Federal spending bill would give local news outlets ‘shot in the arm’

President Joe Biden’s $1.85 trillion social spending bill includes a provision that, if it becomes law, would mark the first time the federal government has offered targeted support in response to the decline of local news.

The help would come in the form of a payroll tax credit for companies that employ eligible local journalists. The measure would allow newspapers, digital news outlets and radio and television stations to claim a tax credit of $25,000 the first year and $15,000 the next four years for up to 1,500 journalists.

It’s a response to growing alarm that the elimination of newsroom jobs is leaving communities without access to critical information. The concern has grown since a hedge fund with a reputation of ruthless cost-cutting acquired Tribune, one of the nation’s largest newspaper chains, in May. Already, about one-fourth of the country’s newspapers have closed and half of local journalism jobs have evaporated in the past 15 years, according to research from the University of North Carolina.

That leaves about 1,800 communities with no local newspaper.

But the credit, which would cost $1.67 billion over the next five years, does create some tension for the industry. Some top Republicans in Congress have derided it as a handout. Leading journalists also acknowledge that it’s awkward to receive financial assistance from a government they cover independently.

Still, given the sense of crisis the industry is facing, many journalists say the risk is worth it.

“This is only a reluctant response to this fear of the collapse of local news and their business models,” said Steven Waldman, president and co-founder of Report for America, an organization that places journalists in local newsrooms, including The Associated Press. “Most journalists start off with a healthy skepticism about the government getting involved and helping journalism. And that’s appropriate.”

“But,” he added, “the reason why this is happening now is just the severity of the crisis.”

Government support for media, in ways direct and indirect, is not new. It goes back to the earliest days of the country when Congress subsidized periodicals’ postal rates. More recently, a pandemic-era small business loan program provided millions to news organizations.

The provision is supported by more than a dozen House Republicans, though the second-ranking GOP leader, Rep. Steve Scalise of Louisiana, called it a scam in a recent tweet. “Make no mistake—this is Biden and Dems in Congress helping pay the reporters’ salaries who cover for them,” he tweeted.

The proposal’s fate ultimately hinges on how Congress proceeds with the broader legislation, which has only attracted Democratic support and has become bogged down by divisions in the House and Senate. Notably, it is one of the few provisions to which House and Senate Democrats have already agreed.

Lawmakers will resume debate on the bill when they return to Washington this coming week.

Though the proposal’s main objective was to rescue small papers that were hit hard as ad dollars evaporated at the start of the pandemic, it will help some larger companies. Should the tax break become law, Gannett, one of the nation’s largest remaining newspaper chains, could gain as much as $127.5 million over five years, according to an analysis by the AP.

Maribel Perez Wadsworth, who runs the news division of Gannett, which employs more than 4,000 journalists at USA Today and local papers such as The Arizona Republic and Detroit Free Press, called the credit a “good shot in the arm.” She would not specify how the money would be used.

AP spokesperson Lauren Easton declined to comment on the tax credit.

Rep. Ann Kirkpatrick, D-Ariz., introduced the credit as a piece of legislation last year along with Rep. Dan Newhouse, R-Wash.

One of the jobs tax credit’s proponents was community-newspaper chain Wick Communications, which is based in Sierra Vista, Arizona—Kirkpatrick’s congressional district. CEO Francis Wick said revenue has dropped by about half since 2009, with a steep ad-sales decline during the pandemic as local businesses reduced advertising. To cut costs, the company consolidated town papers into regional titles, cut print publication days and furloughed journalists.

The tax credit, which would add an extra $2 million for the company in its first year, would help the papers in the 11-state chain try to transition to a digital-centric model with more paying subscribers, Wick said, rather than focus so tightly on cutting expenses.

“We need to make sure ultimately we can do our jobs,” Wick said.

The proposal has a key supporter in House Speaker Nancy Pelosi, who had long supported efforts to help local journalism. But the issue became more personal when her hometown paper, The Baltimore Sun, was among those acquired by hedge fund Alden Global Capital despite efforts by journalists and community members to steer the paper to local ownership.

One of those local advocates, former Maryland county executive Ted Venetoulis, called Pelosi after Alden’s purchase, to urge her to support the credit, which by the time of that phone call was already in the broader Biden package.

That would be the last time Venetoulis and Pelosi, D-Calif., would speak before he died in early October, the speaker said in an obituary in the newspaper and her office confirmed to AP.

The provision put in place guardrails to try to keep money from going to partisan sites that masquerade as local news or fake-news operations while casting a broad net about which organizations are considered legitimate local news outlets, whether they are hedge fund-owned chains, nonprofit, print, digital, radio or TV.

“This isn’t the government deciding who gets it and who doesn’t get it,” said Jon Schleuss, president of the NewsGuild, a union that represents journalists, including those at the AP. “Are you employing local journalists? If so, here’s a tax credit. It’s really helpful because it is targeted to where we’ve lost so many journalists over the past decade and that’s in the local.”