May 6, 2009 / 11:32 PM / 10 years ago

U.S. senators consider options for ailing newspapers

WASHINGTON (Reuters) - The U.S. government could provide tax breaks for newspapers or allow them to operate as nonprofits to help the struggling business survive, Sen. John Kerry said Wednesday.

Kerry, a Massachusetts Democrat, said Congress can help the industry hit by a collapse in advertising revenue, debt that is getting harder to repay and the drift of print subscribers to free online news websites.

Without newspapers, Kerry and other lawmakers said at a Senate subcommittee hearing Wednesday, there will be too few journalists investigating governments, companies and individuals.

“I think there are definitely some things we can do to encourage, to help the situation without stepping over any line,” Kerry told Reuters after holding a hearing on the future of journalism.

Kerry, chairman of the Senate Commerce Subcommittee on Communications, was referring to the idea that federal, state and local governments should not offer subsidies or other financial help to newspapers because it would make them beholden to politicians. This, in turn, could discourage critical stories or investigations.

Kerry’s interest in newspapers sharpened in the past several weeks. The Massachusetts Democrat counts The Boston Globe as his hometown paper, and was dismayed to see that parent company New York Times Co was ready to shut it down because it is losing money.

The Globe was able to avoid closing after reaching a tentative agreement with its biggest union on getting cost concessions that would help the paper survive, though not erase its losses.

“I’m happy they reached some sort of agreement,” Kerry said, adding that he did not know the details of the deal.

Kerry invited representatives of the newspaper, TV news and online media businesses, including Google Inc, where many people read their news, to discuss how to stave off an industry collapse.

He said the hearing was the first in a series that will focus on how to help newspapers adjust to the new media landscape.

They are considering tax relief methods, including how and when publishers can classify operating losses, and whether newspapers should be allowed to operate as nonprofit companies for educational purposes.

“I think it’s worth looking at this nonprofit piece, certainly clarifying that,” Kerry said.

Subcommittee members said they wanted to figure out how to preserve “the core societal function that is served by an independent and diverse news media.”

“I’m afraid we’re going to lose that watchdog if we don’t figure this out,” said Sen. Amy Klobuchar, a Minnesota Democrat whose father was a journalist for the Associated Press and the Minneapolis Star Tribune.

Additional reporting by Robert MacMillan in New York; Editing by David Gregorio

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