Off-Topic Tuesday: Streetsblog Joins Campaign for Public Financing of Non-Profit Media
New York provides tax credits to for-profit newsrooms. Now, non-profit digital outlets, public broadcasters and public access channels are seeking equal treatment. Doing so would strengthen our democracy.
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Jim Heaney, the editor of the Buffalo-based Investigative Post, is leading a campaign for New York State to issue grants to non-profit newsrooms, which are ineligible for tax credits that benefit for-profit newspapers and television stations. Heaney recently opined on the issue, and we're republishing his argument here.
Last June, CNN broadcast a live performance of Good Night and Good Luck, the Broadway play about legendary journalist Edward R. Murrow, who called out and stared down the red-baiting Senator Joseph McCarthy. Following the broadcast, Anderson Cooper interviewed Scott Pelley, correspondent for 60 Minutes, who at one point declared: “You cannot have democracy without journalism.”
There’s a lot less journalism being practiced these days and our democracy is the poorer for it. And the worst may be yet to come without bold action.
The business model that has sustained journalism is in shambles.
Newspapers have historically done most of the heavy lifting of reporting, especially on the local level, and they are hurting. Advertising and paid subscriptions have dramatically fallen and newsroom jobs have been slashed. It hasn’t helped that most newspapers, once the domain of families and other local interests, are now largely in the hands of chains and private equity firms that are more concerned with their bottom line than the quality and quantity of journalism they publish.
“News deserts are widening. Newspaper closures continue unabated. Independent publishers are calling it quits at an alarming rate,” reported The State of Local News, produced byNorthwestern University’s Medill School of Journalism.
Television news also suffers from growing concentration of ownership. Like newspapers, their revenues, audience and newsrooms are shrinking.
Meanwhile, public broadcasting is reeling from the elimination of federal funding. National Public Radio stations, particularly those in rural areas, are vulnerable to the cuts.
There’s only one sector in the media ecosystem that is growing: non-profit, digital news outlets.
Their numbers have grown over the past 15 years from 27 to more than 500. About 60 are located in New York State, a third of them producing local and statewide coverage. The rest are subject-specific, covering topics such as education, ethnic groups, or national or international affairs.
Non-profit news outlets operate under a different business model than commercial media. They depend largely on philanthropic donations from foundations, sponsors and individuals. While the sector is growing, it’s a tough go financially for many outlets.
The Public Broadcasting Act of 1967 laid the groundwork for the financial support of the Public Broadcasting System and National Public Radio. In recent years, a handful of states have instituted grants and other forms of financial assistance to news providers of both the for-profit and non-profit variety.
New York joined those ranks two years ago, providing tax credits to distressed newspapers and commercial television stations. Non-profits were not included and state officials subsequently concluded non-profits are ineligible for the tax credits.
There is now a move afoot to establish a grant program that would provide comparable financial assistance to digital non-profits, public broadcasters and public access channels across New York that provide local coverage of their communities or the state as a whole.
It’s a matter of fairness.
The state has extended a helping hand to the shrinking corporate media whose decision makers are based largely out of state and whose profits go likewise. The approximately 20 digital non-profits, 20 public television and radio broadcasters and 50 public access stations are locally controlled and focused on providing the type of coverage that is increasingly harder to find in legacy media.
Changing news ecosystem
The World Wide Web has turned the news business on its head.
Newspapers have long been the primary source of news and the vehicle advertisers used to reach the public. No more. Print is now the preferred medium for news for only 5 percent of the public. Digital platforms and television are strongly favored.
Shifting news consumption habits explain why newspaper circulation has dropped from a peak of 63 million in 1989 to about 21 million today. Advertising revenue has fallen from $49 billion in 2006 to about $9 billion. Newsroom staffs have been slashed accordingly.
To illustrate the decline of newspapers in New York, consider the plight of The Buffalo News. At its peak in the 1990s, it sold more than 300,000 papers daily and some 400,000 on Sunday. All print. Today, the combined print and digital circulation is about 91,000.
