Paul L. Caron

Friday, August 5, 2011

Saving Newspapers Through a New Form of Tax-Exempt Organization

Nikki Usher (Ph.D. Candidate, University of Southern California, Annenberg School for Communication & Journalism) & Michelle D. Layser (Latham & Watkins, Los Angeles) have published The Quest to Save Journalism: A Legal Analysis of New Models for Newspapers From Nonprofit Tax-Exempt Organizations to L3Cs, 2010 Utah L. Rev. 1315. Here is the abstract:

The proliferation of online news sources masks a deepening crisis in American journalism. Newspapers, which continue to be the linchpin of original news reporting, are facing unprecedented economic pressures largely due to the rise of new media that have forced nearly all major newspapers to lay off large numbers of journalists, reduce the scope of coverage, and sometimes cease operating entirely. The current economic crisis has only exacerbated existing forces already undermining the viability of the newspaper industry. The traditional support from commercial advertising and paper subscription base now seems antiquated, and the question looming before American journalism is what the next operating model will be. As such, a broad spectrum of publicly minded individuals and institutions has tried to find solutions for the ailing industry. One proposal that has gained traction has been to allow commercial newspapers to qualify for tax exemption. What has been lacking thus far is a comprehensive legal analysis of what a tax-exempt nonprofit newspaper can and should look like. This Article seeks to fill that gap by explicating the viability, problems, and benefits of particular legal structures these nonprofit newspapers might employ.

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The left wants to subsidize their bullhorn.

Posted by: teapartydoc | Aug 6, 2011 7:01:42 AM

Non-profits are required to be apolitical. Can the main stream media achieve that?

Posted by: Arch | Aug 6, 2011 4:18:48 AM

John Kerry gets to be the sole arbiter of what constitutes a legitimate newspaper.

Re: the Tea Party "The media has got to begin to not give equal time or equal balance to an absolutely absurd notion just because somebody asserts it or simply because somebody says something which everybody knows is not factual. It doesn’t deserve the same credit as a legitimate idea about what you do." John Kerry 8/5/11

Posted by: Mark Allen | Aug 6, 2011 12:55:52 AM

They're already non-profit organizations. Isn't that the problem?

Posted by: Scott | Aug 5, 2011 6:24:46 PM

Or we could save journalism by practicing it.

...but what journalism actually is seldom seems to be taught.

Posted by: sbw | Aug 5, 2011 5:47:17 PM

We'll, they're already non-profit it would seem.

Posted by: MP | Aug 5, 2011 5:44:01 PM

Used to be lots of buggy-whips. And people were employed making them. Now not so much. Given the "quality" of what the large daily newspapers are delivering, they deserve to follow the buggy-whip makers. Note how the WSJ manages to turn a profit (albeit barely), while the NYT and WaPo don't. The WaPo survives on the earnings of its for profit education wing - Kaplan (though apparently lately, even they are having problems). The NYT lives on charity, lately from Carlos Slim. In 2002 its share price was around $50, now around $10. Adapt or die. And in the case of the NYT and WaPo - DON'T ADAPT, HURRY UP AND DIE!

Posted by: RKV | Aug 5, 2011 5:09:57 PM

If they're losing money hand over fist they aren't paying taxes anyway. How's this going to help? And why would we want to help purely partisan propagandists of the Left?

Posted by: ChipsterNGA | Aug 5, 2011 4:47:47 PM

American newspapers are in bad shape because of the j-schools. These programs turn out people with 4 years of mostly nothing classes, call them "educated," and newspapers hire them to write their stories with no analysis deeper than that found in the talking points of Nancy Pelosi. The Financial Times seems to be doing very well, and I imagine that if you compare the backgrounds of their reporters to those of the reporters NY Times or Washington Post, you will see a difference.

Posted by: will | Aug 5, 2011 4:31:11 PM

Yeah--that's the key to progress. Just subsidize all the industries that have or are becoming obsolete. If we had just done that with the slide-rule and buggy-whip manufacturers we'd have a much healthier society today.


Posted by: Tcobb | Aug 5, 2011 4:18:29 PM

I might go for that if the Sulzberger family and the WaPo owners, et al no longer get any profits from their papers.

In order to get this break they should have to give up all dividends, etc. OTOH, go take a flying leap.

Actually, no I wouldn't go for it under any circumstances since it would legitimize incredibly partisan newspapers forever.

Posted by: jorgxmckie | Aug 5, 2011 4:14:46 PM

" publicly minded individuals and institutions " right out of atlas shrugged

be wary of these publicly minded people, as they are as sure of their moral superiority as i am of their utter inferiority in life and enjoying it....

where we see someone who is successful and enjoying their life they see unfairness,

where we see someon who is a failure due to their own decisions they see the oppressed

Posted by: joe canouse | Aug 5, 2011 3:56:55 PM

If memory serves, this subject was looked at a couple of years ago. The conclusion was that there is way too large a gap between profit-generating enterprises and their substantial infrastructure and expense structure, and what a purely donated capital base would look like. This is another leftwing dream, letting a thousand NPRs bloom across the country. But there is a reason why there is only one NPR, isn't there?

The newspapers dug their own graves years ago. Now they need to get in and shut the lid.

Posted by: Fresh Air | Aug 5, 2011 3:56:40 PM

Interesting concept, but from what I've seen, most of the dinosaur media is not making a profit or paying any taxes as it is. This sounds more like a full employment program for journalism graduates.

Posted by: Rod Taylor | Aug 5, 2011 3:55:40 PM