Senators consider options for ailing newspapers

"Welcome, all, to a brave new world," said a somber-sounding Senator John F. Kerry, who called the hearing. "Today, newspapers look like an endangered species."

Kerry, a Massachusetts Democrat, immediately shot down the suggestion that he was using his position to call attention to the crisis at the Globe, whose owner, The New York Times Co., threatened to shutter New England's most prominent paper, citing massive financial losses. Management and union leaders have reached deals for concessions totaling about $20 million, but the proposals have not yet been ratified by union memberships.

"Let me emphasize that this hearing is not, and was never intended to be, a hearing about Boston newspapers," Kerry told a packed hearing of the Senate Commerce Committee's subcommittee on Communications, Technology, and the Internet. "It's about our nation's newspapers."

Lawmakers and industry leaders offered some suggestions to help newspapers survive. Senator Ben Cardin, a Maryland Democrat, said certain newspapers should be allowed to reconstruct themselves as nonprofits, giving them the same kind of tax breaks churches and public broadcasting entities enjoy.

Advertising and subscription revenue would be tax exempt, and donations tax deductible. Under his bill, newspapers would be free to report on all issues, but they would be prohibited from endorsing political candidates.

Cardin said that papers making money won't choose the nonprofit option, while those not making money aren't paying taxes so the federal Treasury won't lose revenue. The most notable existing example is slightly different than what the bill would allow; while the St. Petersburg Times was donated to a nonprofit journalism institute, it still pays taxes on its profits.

"Simply put, the current model doesn't work," Cardin said.

James M. Moroney III, publisher of the Dallas Morning News, called for temporary tax relief for newspapers, allowing them to write off operating losses over a longer period of time.

Further, he said, Congress should pass legislation ensuring "reasonable compensation" from Internet firms that reproduce or repackage newspaper content - an idea rejected by the online media officials at the hearing.

But the fundamental problem, senators and print media advocates said, is that readers are increasingly getting their news from the Web, where advertising revenues have not come close the level needed to support in-depth beat reporting and investigative work. And while Internet mavens said they were helping newspapers by sending readers to their websites, the print media camp blamed aggregators such as Google for "leeching" the work of professional journalists and putting it on their own sites.

"The parasite is slowly killing the host," said David Simon, a former Baltimore Sun reporter who now works at Blown Deadline Productions in Baltimore. He created the HBO show "The Wire."

Rejecting the idea that "citizen journalists" will fill the void of laid-off newspaper reporters, Simon added: "High-end journalism is a profession. I am offended to think that anyone, anywhere believes that American institutions as insulated, self-preserving, and self-justifying as police departments, school systems, legislatures, and chief executives can be held to [account] by amateurs, pursuing the task without compensation, training, or for that matter, sufficient standing to make public officials even care to whom it is they are lying or from whom they are withholding information."

Internet leaders were indignant, pointing out that the trend is toward the Web, and that newspapers need to adapt to 21st-century reality by finding a way to make money off their websites.

"What needs to happen is monetizing traffic," said Arianna Huffington, owner and founder of the Huffington Post website.

Marissa Mayer, a Google vice president, said newspapers also needed to update their systems by marketing individual stories - not the entire newspaper - to readers.

Further, Mayer said, the popular and profitable search engine is doing newspapers a favor by teasing their stories with a few lines of copy, luring the reader to a newspaper website and its own ads.

When Kerry noted that no newspaper was making enough in Web ads to support its reporting and editing staff, Mayer replied, "It's still very early."

Kerry shook his head slightly. "It's not early," he said, for the Rocky Mountain News in Denver, the Seattle Post-Intelligencer, and other newspapers that have stopped the presses.