The paper’s newsroom staff topped 200 in the 1980s; today it numbers 45. The decline, once slow and steady, has picked up since Lee Enterprises bought the paper five years ago.
The News is hardly alone. Down the Thruway in Rochester, the Democrat & Chronicle newsroom staff numbers 24. Combined print and digital circulation is 35,000.
Rochester was once the headquarters of the Gannett newspaper chain, which is now based in New York City and recently renamed the USA TODAY Co. The chain owns the D&C and 11 other dailies in New York, all of which have undergone significant downsizing.
The Post-Standard in Syracuse has also cut its staff, along with the frequency of the home delivery of its print edition — just three days a week. Like The News and D&C, the Post-Standard is printed out of town, in Harrisburg, Pa. The News prints in Cleveland, the D&C in northern New Jersey. Remote printing pushes up deadlines and reduces the timeliness of editions.
The decline in newspapers plays out in other ways. Sixteen of New York’s 62 counties have just one news outlet, mostly newspapers that are a shell of their former selves because of cuts to their newsrooms.
The number of reporters working all news media outlets — print, broadcast and digital — has fallen nationwide from 40 per 100,000 residents in 2002 to just eight today. The reporting staffs fall below that anemic number in 28 of New York’s 62 counties.
Broadcasters facing growing challenges
The concern for commercial television stations and their news operations begins with a declining audience. The news programming at Buffalo’s three network affiliates, for example, has dropped about one-third since the pandemic. That trend is expected to continue as more and more viewers, in Buffalo and elsewhere, “cut the cord.” The pace of decline will probably quicken as ESPN, a major draw for cable customers, moves to a streaming service.
Chain ownership and consolidation is another concern.
The Sinclair Broadcast Group owns stations in four upstate markets. The Nexstar Media Group is ever bigger with stations in eight upstate markets; in three of them they own two network affiliates. Nexstar has struck a deal, subject to federal approval, to acquire 64 stations nationally owned by Tegna, including WGRZ in Buffalo.The likely outcome of the merger will be the consolidation of newsrooms — fewer journalists, less coverage and limited options for viewers. That’s the way it’s played out in other markets where ownership is consolidated.
New York has about a dozen NPR stations, which play an especially important role in rural areas of upstate. They’ve been hurt by the federal government’s stripping of funds over the summer.
Lost federal funding annually in New York comes to about $23 million for public television stations and $5 million for public radio. An estimated 180 to 200 jobs have been lost over the past year, including 45 to 60 journalists.
Some 50 public access channels across the state are also under financial stress and a couple have closed altogether. The decline in cable subscribers is at the root of the problem.
Those channels used to derive about 90 percent of their revenue from cable-related fees. That’s dropped to about 70 percent and the loss of income has resulted in job losses, an estimated 60 part- and full-time positions at public access stations in Manhattan, Brooklyn and the Bronx alone, according to Michael Max Knobbe, executive director BronxNet Public Media.
“It’s pretty dire,” he said.
Rise of non-profit digital outlets
Non-profit digital outlets are the new kids on the block in a couple of ways. They distribute their content online rather than in traditional print and broadcasting platforms and rely on philanthropic support for most of their revenue.
Membership in the Institute for Non-Profit News, the trade group for non-profit news organizations, has grown exponentially since its founding in 2009. Coverage provided by member organizations include hyper-local, regional, state, national, international and topical reporting. Most members are digital outlets, but includes some NPR outlets.
Some of the biggest national non-profits are headquartered in New York state, including ProPublica and The Marshall Project. At least 19 are focused on matters within the state.
The latest of them, Gothamist, is aligned with WNYC, the public radio station in New York City. Other non-profit outlets focused on New York City include The City, City Limits and StreetsnlogNYC. Documented, also based in New York City, covers immigration issues around the state, primarily NYC.
Two outlets, Investigative Post and New York Focus, are investigative reporting centers. The former focuses on Western New York, the latter state government.
