Tax Exemption Proposal For Struggling Newspapers

Inresponse to the quickly shrinking newsroom staffs and the alarming rate ofpapers going out of business, the idea of major newspapers turning intonon-profits is not so far fetched.  Accordingto an article in Media Shift, it was among the options discussed at a hearing beforethe Senate Subcommittee on Communications, Technology and the Internet.  One advocate, Arianna Huffington, co-founderand editor-in-chief of the Huffington Post, suggested a new revenue model tocombat the industry’s economic problems and opposed trying to increase revenueby restricting access to online content.

“The great upheavalthe news industry is going through is the result of a perfect storm oftransformative technology, the advent of Craigslist, generational shifts in theway people find and consume news, and the dire impact the economic crisis hashad on advertising,” she testified. “And there isno question that, as the industry moves forward and we figure out the new rulesof the road, there will be — and needs to be — a great deal ofexperimentation with new revenue models.”

Anotherbacker of broadening the options for the struggling papers wasSenator Ben Cardin.  The committee discussedhis proposal for legislation that would allow newspapers to transition tonon-profit entities, thereby qualifying for exemption from certain taxes.  The catch is that, as non-profits, newspaperswould have to refrain from endorsing political candidates.  His proposal is pending as S. 673 (111th Cong., 1st Sess. 2009).   Althoughthe bill has been referred to a committee, no further action has been taken on itsince its introduction in March.

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