SACRAMENTO, Calif. (CN) — Moving to buoy independent and minority-owned outlets toiling through a precipitous pandemic-induced advertising dollar shortage, California lawmakers on Thursday advanced legislation intended to save newspaper jobs.
Coined the Save Local Journalism Act, a key state Senate committee approved the proposal that would give the industry extra time to comply with a new labor law that has made it harder for newspapers to retain freelancers and newspaper carriers.
In a unanimous vote, the Senate Appropriations Committee approved Assembly Bill 323, setting it up for a potential vote by the full Senate next week.
Already devastated by a persistent trend of declining subscription and advertising revenues dating back to the Great Recession, the Covid-19 pandemic has been déjà vu for California newspapers.
According to an analysis by the California News Publishers Association, ethnic and community newspapers suffered a 56% average monthly loss in advertising revenue between last April-June while daily newspapers saw a 48% drop. To stay afloat, newspapers across the country have resorted to major layoffs and some have shuttered newsrooms or stopped offering print versions completely.
The proponents of AB 323 say the strains of the pandemic, which have caused thousands of job losses and forced the bankruptcies of major media companies like the McClatchy Company, are leaving readers less informed amid one of the most critical stretches in American history.
“The irony is, this is happening at a time when the thirst for information couldn’t be greater,” said Jim Ewert, general counsel of the publishers association.
Along with navigating through the pandemic without reliable advertisement streams — which contribute the bulk of newspapers’ revenues along with subscriber fees — California outlets have simultaneously been forced to revamp their longstanding distribution model.
After a knockdown fight with business groups and the tech industry, California lawmakers last fall passed what’s often referred to as the Dynamex Law or Assembly Bill 5.
The proposal by Assemblywoman Lorena Gonzalez, D-San Diego, was one of the most high-profile bills of the 2019 legislative session as it aligned labor unions and Democrats against the gig economy and the minority Republican Party. She said it was time for the Legislature to codify the ruling in Dynamex v. Superior Court and bring much-needed clarity to state employment law.
The decision impacted a variety of industries and professions that operated primarily via contract, from Uber drivers, independent truck drivers, freelance writers and newspaper carriers.
As a result, cash-strapped newspapers were suddenly left wondering how they could afford to go on a hiring spree and bring paperboys on as employees. Distribution costs are often one of the largest items in the average outlet’s budget and a recent analysis estimated the average monthly increase for California newspapers could rise 60-85% under the new law.
To help ease the transition, the publishers association and others successfully lobbied the Legislature and Governor Gavin Newsom to grant newspapers a one-year exemption from AB 5 so the industry could craft a plan.
But the brainstorming process was justifiably knocked to the bottom of the page in March by the pandemic.
With time running out, the newspapers and Assemblywoman Blanca Rubio, D-Baldin Park, are now asking for an additional two years. They warn if newspapers aren’t given the extension, they will cut more jobs or worse — stop printing all together.
“Many newspapers in California are failing,” said Rubio while introducing AB 323 earlier this month. “The demise of newspapers will mean many lost jobs and will leave many communities without local journalism.”
Before a Senate labor committee, Rubio relayed the grim facts: nationwide newsroom jobs dropped from 114,000 in 2008 to just 78,000 in 2019. She said the prospect of community papers closing due to increased distribution costs would leave “news deserts” across the state, particularly in minority and elderly neighborhoods.
“If they don’t have these newspapers, I imagine that they are not going to transition to Google to get their news,” said the former teacher of 16 years.
In addition to the exemption that would allow newspapers to continue contracting with carriers until 2023, Rubio’s bill would require the Department of General Services to do an annual recap of how and where state agencies spent their advertising dollars. The goal is to encourage more advertising and grow agencies’ marketing presence in weekly and ethnic papers.
With Thursday’s vote, the measure could be voted on by the Senate next week and then would need to clear the Assembly by an Aug. 31 legislative deadline.
The industry’s lobbyists argue the Legislature can’t afford to stall in renewing their commitment to the Fourth Estate.
“The stakes are pretty high; if we can’t get this done there’s going to be some pretty serious changes that people will see,” said Ewert.