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A New Age for Newspapers: Diversity of Voices, Competition and the Internet A NEW AGE FOR NEWSPAPERS: DIVERSITY OF VOICES, COMPETITION AND THE INTERNET HEARING BEFORE THE SUBCOMMITTEE ON COURTS AND COMPETITION POLICY OF THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED ELEVENTH CONGRESS FIRST SESSION APRIL 21, 2009 Serial No. 111–38 Printed for the use of the Committee on the Judiciary ( Available via the World Wide Web: http://judiciary.house.gov U.S. GOVERNMENT PRINTING OFFICE 48–745 PDF WASHINGTON : 2010 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 COMMITTEE ON THE JUDICIARY JOHN CONYERS, JR., Michigan, Chairman HOWARD L. BERMAN, California LAMAR SMITH, Texas RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, JR., JERROLD NADLER, New York Wisconsin ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia HOWARD COBLE, North Carolina MELVIN L. WATT, North Carolina ELTON GALLEGLY, California ZOE LOFGREN, California BOB GOODLATTE, Virginia SHEILA JACKSON LEE, Texas DANIEL E. LUNGREN, California MAXINE WATERS, California DARRELL E. ISSA, California WILLIAM D. DELAHUNT, Massachusetts J. RANDY FORBES, Virginia ROBERT WEXLER, Florida STEVE KING, Iowa STEVE COHEN, Tennessee TRENT FRANKS, Arizona HENRY C. ‘‘HANK’’ JOHNSON, JR., LOUIE GOHMERT, Texas Georgia JIM JORDAN, Ohio PEDRO PIERLUISI, Puerto Rico TED POE, Texas LUIS V. GUTIERREZ, Illinois JASON CHAFFETZ, Utah BRAD SHERMAN, California TOM ROONEY, Florida TAMMY BALDWIN, Wisconsin GREGG HARPER, Mississippi CHARLES A. GONZALEZ, Texas ANTHONY D. WEINER, New York ADAM B. SCHIFF, California LINDA T. SA´ NCHEZ, California DEBBIE WASSERMAN SCHULTZ, Florida DANIEL MAFFEI, New York [Vacant] PERRY APELBAUM, Majority Staff Director and Chief Counsel SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel SUBCOMMITTEE ON COURTS AND COMPETITION POLICY HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia, Chairman JOHN CONYERS, JR., Michigan HOWARD COBLE, North Carolina RICK BOUCHER, Virginia JASON CHAFFETZ, Utah ROBERT WEXLER, Florida BOB GOODLATTE, Virginia CHARLES A. GONZALEZ, Texas F. JAMES SENSENBRENNER, JR., SHEILA JACKSON LEE, Texas Wisconsin MELVIN L. WATT, North Carolina DARRELL ISSA, California BRAD SHERMAN, California GREGG HARPER, Mississippi [Vacant] CHRISTAL SHEPPARD, Chief Counsel BLAINE MERRITT, Minority Counsel (II) C O N T E N T S APRIL 21, 2009 Page OPENING STATEMENTS The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Chairman, Subcommittee on Courts and Competition Policy ............................................................................................... 1 The Honorable Jason Chaffetz, a Representative in Congress from the State of Utah, and Member, Subcommittee on Courts and Competition Policy ....... 2 The Honorable Lamar Smith, a Representative in Congress from the State of Texas, and Ranking Member, Committee on the Judiciary ......................... 4 The Honorable John Conyers, Jr., a Representative in Congress from the State of Michigan, Chairman, Committee on the Judiciary, and Member, Subcommittee on Courts and Competition Policy ............................................. 5 The Honorable Charles A. Gonzalez, a Representative in Congress from the State of Texas, and Member, Subcommittee on Courts and Competition Policy ..................................................................................................................... 7 WITNESSES Mr. Carl Shapiro, Deputy Assistant Attorney General for Economics, Anti- trust Division, U.S. Department of Justice, Washington, DC Oral Testimony ..................................................................................................... 9 Prepared Statement ............................................................................................. 11 Mr. Brian P. Tierney, Chief Executive Officer, Philadelphia Media Holdings, Philadelphia, PA Oral Testimony ..................................................................................................... 24 Prepared Statement ............................................................................................. 27 Mr. John Nichols, American Journalist, Madison, WI Oral Testimony ..................................................................................................... 39 Prepared Statement ............................................................................................. 41 Mr. Bernard J. Lunzer, President, The Newspaper Guild, Washington, DC Oral Testimony ..................................................................................................... 44 Prepared Statement ............................................................................................. 