- The Washington Times - Tuesday, April 21, 2009

WASHINGTON (AP) - The Obama administration on Tuesday rejected new immunity from antitrust laws for teetering newspapers struggling to compete with Internet providers of news, entertainment and advertising.

Newspapers, however rare and financially weak, can adapt and ultimately conquer the threat posed by the Internet, the Justice Department’s Carl Shapiro told a House panel.

“We do not believe any new exemptions for newspapers are necessary,” said Shapiro, an assistant attorney general for economics.

Newspaper industry representatives told the House Judiciary Committee’s competition policy subcommittee they need more legal flexibility than current antitrust law allows. Current laws limiting mergers are enforced as if newspapers still compete for advertising and readers only with each other, they said.

In reality, they said, newspapers now compete with countless bloggers and online news sources. Industry representatives call that a losing business model, pointing to the rising numbers of newspapers slashing staff and filing for bankruptcy amid a reader exodus for online sources of news and commentary.

“Newspaper publishers will need the flexibility to explore new approaches and innovative business models without the delay, burdens and uncertainty created by the competition laws,” said Brian P. Tierney, CEO of Philadelphia Newspapers LLC. “The enforcement of the antitrust laws has not yet caught up to current market realities.”

At issue is whether to loosen laws governing joint operating agreements designed to save dying publications in two-newspaper cities. The agreements, permitted by the Newspaper Preservation Act of 1970, assumed that the costs of putting out a newspaper were so high that two newspapers wouldn’t be able to survive in the same town. Under a JOA, two newspapers share business operations and costs with their in-town rivals while keeping separate, competing newsrooms.

There have been more than two dozen JOAs, but as of Jan. 1, only nine remained. They included newspapers in Denver, Detroit, Seattle and Tucson, Ariz., all of which were limping under the crippling weight of what newspaper representatives described as an unwinnable fight against Internet sites.

Some witnesses expressed fears that further relaxing controls on mergers could create monopolies and dilute the quality of journalism.

Rather than eliminating government laws on newspapers mergers, government policies should instead support a transformation of news outlets into not-for-profit organizations or cooperatives, said Wisconsin journalist and blogger John Nichols.

“It should encourage the consumption of journalism,” he said, perhaps by providing tax breaks for newspaper and magazine subscriptions.

House Speaker Nancy Pelosi last month asked Attorney General Eric Holder to update Justice’s enforcement of antitrust laws where newspapers were concerned “so that the conclusions reached reflect current market realities.”

Hearst Corp., the publisher of Pelosi’s hometown paper, the San Francisco Chronicle, has warned it may have to close the paper if expenses are not reduced quickly or a buyer doesn’t step forward.

Holder responded by speaking fondly of newspapers’ place in American life, and promised to be open to re-examining government antitrust policies that limit mergers in the struggling industry.

Still, Shapiro said Tuesday that any new antitrust exemptions for newspapers were “not the way to go.” The Justice Department, he said, will weigh each merger proposal individually to determine if it would substantially harm competition and consumers.

Some committee members had different reasons to look askance at or oppose further antitrust exemptions.

Rep. Lamar Smith of Texas, the Judiciary Committee’s senior Republican, suggested that the political bias of newspapers, particularly anti-Republican bias, should be considered. “Continuing the consolidation of newspapers may contribute to increasingly biased coverage,” he said, quoting several studies that show newspapers and their reporters tend to be liberal.

“When one company, such as The New York Times or the Tribune Company, owns papers in multiple cities, there is a risk that the editorial biases of the big city papers will find their ways into other markets,” Smith added. “We discuss the consolidation of newspapers, we must also address the larger issue of inaccurate and biased reporting that has become too common today.”

Philadelphia Newspapers’ Tierney dismissed that reasoning.

“Republican, Democrat, liberal, conservative _ the business model is not working,” he said.

Rep. Jason Chaffetz, R-Utah, said newspapers are to blame for their own crisis and could adapt by charging money for content, like The Wall Street Journal.

“The newspapers’ plight is largely the result of the newspapers’ failure to adjust to changes in the marketplace,” he said.

One powerful Democrat questioned the direness of the industry’s crisis, describing it as “always on the verge of disaster.”

“All of a sudden they need help and they need a lot of help, and they need it fast,” said Judiciary Committee Chairman John Conyers, D-Mich.

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