By Antonio Ray Harvey
Editor’s note: With the shrinking of the media industry viewed as a threat to democracy, the California legislature has stepped in with three bills to help sustain California-based news outlets.
In addition to SB 1327, there is AB 886, sponsored by Assemblymember Buffy Wicks (D-Oakland/Dist. 14), which would require online platforms like Google and Meta to compensate California news producers with digital advertising revenue generated from online content search traffic. Worth an estimated $1 billion annually, the funds would be distributed according to the number of qualified journalists employed in a given newsroom. AB 886 is headed to the Senate Floor in August 2024.
AB 1511, sponsored by Assemblymember Miguel Santiago (D-Los Angeles/Dist. 54), would create a program within the Office of Community Partnerships and Strategic Communications to assist state agencies and departments in directing at least 25% of their marketing, advertising, and outreach budget towards ethnic and community media outlets that qualify as small businesses. Introduced in April 2023, AB 1511 is currently being reviewed in the Assembly Appropriation Committee.
As the world’s fifth economy and home to some of the largest high tech companies, it has been forecasted that the outcomes of these bills could impact the media ecosystem nationally and around the world.
Last month, Sen. Steven Glazer (D-Orinda) vowed to bring back a journalism support bill he authored that had hit a snag in the legislative process.
A few weeks later, the lawmaker lived up to his promise.
On June 27, the California Senate moved to advance Senate Bill (SB) 1327 with a 27-7 vote under the Urgency Clause – special language contained in legislation that privileges it to take immediate effect after the governor signs it.
SB 1327 would impose a charge – called a “data extraction mitigation fee” in the bill — on major digital technology platforms such as Meta, Amazon, and Google to fund local news. Glazer pulled the bill from the floor in May when he discovered he didn’t have the minimum two-thirds votes for passage. Now that he has generated enough support to move the bill forward, Glazer called his push to pass it a “rescue effort.”
SB 1327 is now on its way to the Assembly for review.
“We are in a moment of peril in our democracy, and our hollowed-out newsrooms are in the center of that crisis. Let me provide some context – democracies are the exception in human history. It’s not if they will fail. it’s a matter of when they will fail,” Glazer said during the opening of his presentation during a hearing for the bill on the Senate floor.
Glazer continued, “Ours is 248 years young. Seventy-one percent of the world’s population is under autocracies. Now, in countries such as Hungary, Argentina, and Turkey, we see these democracies teetering. You simply have to see their actions to curtail and take control of independent news media that was keeping these democracies honest. The canary in the democracy mine is independent news.”
A vote on the urgency clause must precede a vote on the bill and requires a two-thirds vote for passage. Glazer’s bill got exactly the amount needed to move off the Senate floor.
Seven Senate Republicans voted against SB 1327, including Senate Majority Leader Brian Dahle (R-Bieber). Sen. Scott Thomas Wilk (R-Lancaster) was the lone member of the party that voted in favor of the bill.
SB 1327 has been getting pushback from digital tech giants and some publishers that are worried about losing advertising, the supposed threat of government influence, discrimination against larger publishers, and nonprofit newsrooms getting a slice of the mitigation fee.
Sen. Roger Niello (R-Roseville) voted against the bill. During the debate on the floor, Niello said it gives him “great pause to entertain a proposal” where over half the journalism industries today are “owned by hedge funds and individual investors,” he said.
The lawmaker who owns several high-end car dealerships added that the bill could bring “unintended consequences such as capital venture groups reaping the profits, should SB 1327 become law.
“That’s one of the things that happens when an industry goes through a drastic evolution…investors come in to take advantage of potential profit opportunities and investment opportunities,” Niello said of his concerns with SB 1327. “I am an unabashed capitalist myself. But they are not buying these newspaper groups for the sake of the mission of news reporting. To them it’s a business deal.”
Sen. Bill Dodd (D-Napa), who voted in favor of the bill, also had some concerns. He wants to make sure SB 1327 is legislation that would not fall into the hands of hedge funds that would purchase newspapers solely to reap funds because of the mitigation fee.
“What I’d like to see, by the time it comes back to the floor is that we have an opportunity to kind of see — maybe not a firm spending program — but at least something that has been thought out particularly so we’re not funding hedge funds,” Dodd said.
To qualify for the tax credit, news media outlets must initially circulate or distribute news content within the state of California and operate internet platforms.
SB 1327 proposes a 7.25% on gross receipts derived from data extraction transactions, according to the bill’s language. At the end of his presentation, Glazer made it clear that media outlets do not have to accept funds through the tax credit.
“This measure is content neutral (and) ownership neutral,” Glazer said. “If a publisher of an outlet doesn’t want to have the connection with a government through a tax credit, they don’t have to take it.”
Fees extracted from digital technology companies with a minimum of $2.5 billion in annual advertising revenue would provide $500 million in employment tax credits to news organizations in California. An additional $400 million in extracted fees would go directly to schools.
Sen. Lola Smallwood-Cuevas (D-Los Angeles) spoke about the ways public opinion, politics and civic life have been influenced by misinformation and disinformation since the decline of the journalism industry. A member of the California Legislative Black Caucus (CLBC), Smallwood-Cuevas is a former journalist.
“These are efforts to make a difference,” Smallwood said of SB 1327. “I must applaud the author for his work particularly because the alternative must also include building a representative workforce within the newspaper industry, which this bill takes into account — ensuring that those who look like California tell the story of California.”
