LJSA tax credits would be a game changer for community newspapers


The Local Journalism Sustainability Act carries the opportunity to significantly impact even the smallest communities across the United States, says Southern Newspapers President Leonard Woolsey. 

Leonard Woolsey

Woolsey, who also is president and publisher of The Daily News in Galveston, Texas, says: “Our industry, particularly on the smaller community side, has always run lean and with everyone doing multiple jobs — it is in our DNA.”

Tax credits that would allow those papers to hire even a single additional reporter or staff member would be “an investment that pays off in incredible multiples,” he said. “Imagine, say, a reporter writes three stories a day. Those three stories times five days equals 15 stories. Multiply by 52 weeks, and you are at 780 stories explicitly written about a local community. Imagine the impact of that voice in the local conversation of a small (or any) community in America.”

Matt McMillan

Matt McMillan, CEO of Press Publications in White Bear Lake, Minnesota, echoed the value that newspapers bring to the local community. “We’re the only reporters at most of our meetings and news events,” he said. "We write and publish voters’ guides before each election so readers know the positions of candidates running for local office. No other sources exist in our communities for this vital coverage.” The LJSA would help papers like his retain and recruit reporters who are vital to community news coverage.

LJSA tax credits also would be a “game changer” for Southern Community Newspapers, Inc., says Michael Gebhart, president and CEO. “Adding even one more reporter to each of our newspapers would allow for more coverage and more in-depth coverage of local news and events, strengthening all our papers.”

Gebhart, Woolsey and McMillan shared their thoughts this week with America’s Newspapers about the industry’s need for the temporary tax credits that the LJSA would offer. 

Mike Gebhart

“Our industry remains challenged because of sluggish revenues and the continued Big Tech threat,” Gebhart said. “Revenues have been declining for years. The pandemic hurt us, and the sluggish economy impacted many core advertisers.  We’re beginning to see some slight improvement, but because of category cutbacks, the revenue challenge remains.  While I am confident our industry will continue to navigate through the tumultuous waters, it won’t come without major challenges to the bottom line.” 

“One monumental change,” he said, “would be the tax credits granted from LJSA.  The passage of the bill would help local newspapers reach sustainability over the next few years.”

Like so many other business models, Woolsey said the newspaper industry is in an historic transition. “Fueled by technology and a rapid change in behaviors resulting in part from the 2020 COVID lockdowns, our industry is rapidly rebuilding our business models with a new pathway to growth and sustainability,” he said.  “Some are doing better than others, but the loss of one newspaper in a small community is one too many. We need to fight for the fabric of our community.”

The gauge of success

He said his company, Southern Newspapers, is doing fine — “but fine should never be a gauge of success. We moved fast and furious as COVID came on the scene, but it was painful and at times heart-wrenching. And if we learned anything in the last two years, the pace of change and need for rapid evolution of our business plans will forever remain in a two-minute football drill mode. The world changed like the tectonic plates — and so must we. Remember, fine is not good enough. A good business must be responding to coming changes, not stuck reacting to what is happening in the moment. The LJSA will allow many that extra hand to reset their team and business plans for true sustainability.”

As for the next five years, he said: “Southern will be here and serving communities to the best of our abilities. What that will look like is incredibly uncertain — as the lessons of the past two years have proven. What I do know, however, is we will approach each day as a critical moment in time requiring us to make the best longer-term decisions for our communities and employees. I believe what we do has both purpose and is inherently tied to the success of our democracy — and I, for one, am not going to let that light go out on our collective watch.”

Without newspapers, the watchdog is missing

News is necessary, says McMillan, and community newspapers need to transition for the sake of their communities. Without newspapers, the watchdog is missing, which can lead to taxes increasing and voting declines. He said the sense of community, volunteerism and giving also can decline without newspapers.

“We play vital roles informing citizens in our communities,” McMillan said. “Reader trust for community newspapers hasn’t and won’t change. In fact, reader trust is growing as people become wise about untrusted sources. Subscriptions are growing.”

McMillan said that Press Publications, like other community papers across the country, is rebounding from government/pandemic limits on community festivals, fairs, events and disruptions. “We expect recovery to continue as these events return — provided breaks in supply chains allow them to do so. The recovery is choppy, but improving.”

