The Local Journalism Sustainability Act

For a century, we have relied on local broadcasters for quality, curated news and information subjected to the editorial process. We have heard old axioms like all politics is local and others that underscore the importance of quality, accurate local newsgathering and reporting. For many decades, local broadcasters fulfilled that mandate. Some better than others for sure, but still for the most part, honoring the editorial process.

That legacy is in danger!

The Competitive Challenge:

Over the last decade it has become painfully clear that new digital technology has captured the public’s attention and increasing numbers of our citizens are relying on and trusting it for their news, replacing local journalism. The University of North Carolina Hussman School of Journalism and Media recently reported that in only two decades, successive technological and economic assaults have destroyed the for-profit business model that sustained local journalism in this country for two centuries, leading to fears of an “extinction-level event” that may lead to the collapse of the country’s local news ecosystem.

It is broadly recognized that this is a crucial time in the history of television journalism and journalism in general. While broadcasters offer critically important information to local audiences and make crucial contributions to our culture through local programming, broadcasters now face pressures brought about through personal use technologies not imagined a little more than a decade ago. These pressures are most extreme in smaller markets and on smaller, community-based broadcasters.

That digital viewing is making increased inroads into traditional broadcast viewership is not news and not new. Local owners are unable to compete with digital advertising, which is drawing away increasing amounts of advertising revenue, forcing many local owners to cut costs, inevitably resulting in less local programming overall and to less in-depth local journalism. The advent of digital advertising has forced local broadcast advertisers into direct competition with sources like Facebook, Google, and other internet services that provide targeted, local, national, and even global, outreach, without regard to local boundaries and identities. Small market advertising can now be bought in a bundle with larger markets at an averaged overall cost. Despite their best attempts to compete, local broadcasters are not able to keep up.

Several recent studies comparing local television advertising with digital advertising demonstrate that local television advertising is quickly falling behind. In 2021, local television advertising is expected to account for just 11.4% of all local advertising revenue, while digital advertising revenue will more than triple that of local television. Industry analysts project that local television advertising revenue will plunge to 6.5% in 2023, while digital advertising will expand 8.5% in 2021 and 7.5% in 2023. In 2021, digital advertising spending was responsible for 15% of all advertising spending and is anticipated to capture 35% of all spending within five years.

Compounding the issue, national digital competition can sell at lower rates by averaging its costs across its national audience. Though some local broadcasters have attempted to compete online, a move to digital is difficult for local broadcasters. Industry analysts have said that broadcasters attempting to compete on the digital scene must sell 10-15 times the amount of their broadcast sales just to achieve the same margins they would for their broadcast revenue. This leaves far less money for broadcasters to invest in local programming and services.

Local Journalism Sustainability Act - Congress Reacts!

That this digital advertising evolution is having real consequences on local journalism has not gone unnoticed by Congress. Recognizing that without sufficient economic support, good localism and viewpoint diversity cannot survive, the Local Journalism Sustainability Act was introduced. It deserves broadcaster support. The House and Senate versions both seek to provide a pathway to financial viability for local news in newspapers and local digital only publications through a series of tax credits in the face of the erosion of their advertising base by digital media. The Senate version adds support for television and radio.

The Local Media Tax Credit for Advertisers

The Act proposes benefits for local newspaper subscribers, as well as benefits to advertisers who advertise on local media. There is also a credit for small business to provide financial flexibility to spend on advertising in local news publishing and media. The Act proposes to offer a five-year credit of up to $5,000 in first year and up to $2,500 in subsequent four years. The credit covers 80% of advertising costs in first year and 50% in subsequent four years. The purpose is to increase flexibility so that small businesses may utilize this credit to advertise with local television and radio stations, in addition to local newspapers, digital-only local news sources and nonprofit news organizations.

Although the House version does not yet include broadcasting, the Senate version would benefit those who choose to utilize broadcast advertising as well as newspapers. The act recognizes that the larger battle is to sustain and retain locally based journalism. In this fight, broadcasters and local newspapers are allies. If passed, the Senate bill would provide advertisers in either a local newspaper or a local broadcast station, a tax credit for small businesses who utilize local media to get their advertising messages to their communities.

Tax Credits for Journalists

To promote local journalism, the Act encourages hiring more local journalists with a proposed five-year credit of up to $25,000 per journalist in the first year and up to $15,000 per journalist in the subsequent four years. In addition, it offers an additional $12,500 for each local journalists who spends at least 100 hours per year on reporting local news.

It’s important to let your congressional delegation know to support the Senate version, as the House version has not yet been amended and provides this credit only to newspapers while the Senate version extends the benefits to broadcasters as well. Therefore, this provision, in particular, has been supported by the Radio and Television News Directors Association, (RTDNA) in recognition of its incentive for local media outlets to hire more news professionals.

Local News Subscription Credit

Attacking the issue from another perspective, the bill would provide a credit to incentivize Americans to subscribe to local newspapers or donate to local nonprofit news publishers with a five-year credit of up to $250 annually to cover 80% of subscription costs in the first year and 50% in subsequent four years. To receive the full $250 credit, a subscriber would have to spend at least $312.50 in the first year, and $500 each of the following four years. Alternatively, the credit can be used to help support a donation to a nonprofit local news publisher.

The NAB recently put it this way:

Local broadcast journalists and newspaper reporters are on the ground covering the news that impacts every community, including lifesaving information during times of crisis. Newspapers and local TV and radio stations also provide investigative stories that shine a light on government and hold those in power accountable. Local broadcast stations provide these critical services for free, over the air, to their communities and are the most trusted source of news and reporting in the country. But the sourcing, reporting and production of this news is very costly. In most stations, news costs alone account for more than a third of total expenditures. For some stations that cost approaches half of their expenses. Much of a local media outlet’s budget comes from local advertising revenue. But over the past decade many of those dollars are being diverted to and consumed by a handful of massive online technology platforms. While these companies are taking the lifeblood of local journalism, they are not actually providing any of the critical local news reporting that Americans depend upon. Instead, these tech companies provide untrustworthy platforms where misinformation runs rampant. By providing a tax credit for the hiring and retention of local journalists, as well as giving small businesses a credit for a portion of their advertising costs on local media, the Local Journalism Sustainability Act would help stabilize local newsrooms during a time when these local outlets are facing the economic impact of advertising dollars going to massive technology platforms, and the pandemic’s blow to local businesses that don’t have the resources to advertise with local media.

Your support is needed:

If your senator or representative has signed on to the Local Journalism Sustainability Act, be sure to thank them. If they have not, now is the time to ask for their support. At this writing, here is are the members who have signed on:

For the House Bill H.R.3940 - the primary sponsor is Ann Kirkpatrick [D-AZ2] and there are currently 63 cosponsors: 49 Democrats and 14 Republicans. For the Senate Bill S.2434 -, the primary sponsor is Maria Cantwell [D-WA] and there are currently 14 cosponsors: You can find the Senate co-sponsors here: https://tinyurl.com/LJSA-Senate-Sponsors and the House co-sponsors here: https://tinyurl.com/LJSA-House-Sponsors

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.