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When newspapers close, the cost of government goes up

Posted by   /  July 27, 2018  /  No Comments

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A first-of-its-kind study looks at how local news outlets shutting down impacts cities’ and counties’ finances

By Liz Farmer | Governing

Mass layoffs and downsizing have decimated many newsrooms over the last two decades as the way people access their news has changed in the internet era. But new research shows that the decline of newspapers may also have taken a toll on cities’ and counties’ budgets.

That’s the suggestion from University of Chicago and University of Notre Dame researchers, who are the first to look at the relationship between public finance and newspaper closures. They found that municipal borrowing costs increased by as much as a tenth of a percent after a newspaper shuttered, even when accounting for declining economic conditions. For the local governments included in the study, that translated to millions more in additional costs between 1996 and 2015.

The reason for these changes, researchers say, is that the closure of a local newspaper creates a “local information vacuum” that is unlikely to be filled by the national news media, which needs to appeal to a much broader audience, or online outlets, which have not generally filled the investigative journalism gap left when a local newspaper shuts down. Therefore, the study says, “potential lenders have greater difficulty evaluating the quality of public projects and the government officials in charge of these projects.”

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