Newspaper Preservation Act

The Newspaper Preservation Act of 1970 was passed to allow antitrust exemptions for newspapers in the same geographic region with agreements to share business and operating expenses while maintaining separate news and editorial functions. Known as joint operating agreements, or JOAs, these were intended to connect a “failing” newspaper with a stronger one. In theory, these agreements permit competition in a newspaper market by saving the weaker paper. In practice, some critics argue, JOAs permit additional monopolization of the news product by shutting out other publications.

Although JOAs were designed to preserve struggling newspapers, broader industry trends—particularly the rise of digital media—have led to widespread newspaper closures in the United States. A University of North Carolina study published in 2018 found that since 2004 roughly 1,800 local newspapers had ceased publication, mainly in rural areas. More recent research has identified more than 200 U.S. counties without a local newspaper. Large urban dailies have also faced significant challenges, with publishers experimenting with cost-cutting measures such as reducing print frequency, laying off staff, or transitioning to digital-first models. Today only a handful of JOAs remain, often in heavily modified form.

Origin

The Newspaper Preservation Act was passed in response to a 1969 decision by the Supreme Court of the United States, Citizen Publishing Co. v. United States, in which the Court invalidated a JOA between two Tucson newspapers, finding it in violation of antitrust laws. Justice William O. Douglas famously wrote for six members of the Court: “Freedom to publish is guaranteed by the Constitution, but freedom to combine to keep others from publishing is not.”

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Congress responded less than a year later, after strong lobbying from the newspaper industry, with the Failing Newspaper Act, which eventually became the Newspaper Preservation Act. The law begins with a finding that “it is hereby declared to be the public policy of the United States to preserve the publication of newspapers in any city, community, or metropolitan area where a joint operating arrangement has been heretofore entered into because of economic distress or is hereafter effected” under the act. The act grandfathered existing JOAs (including the Tucson JOA that precipitated the original lawsuit) and set parameters for the creation of new ones. The law permits the paired newspapers to engage in activities that would otherwise be antitrust violations, such as price fixing, profit pooling, and market control. At the same time, the stated purpose of the act is to foster competing voices in communities where two newspapers may not be commercially viable.

The Justice Department opposed the law, while many newspaper owners—particularly those engaged in current JOAs—supported it. The Hearst newspaper chain sent letters to President Richard Nixon and his administration to request support for the act. Several critics have suggested that Nixon’s favorable treatment of the act was a result of a desire for positive press coverage (indeed, the administration reversed its original opposition). The act was signed into law in July 1970, and 22 JOAs were in effect at the time.

The Act in Practice

Under the act, two newspapers may petition the attorney general for permission to create a JOA. The attorney general must determine that one of the newspapers is “failing” in order to grant the JOA. The act defines “failure” broadly, stating that a failing newspaper is one that “regardless of its ownership or affiliations, is in probable danger of financial failure.” The act does not require a newspaper’s status to be evaluated as to ownership or competition. However, there can be no merger of editorial staffs, and editorial stances must be independently determined (although the meaning of “independently determined” has never been judicially interpreted). And, as noted below, what constitutes a failing newspaper is open to interpretation, with the decision ultimately in the hands of the attorney general.

In Michigan Citizens for Independent Press v. Thornburgh (1989), the Supreme Court upheld by a split vote (no opinion was published) the decision of the attorney general to approve a JOA between the Detroit News and the Detroit Free Press. The two papers had engaged in fierce competition and both had been losing money, though the News had led the Free Press in most competitive measures. An administrative law judge had found that the Free Press, the “failing” paper, was not in real danger of failing, and, in fact, he did not believe that “reader and advertiser demand in Detroit is so inadequate that the market cannot sustain two profitable papers irrespective of changes in pricing policies.” Therefore, because the Free Press was not considered to be failing, the administrative law judge said, the requirements of the act had not been met.

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Attorney General Edwin Meese disagreed. He noted that the Free Press had suffered a decade’s worth of losses and had no way to reverse that trend, so it was failing, and he granted the JOA. A district court upheld Meese’s decision, and the United States Court of Appeals for the District of Columbia Circuit upheld the district court’s decision. The appeals court said that while the Free Press was not in the traditional “downward spiral” that usually indicates a failing newspaper (decreasing circulation leading to fewer ads leading to even more decreases in circulation), it was on the brink of such a spiral. The attorney general’s interpretation, the court said, was not unreasonable or capricious, merely different from the administrative law judge’s. And, said the court, Congress gave the burden to the attorney general to determine what constitutes a “failing newspaper.”

The Supreme Court upheld the appeals court’s decision by a split vote without opinion. The New York Times editorialized that Meese’s decision was probably the right one under the Newspaper Preservation Act but that the act itself was problematic and should be repealed. According to the Times, the act ignores other, newer sources of competition: “Virtually every major metropolitan area has one or more substantial suburban newspapers that conceivably could gain market share if a faltering big-city newspaper were allowed to die.”

Controversy

Proponents of the act and of JOA arrangements argue that the stated purpose of the act—to maintain several newspaper editorial voices in communities that cannot economically support more than one—was valuable when the act passed and continues to be so. The Newspaper Association of America, in a 2005 brief to the Antitrust Modernization Commission, recommended that the act be retained. The act, according to the association, “preserves and prolongs editorial and reportorial competition between newspapers after the economic basis for commercial competition has disappeared.” Newspapers in JOAs maintain strong editorial voices and do not appear to become homogeneous in their coverage and content. Online and other news outlets continue to provide serious competition to newspapers, and the act provides sustenance to a newspaper that otherwise would have failed, maintaining an additional editorial stance in the community.

Opponents suggest that newspaper readership continues to decline despite the JOA exemptions to antitrust law, and that the act relies on antiquated ideas of what competition and news sources are. The unclear legal definition of “failing newspaper” results in large news organizations pitted against smaller ones. Some see the act as providing a “soft landing” for competing newspapers that might take advertising and editorial risks they would not take in the absence of the option for a JOA—in other words, knowing that the newspapers can bail each other out means that they need not be as careful with their business decisions. Business columnist Daniel Gross took an even harsher view of the act: “JOAs insulate politically connected and favored industries from the competition that would cause them to change business models or innovate, and permit them to collect diminishing profits while doing nothing to ensure long-term viability.”

The original version of this article was published by SAGE Publications in The SAGE Encyclopedia of Journalism.