Newspapers are a bargain. Every day we deliver right to your doorstep the latest in local, state national and international news, right along with sports, comics, advice columns, weather, features, community news, school news, classified and display advertising and opinions – like this one.
OK, we admit we’re biased. This is our business and we take our responsibilities to our community and our readers seriously.
But what you may not know is that it’s also likely that we’re delivering not only to your doorstep, but to you wallet as well.
That’s the suggestion of a recent study by researchers from the University of Notre Dame and the University of Illinois at Chicago that was presented this summer at Yale University. The report, “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance” was done by Pengjie (Paul) Gao, Notre Dame, and Changl Lee and Dermot Murphy of the University of Illinois at Chicago.
The study looked at newspaper closures across the country and their impacts on the communities they served – examining 1,600 English language newspapers serving 1,266 counties in the U.S. between 1996 and 2015, excluding counties without any daily newspaper.
The abstract of the study says: “Local newspapers hold their governments accountable. We examine the effect of local newspaper closures on public finance for local governments. Following a newspaper closure, we find municipal borrowing costs increase by 5 to 11 basis points (that’s one one-hundredth of a percent) in the long run. Identification tests illustrate that these results are not being driven by deteriorating local economic conditions. The loss of monitoring that results from newspaper closures is associated with increased government efficiencies, including higher likelihoods of costly advance refundings and negotiated issues, and higher government wages, employees, and tax revenues.”
Gao told a reporter this summer, “When local newspapers aren’t there to hold governments accountable, we see costs increase due to a lack of scrutiny over local deals. With the loss of local news coverage also comes higher long-term borrowing costs for cities – more so than in neighboring counties.”
The report also provided anecdotal support with examples from some major newspaper closures – such as the Rocky Mountain News and the Cincinnati Post, which were notable for their government watchdog reporting. After the Rocky Mountain News closed, the study said, the average municipal yield for newly issued government bonds increase by about 37 basis points. After the Post’s closure, the average medium spread went up by 66 basis points.
While basis points are small measurements, over the length of a bond and with the millions of dollars they often total, that can add up to thousands of dollars for local taxpayers. Not to mention the higher costs for government wages, number of employees and rise in tax revenues when a watchdog newspaper is put to sleep.
While the researchers did not study this, in their conclusion, they noted the rise of online news outlets that are changing the way people consume news, but they caution that these news outlets “do not necessarily provide a good substitute for high-quality, locally sourced, investigative journalism.”
That’s our daily newspaper plug for today; now we’ve got to get a paper out. We’ll continue to do the best we can reporting the news and watching what government is doing within our resources. It’ll be on your doorstep and probably in your wallet as well.