Big Tech disruptions

In addition to the financial break that temporary tax cuts would provide over the next five years, McMillan also said this gives time for Congress to act on another issue of importance to newspapers — the disruptions caused by Big Tech companies.

Australia passed a law this year that requires Big Tech companies like Facebook and Google to pay local media outlets and publishers to link their content on news feeds or in search results.

 “The U.S. can do the same,” McMillan said, adding that his own papers have seen advertising disruptions by Big Tech. “LJSA gives Congress time to fix it.”

Woolsey agreed that the five-year sunset clause would allow newspapers “the breathing room to rebuild their business models” following once-in-a-lifetime societal changes (COVID lockdown related, massive technology disruptions, etc.). “While an industry asking for assistance is not particularly unheard of (think of tariff requests, farm subsidies, etc.), for the newspaper industry, this is unprecedented. I promise you this industry would not be bringing this forward if we did not believe the relief is critically needed to help transition even the smallest community newspapers.”

Adapting to the ever-changing marketplace

Gebhart also said Southern Community Newspapers is “hanging in there as best we can.”

“Basically, we mirror the overall industry,” Gebhart said. “Out of necessity we have cut expenses across the board because of declining revenues. We continue to adapt to the ever-changing marketplace caused primarily by digital influencers while remaining true to our core values related to local journalism. As a small media company, we needed the PPP loans to survive.  Thankfully, I think we’re weathering the storm for the time being.”

Over the next few years, Gebhart believes his company will continue to transform from print centric to digital.  “While I believe print will be a factor for many years, we need to stay diligent to the future of a digital first world.  In an industry that used to be programmed for growth by just joining the parade, we now must constantly come up with new and innovative ways to meet the needs of our readers and our advertisers.”

This is not an "us vs. them" scenario

All three media executives flatly rejected the idea that accepting the tax credits would impact their newspapers’ coverage of the federal government or other government institutions.

“Newspaper publishers in Canada received help,” McMillan said.  “Did you see its coverage of government change? No.  We serve readers first.  Our ability to be the independent watchdog actually increases if we sustain and grow reporters.”

Gebhart agreed, saying: “On the editorial side, we do not allow the business side of the company to alter our coverage of local businesses and governments.”

Woolsey said that by accepting tax credits, “all it ensures is we will be able to do a better job of reporting the people’s business.” He said, “Newspapers and the government are not adversaries — far from it. We both work to serve our communities and tend to work together to that end. I work with many elected officials who would be greatly impacted if their local newspaper was not there to help raise opportunities to address and resolve on behalf of their constituents. This is not an us vs. them scenario, as many in 'scare the pants off our viewers' media like to portray. We are all here to serve our communities and are passionate about how to arrive at those ends.”

Woolsey added, “My entire life, I’ve read about tax credits and financial subsidies for industries — from farms to steel — to even the most obscure business segments. And, unlike the LJSA with its sunset clause, many of these will forever be in place. The newspaper industry is not asking for a handout, but simply a hand to navigate a societal and economic transition. We are proud of our independence, both financially and in our role in democracy. And I can promise you, this ask is not anything any of us feel excited about — but we get it. Today is a historic time of change, and as fast as we move, we recognize this might be that one time we ask for a hand. Again, we are not asking for massive, long-term subsidies but rather a short-term and narrow tax relief provision to allow newspapers to employ people while reimagining their business models.”

The purveyors of truth

Gebhart stressed the need for passage of the LJSA, saying, “Local newspapers are the purveyors of truth in a community.  In the communities where we provide news coverage, we are the sole source readers have to keep up with local government and events. The same is true for hundreds of other newspapers across the country. More in-depth reporting by the local newspaper is in the best interest of all citizens.  LJSA helps everyone — for the common good.”

McMillan also noted that the LJSA includes a tax credit for local businesses to advertise. “Since our newspapers reach the largest audience in our communities, ads delivered to that audience spur response and extra business. As each local business grows by advertising, it keeps/grows its employees and pays the government more taxes. Advertising tax credits can help hundreds of thousands or millions of local businesses recover.”