46 Mr. Ben Scott, Policy Director, Free Press, Washington, DC Oral Testimony ..................................................................................................... 48 Prepared Statement ............................................................................................. 51 Mr. C. Edwin Baker, Nicholas F. Gallicchio Professor, University of Pennsyl- vania, Philadelphia, PA Oral Testimony ..................................................................................................... 59 Prepared Statement ............................................................................................. 61 Mr. Dan Gainor, Vice President, Business and Media Institute, Media Re- search Center, Alexandria, VA Oral Testimony ..................................................................................................... 71 Prepared Statement ............................................................................................. 73 APPENDIX Material Submitted for the Hearing Record .......................................................... 99 (III) A NEW AGE FOR NEWSPAPERS: DIVERSITY OF VOICES, COMPETITION AND THE INTERNET TUESDAY, APRIL 21, 2009 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS AND COMPETITION POLICY COMMITTEE ON THE JUDICIARY, Washington, DC. The Subcommittee met, pursuant to notice, at 2:07 p.m., in room 2141, Rayburn House Office Building, the Honorable Henry C. ‘‘Hank’’ Johnson, Jr. (Chairman of the Subcommittee) presiding. Present: Representatives Johnson, Conyers, Gonzalez, Jackson Lee, Chaffetz, Goodlatte, and Smith (ex officio). Staff Present: Christal Sheppard, Majority Counsel; Anant Raut, Majority Counsel; Elisabeth Stein, Majority Counsel; Rosalind Jackson, Majority Professional Staff Member; Stewart Jeffries, Mi- nority Counsel; and Blaine Merritt, Minority Counsel. Mr. JOHNSON. This is the Committee on the Judiciary, the Sub- committee on Courts and Competition Policy, and this meeting will now come to order. Without objection, the Chair will be authorized to declare a recess of the hearing, and I will now recognize myself for a short statement. The newspaper industry is facing hard times. Newspapers report losing millions of dollars a week, and clearly this is an unsustainable situation. So, as a result, it is nearly impossible to open a newspaper, turn on cable news, or even go online without reading about another newspaper threatened with the closure of its doors forever. A key contributor to this phenomenon is the ongoing reduction in advertising revenue. Advertising revenue, which was once the lifeblood of the newspaper industry, has decreased by 25 percent in the last year alone; and over the last 15 years, public preference for news consumption has dramatically shifted from print media to online sources; and in that time, online readership has grown from essentially 0 to 63.2 million people. This has contributed to a vi- cious cycle as readership declines and newspapers earn less in ad- vertising revenue, which results in less content, which results in fewer readers, and on and on, with no end, infinite. So most would agree, however, that online news is not a com- plete substitution for print media. Because of the digital divide, not everyone has access to the Internet or the news online. As print media disappears and content is moved online, entire segments of our society are being cut out from their access to the news. Thus, (1) 2 the elderly, the economically disadvantaged, niche markets, and some physically challenged individuals are disproportionately harmed by the decline in print media. In this light, access to print media, particularly print media that covers the national news from a local perspective, and also the local news, becomes increasingly important. Another negative consequence of the decline of newspapers is the erosion of responsible journalism. Over the last decade, economic pressures have resulted in layoffs of journalists and newspaper staff. The loss of jobs is bad enough, since every job must be pro- tected in this economy. Compounding the problem is the harm to the first amendment of the United States Constitution. I have always considered, as many others have, the media to be our fourth branch of government. It provides a check on government and private fraud and abuse that may be lost to local and regional newspapers close to Washington, DC, and international bureaus. Even the wire services, by the way, Associated Press, I think UPI went out of business at one time, but it is back in operation, unlike its former self. In addition, local news only of importance to small areas and niche markets may be lost forever if the smaller newspapers are unable to survive. In fact, it is exactly this premise that the mar-
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