Business Operations Issues

Newspapers desire to be good corporate citizens and have made changes in the way they do business that will have long-term benefits for the environment. Since 2000 over 70 percent of all old newspapers in the United States were recovered and recycled. The average amount of recycled fiber content in newsprint used by U.S. newspapers has increased from 10 percent in 1989 to more than 30 percent today. In addition, most newspapers have switched to vegetable-based inks in lieu of petroleum oils. As a solution for global warming/climate change is sought, newspapers will be searching for ways to reduce their “carbon footprint” and use of energy.

All newspapers must comply with Environmental Protection Agency (EPA) regulations. These regulations address the inks and chemicals involved in the printing process, the by-products of that process, the substances emitted into the air as a result of printing newspapers, and the safety and well-being of employees. EPA’s regulations can touch every department within a newspaper and can have a dramatic effect on production costs.

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In 1975, the Federal Communications Commission (FCC) adopted a rule which prohibited a newspaper and a broadcast or radio station from being co-owned if located in the same market. Over forty newspaper / broadcast cross-owned properties were grandfathered into place when the rule was established. For over 30 years, this rule has not been changed despite repeated findings by the FCC since 1996 that it needs to be reviewed and revised.

In 2003, the Commission adopted new media ownership rules, which included the relaxation of the newspaper / broadcast cross-ownership ban. In its place, the FCC adopted general cross-media ownership limits. The Third Circuit in 2004 remanded the media ownership rules back to the FCC. The Third Circuit endorsed the FCC's conclusion that the newspaper / broadcast cross ownership ban is not needed for diversity purposes. However, the Court found the FCC had "not sufficiently justified its particular chosen numerical limits for local television ownership, local radio ownership or cross-ownership of media within local markets." The Third Circuit also held that the FCC properly decided to retain some limits on cross-media consolidation to ensure diversity in the local marketplace, but it found flaws in the "Diversity Index" the FCC used to support its cross-media limits. In 2005, the Supreme Court denied an appeal by newspapers and broadcasters to review the Third Circuit's decision.

In late 2007, the FCC modestly relaxed its 32-year old ban on newspaper/broadcast cross-ownership in the same market.  If certain conditions are achieved, the ban is eliminated in the top 20 markets.  While cross-ownership of a newspaper and broadcast property in smaller markets is presumed against the public interest, the FCC will also consider application to overcome this presumption by considering factors such as whether the combined properties will increase the dissemination of local news, whether each affected media outlet will maintain its own news and editorial staff exercising independent news judgment, the level of concentration in the market, and the financial condition of the newspaper or broadcast station involved.

The FCC order also permits existing combinations that were either grandfathered in 1975 or have been granted permanent waivers to remain in existence.  The FCC also grandfathered existing combination operating under temporary waivers.

NAA believes that the FCC's December 18th decision provides a modest amount of relief from an unjustified rule that had restricted the enhancement of local news, in both print and over-the-air, in communities across the country.

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While some newspapers are independently-owned, many are corporations with stock that is publicly-traded on major stock exchanges. Whether taxes on earnings are paid at the individual or the corporate rate, taxes are a substantial cost of doing business. Independently-owned newspapers are concerned about increases or reductions in the individual tax rate, which affects the profitability of the enterprise, as well as changes that might occur to the estate tax, which can affect the survival of the newspaper. Newspapers in corporate form will likewise be concerned about increases or reductions in the corporate tax rate. Both will be concerned about the implementation of the Streamlined Sales Tax Project, whose goal is to provide simplicity and uniformity for states’ sales and use tax regulations. In the current “pay-go” environment, diligence will be necessary to prevent the elimination of current tax benefits to pay for other programs, increasing taxes on newspaper operations.

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Newspapers strive to provide a safe workplace for all employees. The Occupational Safety and Health Administration (OSHA) is the federal agency responsible for making sure that occurs. OSHA’s regulations address the entire work environment: the workplace itself, the equipment used and how it is guarded to prevent injuries to employees, along with how the work is actually performed. Their regulations provide guidance on ergonomics, safety, and hazards that might harm employees. As with all regulations, the costs of implementation can be a significant cost of doing business.

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NAA submits friend-of-court brief in Charleston JOA case

NAA has filed an amicus curiae brief supporting dismissal of a U.S. government challenge to the sale by MediaNews Group, Inc., of assets of the Charleston Daily Mail to the Daily Gazette Company. The sale is the subject of a challenge by the U.S. Department of Justice Antitrust Division.U.S. v. Daily Gazette Company and MediaNews Group, Inc., No. 2:07-0329 (S.D. W. Va. May 22, 2007)

The Charleston Gazette and the Charleston Daily Mail entered into a Joint Operating Agreement in 1958, prior to enactment of the Newspaper Preservation Act, 15 U.S.C. 1801 et seq. The government alleged that, when Daily Gazette acquired MediaNews Group’s 50 percent interest in the JOA in May 2004, it acquired ownership of the Charleston Daily Mail with the aim of shutting it down, and that editorial competition between the two newspapers suffered, violating federal antitrust laws. The government charged in its brief that the 2004 amendments to the JOA were part of a plan to terminate the Daily Mail’s publication, to allow it to fail, and to leave Charleston with a single daily. The government cited steps Daily Gazette Company took "to implement its plan" such as cutting newsroom staff and budget, eliminating the Saturday edition, and ceasing promotions and discounts, and characterized these steps as "decisions regarding content and style" that affected "the attractiveness and worth of the paper to readers." The brief suggested these steps would diminish the newspapers’ "depth, breadth and accuracy” and “most attractive mix of news, features, and editorials," reduce output, and increase prices to readers and advertisers.

The newspapers sought dismissal, contending that editorial competition, including competition in “thoughts and ideas,” is incapable of measurement or adjudication, and beyond the scope of antitrust law. The newspapers argued there has been no economic or commercial competition between the newspapers since the JOA was formed, and that the two newspapers are the economic and legal equivalent of two brands sold by a single joint venture, which is permissible under United States Supreme Court joint venture case law. NAA supported the dismissal, noting that DOJ cannot base its antitrust claim on an evaluation of the “content and style” of a newspaper, characterized as its quality, without infringing core First Amendment values. The government should not substitute its views on how to staff and position a newspaper for decisions made by newspaper management in response to changing marketplace circumstances. The brief said antitrust liability for newspapers historically has been restricted to commercial “trade and commerce” and has not rested on an evaluation of news or editorial content. The government filed its opposition October 5.

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