Later this summer, the state Senate will likely vote on Assembly Bill 886, which would tax Google, Facebook, Instagram and Microsoft to bail out legacy media in California.
The bill would pay newspapers and local TV stations based on the number of links indexed by the tech companies’ search engines. 70% percent of the money raised is supposed to go to hiring journalists, but there is no mechanism for ensuring this.
The bill is bad in purely economic terms — it never makes sense to subsidize obsolete industries — and is also supremely ironic because it would tax California-based tech companies to support out-of-state media owners.
Most of the large- and medium-sized newspapers in California are owned by New York-based Alden Global Capital, Virginia-based Gannett and New Jersey-based Chatham Asset Management. The Los Angeles Times and San Diego Union-Tribune are locally owned by biotech entrepreneur Patrick Soon-Shiong, but the San Francisco Chronicle, San Jose Mercury News, Sacramento Bee, Orange County Register, Riverside Press-Enterprise and many others are owned out of state.
The same goes for TV stations. Texas-based Nexstar Media Group, Maryland-based Sinclair Broadcast Group and Ohio-based Scripps own most of the stations in California. KUSI, San Diego’s last locally owned station, was sold to Nexstar earlier this year.
A handful of out-of-state companies will make a lot of money if this bill passes and is signed by the Governor. But ordinary Californians seeking better news coverage will suffer in four ways.
First, readers will lose online features they have come to depend upon. Facebook and Instagram have said they will ban news links in California if the bill passes. That means that if you see an interesting article, you would not be able to put it in a Facebook post for friends to read. Worse still, Google might remove all news posted by California media from its search engine, as it is doing in Canada because of a similar bill just passed.
Second, AB 886 will freeze in time the current media landscape. The Google and Bing search engines would be required to maintain the current visibility of legacy media. So even if independent online websites provide more accurate and balanced news coverage, the search engines will have to send readers to newspapers and TV stations.
Third, independent online media will suffer and many websites may have to cease operation. Popular websites like Times of San Diego, Berkeleyside, Long Beach Post, Noozhawk and Lookout Santa Cruz will get fewer readers from search and lose advertising as a result. In some communities, the only news offerings will again be newspapers requiring expensive monthly subscriptions.
Fourth, there is something inherently unfair in all this. At a time of high inflation and economic distress, why do a handful of out-of-state companies get a California bailout? And even if they do hire more journalists, those companies will make at least a 30% profit on it. That rate of return would make even a pharmaceutical company blush.
Backers of the bill mean well, stating in a preamble that “quality local journalism is key to sustaining civic society,” but nice words about democracy don’t alter the fact that the primary benefactors will be out-of-state owners more focused on profit than public service.
The next step for the bill is a hearing in the state Senate Judiciary Committee on Tuesday, July 11. Well-paid lobbyists for out-of-state media owners have already made their pitches, but Californians who want a vibrant local media can still make themselves heard. Reach out to your state Senator to demand truly “free and diverse” media for a 21st century California.
Chris Jennewein is editor and publisher of Times of San Diego.