Postal subsidies plummet

The late 1960s marked a high-water mark for the government’s financial support for the news business. At the time, the postal service was subsidizing about three-fourths of the mailing costs of newspapers and news magazines, at a cost of about $400 million a year (nearly $2 billion in today’s dollars). This benefit, in combination with other government supports such as tax breaks and paid public notices, amounted to a substantial financial boon for American news publishers. The Postal Reorganization Act of 1970 marked a turning point. The landmark legislation immediately reduced publishers’ mailing subsidy by about half, and ever since, government’s financial support for the commercial news business has been falling. Today, as many newspapers struggle for survival, the government appears certain to reduce its support still further by moving public notices to the Web.

These declines have not been a result of a concerted policy to reduce government subsidies and other financial support for the news business. Rather, they emerged from government funding problems and from the development of technology that paved the way for reduced support. Nevertheless, the impact is clear. At a time when news businesses are fighting to survive, the government has been reducing longstanding forms of support. Unless it changes course, that support is likely to continue declining.