Tweaks in policy or taxes, not major bailouts, would help newspapers serve readers

There is no question newspapers are struggling. Why is a more layered and debated discussion. The Internet is the easy answer, but only tells part of the story.

The Internet has forced structural changes that some newspapers will be able to manage, some will not. Nothing has damaged newspapers more than consolidation and the debt the industry took on to constrict ownership.

An editorial Friday pointed out that the Minneapolis Star Tribune, which emerged from Chapter 11 bankruptcy protection Monday, had $400 million in debt. A huge number for a single newspaper. A more illustrative example of the industry's woes is the Tribune Co.

For years, the Chicago-based company feasted on television stations and newspapers until it almost collapsed under its own largesse and was bought by developer Sam Zell. Zell took on a massive amount of debt, fumbled around with his new toy then entered Chapter 11. Tribune will likely be owned by its lenders, the banks.

The Seattle Times is not immune to the market pressures affecting the newspaper industry. We are grappling with the Internet; how to make money with it, how best to deliver our content through it. The Times, like every other newspaper that will survive the recession, will have to adjust to slimmer profit margins.

The plight of newspapers has caught the attention of Congress. Sen. Benjamin Cardin, D-Md., has introduced the Newspaper Revitalization Act, and a hearing was held recently in the House about the future of newspapers.

Regular readers of this column know that I am not a fan of Cardin's bill, which would allow newspapers to become 501(c)(3) tax-exempt organizations. I don't oppose the bill but don't believe that it is the model to save newspapers. Mainly because newspapers don't need saving.

The worst idea is a federal bailout. Accepting federal dollars would taint newspapers for generations to come. A bailout would also be ineffective. Most likely the money would melt into the nation's largest chains. They would pay down their debt then go back to putting out pedestrian newspapers.

When considering a bailout I find myself aligned with newspaper-haters like Daniel Lyons of Newsweek. Never mind that he works for a struggling ink-on-paper product that is owned by a newspaper company and desperately emulating the Economist, which very much sees its future in print. Set that aside and a recent screed of his on the Techtonic Shifts blog has some merit.

"The only beneficiaries of a bailout would be a handful of big newspaper companies that used to be profitable and powerful and now, well, aren't," Lyons wrote.

There are actions Congress and legislatures can take to help newspapers, not just the Bigs, adjust to the reality of decreased profits. The L3C (low-profit limited liability company) model is a better solution than the not-for-profit. It sets up a system that plows profits back into the newspaper. Probably not a system that would interest the big chains. But it could be a good model for a local person or a group that wants to buy a newspaper from a bankrupt chain like Tribune.

Washington state newspapers received a break on the state business-and-occupation tax this year. A rather minor assist that is already applied to larger companies in the aerospace and timber industries.

Yes, newspapers have a different relationship with the government than Boeing or Weyerhaeuser. But minor tweaks to taxing or new ownership models made possible in Congress won't lead to journalists being wards of the state.

What it will help ensure is that some, not all, newspapers will make it through this slumping economy with a sustainable structure.

Ryan Blethen's column appears Sunday on the editorial pages of The Times. His e-mail address is: rblethen@seattletimes.com