“A good newspaper is a nation talking to itself,” Arthur Miller said in 1961.

Inside the voluminous $2.2 trillion Build Back Better bill passed by the House on November 19th is a controversial subsidy intended to support local journalism coverage. The cost over five years is estimated at $1.7 billion.

It’s a payroll tax credit of $25,000 per employee the first year and then $15,000 for the next four years for news organizations that serve “the needs of a regional or local community.” The measure would allow newspapers, digital news outlets, and radio and television stations to claim the tax credit for up to 1,500 journalists. The journalists in question would have to live within 50 miles of their news outlet and work more than 30 hours a week.

News outlets across the country have been struggling for decades, as the rise of digital media has eroded their revenue from print ads and classifieds. With a few notable exceptions, mostly elite brands with a national coverage model, news publications have not made up the difference with digital advertising.

As an industry, digital advertising is dominated by Google, Facebook and Amazon. In 2020 Google generated $147 billion, 80% of its total sales, from digital advertising. Facebook generated $86 billion in total revenue, with $17.4 billion from digital advertising. Amazon generated $12.7 billion from advertising in the US, out of total sales of $386 billion. Facebook and YouTube together accounted for 49% of all online video advertising that year.

As a result of digital cannibalization, roughly one-quarter of the newspapers in the country have closed in the last 15 years. Meanwhile, according to data from the Pew Research Center, the number of journalists fell to 31,000 last year from 71,000 in 2008.

That contraction has dramatically changed the scope of news coverage in the US. According to researchers at the University of North Carolina, there are now 200 counties with no local paper, and over 1,800 communities without local news coverage.

As if digital obsolescence weren’t challenging enough, another insidious threat has been stalking the news industry. Private equity firms and hedge funds, always attracted to the stench of dying businesses, are scooping up struggling newspapers.

In 2020 Gannett, the owner of USA Today and dozens of other newspapers, merged with publishing giant Gatehouse media. That deal put 20% of all US papers under the control of a hedge fund called New Media Investment Group.

Chatham Asset Management, a New Jersey-based hedge fund best known as owner of the National Enquirer, also acquired McClatchy in 2020. At the time McClatchy was the country’s second-largest newspaper publisher.

Even storied publishers are not immune. Alden Global Capital, a secretive hedge fund that has quickly become one of the largest news operators in the country, recently acquired the Chicago Tribune.

Some of these acquirers believe they can create a more robust, digital-only business model for their news outlets. Other investors are pursuing a “roll-up” strategy - seeking greater scale to replicate content across multiple outlets.

The roll-up strategy mimics the consolidation of radio station ownership over the past 15 years. The number of radio station owners peaked in 1995 and then consolidated drastically. By 2005 the top four radio companies controlled 48% of the US listening audience.

Consolidation has a serious side effect: mass replication destroys media diversity. In the radio market, just 15 formats comprised 76% of all commercial programming as of 2018.

In the news industry, consolidation and content replication are directly correlated with the demise of local coverage. More consolidation equals less local content.

In the October issue of The Atlantic, an excellent investigative piece by McKay Coppins details how Alden Global Capital seems to be pursuing a more repugnant investment strategy.

Alden doesn’t engage with the properties it owns. It does not communicate with the news staff. It simply sells off real estate, cuts jobs, and focuses maniacally on increasing cash flow from each paper while readership steadily declines.

Because this is 2021, the payroll tax credit subsidy tucked into the Build Back Better social spending bill has attracted significant criticism.

A number of Republican politicians have labeled the proposal a partisan handout. Both the New York Post and the Wall Street Journal have decried the scheme as a conflict of interest - a public money payoff for a media industry that is overwhelmingly aligned with Democrats.

Supporters of the tax credit note the crucial role that local news outlets play in bringing communities together. Without them, who will chronicle town meetings, report on county politics and hold local officials accountable?

The Mountain-Ear is a prime example of local journalism that provides an essential glue to the communities it serves. The paper features local events, government activities and cultural topics that simply aren’t covered anywhere else. Without local news outlets like The Mountain-Ear, small and remote communities effectively disappear into a “news desert.”

Ironically, the tax credit proposal didn’t originate as a partisan idea. It made its first appearance in the Local Journalism Sustainability Act, a bipartisan bill introduced in 2020.

The notion that amoral vultures like Alden Global Capital might receive government funding is repugnant. However, a nation without meaningful local news coverage is a far greater concern.