The Results of The Newspaper Preservation Act Are Controversial

By Jacqueline Smith on August 04, 2010
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In September 1997, Gannett owned 87 newspapers; Knight-Ridder, 33; Newhouse, 23; Times Mirror, 9; the New York Times Company, 20; and Dow Jones and Company, 20.74 In 1998, the Sunday New York Times had a circulation of 1,018,912; the Los Angeles Times, a Sunday circulation of 1,cartier love bracelet silver,355,682; and the Detroit News and Free Press, a Sunday circulation of 796,468.

In 1970, Congress passed the Newspaper Preservation Act, which permitted news-papers threatened with bankruptcy to share manufacturing plants and commercial operations, an activity that would otherwise violate antitrust laws. Since the law was en-acted, the Justice Department has approved thirty Joint Operating Agreements (JOAs), preserving the existence of multiple newspapers in many cities in the United States.76 Although two papers may share printing, advertising, and circulation functions,cartier love charity bracelet cost, the act stipulates that the papers' newsrooms and editorial pages must remain separate and in-dependent. The success of JOAs has been mixed, however. As of 1999, JOAs were in place in fifteen U.S. cities, including Albuquerque, Birmingham, Charleston, Chattanooga, Cincinnati, Detroit, Fort Wayne, Honolulu, Las Vegas, Salt Lake City, San Francisco, Seattle, Tucson, and York, Pennsylvania.

The results of the Newspaper Preservation Act are controversial. Its critics charge that such mergers hike advertising rates. Advertisers, such as supermarkets, who must use the newspapers to reach readers must pay the price. These costs are passed on to consumers. Defenders of the act note that it has preserved two editorial voices in some major cities. In 1983, for example, Seattle's two major papers—the morning Post-Intelligencer and the evening Times—combined. The Post-Intelligencer, which appeared to be failing before the venture, prospered for a time but has recently been in financial straits.

The continuation of the Newspaper Preservation Act is uncertain. In 1989, the Supreme Court voted 4-4 to let a JOA agreement go forward between two Detroit papers. In the same year, the House Committee on the Judiciary's Economic and Commercial Law Subcommittee held hearings to determine, among other things, whether the act should be repealed. Although the act withstood both of these encounters with opponents, the narrow court win and increased congressional scrutiny mean that its continuing existence is no longer assured.

Newspaper advertising revenues rise and fall with the economy. Revenues for 1997 were $41.3 billion, an increase from the year before, but the continued increase necessary to offset the rising cost of newsprint was uncertain.78 In major newspaper markets, advertising is 35 percent retail, 27 percent automotive, and 7 percent travel. A drop in consumer spending or employment opportunities directly affects revenues.

The relationship between readership and advertising is complex. When a paper be-gins to lose circulation, a downward cycle begins. Readers purchase the paper for its news content and its advertising information. The newspaper with the larger circulation gets the greater share of advertising. Increased advertising increases the news hole, which in turn attracts more readers and with them more advertisers. A newspaper trailing another in a market may find itself with 40 percent of the readership but, because of this cycle, only 25 percent of the advertising. Because advertising accounts for up to 80 percent of a newspaper's revenue, decreases in advertising can spell a paper's demise.

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