GAO Local News Study Highlights New Policy Alternatives to Resolve Crisis

The federal Government Accountability Office several months ago convened an expert policy panel on solutions for the local news crisis in the US. This was a widely multidisciplinary group of professors, journalists, technologists, business leaders, academics and leaders in civil society.

I was gratified to join this effort, building our Local News efforts at the Shorenstein Center with my paper, Solutions to America’s Local Journalism Crisis: Consolidated Literature Review (updated source library of literature available here). 

Today the GAO publishes its report which concludes that successful strategies to resolve the crisis in local news will feature both accelerated digital innovation — and some highly targeted policy initiatives.

The GAO report was prompted by Congressional inquiries and now goes to FCC Chairwoman Jessica Rosenworcel. But the report’s intended audience should be broader and includes any citizen concerned about the crisis in democracy caused by the decline in local news. The crisis was most vividly recently explained by Shorenstein Director Nancy Gibbs in her recent Washington Post OpEd.

Our GAO-convened panel of experts met with GAO officials for several days, largely via videoconference due to the Pandemic. The resulting report is highly nuanced and thoughtful – among the most comprehensive and deeply reported studies of local news in recent years. After our live sessions, GAO experts spent the next few months compiling evidence in accordance with generally accepted government auditing standards.

Some highlights:

• The GAO says the primary goal of public policies should be to preserve the function of journalism — and NOT to save any specific local news outlets.
• Direct government funding and tax incentives supporting nonprofit news organizations CAN be useful in addressing market failure BUT MUST provide sufficient safeguards to ensure independence. This is of course easier said than done.
• Tax credits and government advertising CAN provide financial support for local news but the impacts may not adequately target local news specifically or public interest journalism.
• While some countries now controversially mandate internet platforms pay news publishers for using their content — the literature, stakeholders, and experts ‘expressed concerns’ that the policies may be based on insufficiently supported claims. Moreover, if not properly designed, such policies could result in unintended consequences for smaller publishers and consumers.
• Digital transformation – although both needed and inevitable – ‘may have increased the risk of market failure because this type of news is now less frequently bundled with high revenue-generating content in a print newspaper—an approach that allowed for cross-subsidization.’ In my view, this is why the cost-cutting hedge-fund owners hollowing out such businesses and extracting maximum cashflow will ultimately be left with no terminal asset value unless they find a strategy to sustainably grow revenue.

There is much more in this 93-page study, which does a fine job with the history of market disfunction in local news wrought by digital transformation. Anyone interested in the subject should read the full report here.

Shorenstein Center visiting scholar Craig Forman is past CEO at local-news group McClatchy Co. and is a partner at NextNews Ventures in San Francisco.