Aside from the behemoth that is WNYC/Gothamist, newsroom staff sizes range from 20 down to a single employee. Finances are tight, with about half of non-profits reporting negative cash flow in their most recent 990 filings with the IRS.
Moreover, wide sections of upstate aren’t served by a digital non-profit newsroom, including most of the Southern Tier and the Thruway corridor east of Syracuse through to the state border.
But non-profits are growing their audience, which account for about 3.5 million users a month. There’s room for substantial growth, provided outlets have the financial resources to add staff, expand coverage and evolve their business operations.
Push for equitable assistance
State lawmakers approved tax credits for daily and weekly newspapers and commercial television stations in 2023. The tax credits are worth up to $25,000 per employee retained, plus $5,000 for every new job added.
Publicly traded companies are not eligible, with the exception of newspapers that have lost at least 20 percent of their staff or circulation in the previous five years. This potentially allows for chains including Gannett, now the USA TODAY Co., and Lee Enterprises to receive the credit. TV and radio broadcasters can qualify only if they are not part of a publicly traded company.
The cap on tax credits for individual outlets is $300,000 per year. There is a separate $20,000 cap for the new jobs credit. Tax credits can collectively add up to $30 million a year.
The legislation did not include non-profits, and an effort to include them failed to garner the necessary support in last year’s legislative session.
A coalition of digital outlets, public broadcasters and public access stations led by Rebuild Local News have renewed their efforts for state assistance and are presently lobbying Gov. Hochul’s staff to include it in her executive budget that will be presented to the legislature in January.
Non-profits do not pay corporate taxes and are therefore ineligible for a tax credit. So instead, the proposal calls for grants to nonprofit news outlets whose audience is at least one-third state residents. Eligible outlets include digital newsrooms, NPR and PBS stations, and cable access stations.
As with newspapers and commercial television stations, the grants would be worth up to $25,000 per employee, plus $5,000 for every new job added.
Collectively, grants could not exceed $15 million annually and the cap on individual outlets would be the same as for newspapers. The program would have to be appropriated every budget year.
This is a challenging budget year for the state, given cuts in federal aid. Then again, $15 million is a modest amount given the state’s $254-billion budget. And it’s a fraction of the $920 million in state tax credits this year to Hollywood film and TV producers — a subsidy that works out to $65,000 per job.
To safeguard against government influence over editorial content, reporting requirements would be limited to audience and finances.
“A program should, and can, be constructed so that grants are given on objective criteria — the number of employees — rather than subjective judgments about editorial matters,” says Steven Waldman, president of Rebuild Local News. “This creates great incentives for hiring while protecting the editorial independence of the news outlets.”
Government assistance elsewhere
Nineteen states in recent years have considered policies that would financially assist news organizations, be they for-profit or non-profit. In addition to New York, three states — California, Illinois and New Jersey — have established programs that direct state funds to news outlets.
The assistance in Illinois includes $25 million over five years in payroll tax credits and scholarships.
The Civic Information Consortium in New Jersey has provided newsrooms with nearly $11 million since 2018. The funds are available to outlets in communities considered marginalized and/or news deserts.
The Civic Media Program in California provides local news outlets with $10 million each from the state and Google. The state also funds a local news fellowship program.
Government subsidies are the norm in the European Union. Its member counties in 2020 committed about $5.6 billion primarily to public media outlets to produce news content, part of more than $20 billion in total support. Another $1.5 billion went to private media concerns.
Canada also provides funding, albeit more modest. The Canadian Broadcasting Corporation receives about $1.4 billion annually. The Local Journalism Initiative earmarks $58.8 million over three years for news outlets across the country.
By contrast, federal support in the United States for the Corporation for Public Broadcasting was $535 million this fiscal year before President Donald Trump and Congressional Republicans eliminated the funding this summer.
There’s a correlation between government financial support and democracy. Nine of the 10 nations rated as most democratic by the Association for Development and Advancement are members of the European Union.
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