Mark MacCarthy is a professor at Georgetown University’s Communications, Culture and Technology program. The following are his remarks delivered at the Federal Trade Commission’s “News Media Workshop” held on December 1 and 2, 2009. Read an expanded version of these remarks in his earlier guest blog post here.

I want to develop the idea that public funding is a necessary part of the mix of support mechanisms for the journalism of the future.

Why? The Internet has undermined the advertising and bundling mechanisms that subsidized news production.

Charging online readers for access to news won’t be enough. If the 80-20 revenue split between ads and subscription is the same online as offline, then the most the strategy of erecting online pay walls could net is about 25% above the $3 billion that the industry clears now from online ads. That’s about $750 million. It’s just not enough.

So what do we do? Congress should adopt legislation that would provide substantial additional resources to the Corporation for Public Broadcasting to support local newsgathering by public service media.

The system of public service media already exists. What it needs is the funding to hire journalists to cover local and regional news: school boards, zoning meetings, city councils, and state legislatures.

As you have heard, CPB and NPR clearly recognize their opportunity to fill the local newsgathering role. A step in the right direction is NPR’s new local journalism project with support from CPB and the Knight Foundation. With substantial additional federal funding, this initiative could be expanded.

A supplemental CPB funding request and all future funding requests should contain a provision for local newsgathering.

CPB already dispenses federal funds for news and public affairs programs like the NewsHour and Frontline. One model for the new news and public affairs grants is the Independent Television Service ITVS receives money from CPB to fund public television programs produced by independent producers and independent production entities.
But wouldn’t the government control the news agenda and point of view of publicly funded news? Not necessarily. Other countries including Great Britain have a tradition of publicly funding news organizations that are vigorous critics of government policies. We have this tradition here in the United States as well through CPB, and its “heat shield” provisions are there to prevent political interference with news content.

Finally, should public support be conditioned on the grantee maintaining nonprofit status? Some might allow grantees to be low-profit, and there is a legal status called L3C that might permit this. In my judgment, the key point is that their purpose be public. Newsgathering grants would not preclude other support mechanisms, including philanthropy, donations from the public, and even some revenue from advertising and subscription fees. If their revenues exceed their costs, however, they would need to use all or most of their net revenues for their public purpose.

I don’t think all local news can be produced through government grants. Maybe it would be ideal to keep the center of gravity of the news business in the private sector, with only a supporting role for philanthropy and public funding. I don’t know the right mix of new funding sources, but I do think that public funding is an essential element of the mix. And the time to start developing the specifics of this idea is now.