NH is 1st state to help newspaper, likely not last

AP News
Posted: Nov 12, 2009 3:28 PM

New Hampshire's decision to guarantee a line of credit to a struggling newspaper likely won't be the last such effort despite the questions it raises about independent coverage.

At least two other states have explored similar deals as newspapers across the country face an unprecedented decline in advertising revenue, but no other state has gone through with it yet, news industry analysts said this week.

New Hampshire's Executive Council, which reviews and approves state contracts, agreed without debate last week to guarantee 75 percent of a $250,000 line of credit to the Eagle Times of Claremont, which reopened under new ownership last month after declaring bankruptcy in July.

Stephen Farnsworth, professor of communication at George Mason University in Fairfax, Va., said newspapers face questions of credibility if their very existence depended on those they write about.

"Even if the paper covers government officials critically, readers may still have their doubts about whether they are getting the full story," Farnsworth said.

Publisher Harry Hartman said the newspaper has yet to touch the line of credit, given that it has brought in more money than expected since its bank approached the state for a guarantee. He said the newspaper expects to turn a profit in its first month.

"It has nothing to do with us getting any type of bailout from the state to start this newspaper up," he said in an interview. "We came back and revived it with all our own money. The line of credit is just that _ a line of credit just in case."

Hartman said the credit guarantee has been blown out of proportion by competitors who "aren't happy we're back in the market."

In a message to readers Thursday, senior partner George Sample said the owners plan to go back to the bank in a few months to try to eliminate the need for any state involvement. Meanwhile, Sample assured readers that "no one, not the state, not anyone, gets special treatment in our newsroom."

Gov. John Lynch has said the credit guarantee was appropriate for economic development. The newspaper had 66 full-time workers when it closed and about 30 workers now.

John Sturm, president of the Newspaper Association of America, told Congress in September that direct financial assistance would be inappropriate, but newspapers should be allowed to recoup taxes they paid on profits earlier this decade.

There also has been talk of federal subsidies for media outlets, but very little consensus, said Rick Edmonds of the Poynter Institute, a journalism think tank in St. Petersburg, Fla. He believes states are likely to get more involved.

Last year, Pennsylvania Gov. Ed Rendell arranged a meeting between Philadelphia's two large daily newspapers and the state's largest employee pension funds, but nothing came of it. Connecticut officials, meanwhile, were prepared to offer financial help to attract potential buyers for two daily newspapers that came close to shutting down this year. The buyer ended up not asking for help.

Jack Lule, a journalism professor at Lehigh University in Bethlehem, Pa., said subsidies may help newspapers make the transition from paper to Internet and noted that America's first newspapers got state and federal assistance.

"We're at a point in our history now where it seems foreign to us but actually we can find a lot of examples of that, and I do believe it's part of our future," he said.