Should newspapers be next for government bailouts?Philadelphia Newspaper Holdings L.L.C., owner of the Philadelphia Inquirer, is looking for a bailout from the state of Pennsylvania. The paper, for which I have done freelance work for in the past, has like other major metropolitan dailies struggled for years with declining advertising and circulation. It has been trimming staff with a vengeance but it has done little good.
Bloomberg News reported last year that the publisher was in "technical default" of its loan covenants. Even if the company wanted to sell out, who would buy? Corporate credit has tightened to the point where even credit-worthy businesses are having difficulty getting funded. So what's a businessman such Philadelphia Newspaper's Brian Tierney, who led a group of businessman who purchased the Inquirer and related properties for $562 million, to do?
That's right, he's asking Pennsylvania Gov. Ed Rendell to write him a check even though 2008 was a big news year for Philadelphia with the Phillies winning the World Series and the hotly contested presidential primary in Pennsylvania.
What's amazing is that Rendell, a Democrat who has never been chummy with the Republican Tierney, is considering the idea.
"If the governor was persuaded to the wisdom of helping Philadelphia Media Holdings, the money could come from a number of revenue streams," his spokesman Chuck Ardo told the Bulletin.
Though I know people at the Inquirer and wish them well, I find the idea of a state bailout for Pennsylvania's largest paper to be troubling. For one thing, what's to stop smaller publications in places such as Pittsburgh and Johnstown from asking Rendell for a handout. What about other business that are struggling? Shouldn't they get help too?
This raises all sorts of journalistic problems. Would Rendell, already a popular governor, get a pass from the Inquirer if he prevents the Inquirer from going bankrupt? This also creates a dangerous precdent for state control that will be replicated in other states.
Imagine the New York Times Co. (NYSE: NYT) asking for help from the state of New York? What about Illinois and California helping Tribune Co? Would District of Columbia write the Washington Post Co. (NYSE: WPO)? The possibilities for state control of the media are frightening.
Setting aside my concerns as a journalist, bailing out newspapers would be a bigger waste of taxpayer money than the bridge to nowhere.
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Reader Comments (Page 1 of 1)
1-29-2009 @ 3:30PM
BHarrison said...
Forget any bailout for them . . . they were already failing BEFORE all of this.
. . . and as was said by another "expert" in another news article: "Our world will NEVER be the same as it was . . ." That is the reality of it all.