Recommendation 1

THE COMMISSION RECOMMENDS:

Direct media policy toward innovation, competition, and support for business models that provide marketplace incentives for quality journalism.

Throughout American history, the main source of journalism has been private enterprise. The Commission does recommend below that the United States intensify its commitment to public media. But the journalism supported by marketplace incentives—including both for-profit and not-for-profit models— is likely always to provide the lion’s share of original and verified reporting. The health of the private media sector is an important public-policy goal. So too is the independence of private media from governmental intervention on content grounds.

Existing companies and start-ups are busily searching for business models to sustain local news operations. Government’s first role should be to let experimentation thrive. Governments should avoid regulations that distort incentives. Rules should not make investments in traditional media artificially more attractive than new ventures, or vice versa. Governments should be careful not to pose barriers to innovation. Agencies should regularly re-examine whether rules serve the proper ends of public policy in light of changing economic and technological conditions. This includes rules regarding property rights, ownership limits, and the legal obligations of media firms.

In the Commission’s view, the central tenets of media policy should be innovation and competition. Federal agencies that regulate electronic media should make it possible for as many economically viable competitors as possible to gain access to local audiences. It is important to improve citizen access to the information sources of their choice.

Policy makers should promote competition both within and between different media platforms. There should be sufficient competition among providers of new and traditional information services to meet the needs of information consumers with the greatest effectiveness and at lowest cost.

While the Commission clearly does not invite governments to meddle in the practice of journalism, it is aware of a number of proposals to aid journalistic organizations. A persuasive case has not been made to the Commission for direct subsidies to private media enterprises. But there is a social value of journalism. So, without recommending any particular measure, the Commission suggests that governments explore modest viewpoint-neutral tax and regulatory changes to help media ease the burden of rapid change amid financial turmoil.

For example, state and federal governments could include a state sales tax exemption for print and online journalism subscriptions, or a federal tax credit for the support of investigative journalism.³³ Other changes to federal tax law could include “permissive joint operation of for-profit and not-for-profit journalism enterprises within the federal tax exemption regime, amendment of the deduction limitations for contribution of a newspaper business to a not-for-profit organization, deferral of gain in taxable acquisitions of newspapers by not-for-profit organizations, and permissive use of tax-exempt conduit bond financing in such acquisitions.”³⁴ Not-for-profit news organizations could also be strengthened if their advertising revenues were at least partially tax-exempt and if rules against engaging in unrelated businesses were relaxed. Without endorsing these measures, the Commission commends them for public dialogue.

Local governments should take note of the civic value of private investment in information infrastructure. Public policy should encourage local entrepreneurs to fill local information voids or provide alternatives in local information flow. Community-focused venture funds and tax incentives may be appropriate to spur local entrepreneurship in media and technology applications with civic virtues.

Innovation, competition, and marketplace incentives will be critical to the growth of both for-profit and not-for-profit models. Foundation funding will undoubtedly help to launch and sustain many significant local efforts. Still, the most successful nonprofits are likely to be those that succeed at developing multiple streams of revenue that are fed back into the organization. The Commission thus expects that public policies that support market incentives for the production of quality journalism will serve the interests of both for-profit and not-for-profit models.

Next Page: Recommendation 2