Senator proposes nonprofit status for newspapers

Struggling newspapers should be allowed to operate as nonprofits similar to public broadcasting stations, Sen. Benjamin Cardin, D-Md., proposed Tuesday.

Cardin introduced a bill that would allow newspapers to choose tax-exempt status. They would no longer be able to make political endorsements, but could report on all issues including political campaigns.

Advertising and subscription revenue would be tax-exempt, and contributions to support coverage could be tax deductible.

Cardin said in a statement that the bill is aimed at preserving local newspapers, not large newspaper conglomerates.

"We are losing our newspaper industry," said Cardin. "The economy has caused an immediate problem, but the business model for newspapers, based on circulation and advertising revenue, is broken, and that is a real tragedy for communities across the nation and for our democracy."

Cardin said his proposal may not be the best choice for some major newspapers, but "should be an option for many newspapers that are struggling to stay afloat."

Speaking on the Senate floor, Cardin added, "As local papers are closing, we're losing a valuable tradition in America - critically important to our communities, critically important to our democracy."

The head of the newspaper industry's trade group called the bill a positive step.

John Sturm, president and chief executive officer of the Newspaper Association of America, said the proposal "recognizes changes in the law might be necessary to provide a boost to newspapers trying to weather this difficult economic period."

He agreed with Cardin that his approach may not work for all newspapers, but said the legislation is a starting point for discussions already under way on ideas to help the industry.

The association is a nonprofit organization representing the $47 billion newspaper industry and more than 2,000 newspapers in the United States and Canada.

Reports of layoffs and furloughs at newspapers around the country have become common in recent months. Gannett Co., which publishes 85 daily newspapers, announced Monday that it was asking most of its 41,500 employees to give up a week's pay for the second time this year. The same day, Advance Publications, which publishes daily papers in nearly two dozen cities, said it was ordering 10-day furloughs and a pension freeze at nearly all its daily newspapers.