.

Ted Simons: Very good to see you again. Thank you for joining us.

Tim Mguire: Thanks.

Tim McGuire:Professor,Walter Cronkite School of Journalism and Mass Communication, Arizona State University;

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