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Is state money for newspaper advertising a ‘subsidy’?

By   /   June 26, 2013  /   2 Comments

By Ryan Ekvall | Wisconsin Reporter

MADISON – The Wisconsin Economic Development Corp. has contracted for advertising services with some of the state’s biggest daily newspapers, to the tune of tens of thousands of dollars, Wisconsin Reporter has learned through an open records request.

Taxpayer money often goes toward advertising in media outlets, but a vote by legislative Republicans to boot the Wisconsin Center for Investigative Journalism from the University of Wisconsin-Madison has clouded the issue

Assembly Speaker Robin Vos, R-Rochester, acted to preserve “the separation of the press and state” and to avoid “creating arrangements that some in the public might perceive to be helping one organization (with subsidies).”

The outcry from media and First Amendment advocates, including Wisconsin Reporter, was immediate, and many have urged Gov. Scott Walker to veto the controversial provision in the 2013-15 budget he is expected to sign Sunday.

WEDC: The Wisconsin Economic Development Corp. has spent tens of thousands of dollars on advertising in daily newspapers. Should taxpayer money be spent on advertising in news outlets? How is that free-market relationship different from the University of Wisconsin-Madison’s deal with the Wisconsin Center for Investigative Journalism?

Two questions come to mind: Should WEDC, or any government-backed entity, spend taxpayer money advertising in the same publications that report on government? Could that relationship create the same public perception problems Vos worries about with the UW and WCIJ?

WEDC bought half-page, bi-monthly color ads in the Wisconsin State Journal, spending nearly $40,000 from October 2012 to April 2013 – a time when WEDC was under intense scrutiny from the press and lawmakers for mismanagement of taxpayer-funded economic development programs. WEDC also is running an ad on Madison.com, which hosts the State Journal’s online product, for about $150 a month.

WEDC contracted to run ads on the Milwaukee Journal Sentinel’s online site for $1,600 over three months, from May to July 2013. The agency also runs ads on Wisbusiness.com for about $165 a month.

Vos did not return calls from Wisconsin Reporter, and neither did Rep. John Nygren, R-Marinette, the co-chair of the Joint Finance Committee and perhaps the most vocal proponent of the budget provision to boot the WCIJ from the university.

“I think it makes it more difficult for any news organization to be independent when you’re getting what could be perceived, and I believe, state facilities subsidized by the taxpayers,” Nygren told WCIJ’s Bill Lueders a few weeks ago.

“Should it matter that the center provides a service that the university finds valuable for its institution and its students and wants to preserve?” Lueders asked, referencing that the center’s news operations are housed in two offices at UW’s Vilas Hall, in exchange for the small office space the WCIJ provides paid interns, guest lecturers and other educational services.

“That’s the decision they made and we feel otherwise, and that’s why we made the decision we did,” Nygren answered.

Substitute “center” for “State Journal” and “university” for “WEDC.” Would Nygren feel the same way?

WEDC finds advertising with these news sources valuable, presumably to attract more attention from and increase awareness in the business community. Likewise, the newspapers find contracting with WEDC beneficial. In short, WEDC helps pay their bills.

It’s a mutually beneficial exchange that improves the lot of both WEDC and the news organizations, a voluntary, free-market transaction.

It’s just that WEDC also is a government — or quasi-government — agency, not that there’s anything unusual about the business arrangement. The government “subsidizes” newspapers all the time, from the state Department of Tourism to payments for mandatory public notice placements – to announce things such as open meetings and agendas.

Newspapers depend on government action enough the Texas Press Association spent some time and money lobbying against a bill that would allow units of government to post public notices online instead of spending millions of taxpayer dollars to print notices in the local paper of record.

Mark Pitsch, president of the Madison Pro chapter of the Society of Professional Journalists, said advertising and news coverage are supposed to operate behind separate walls so that ad buys don’t influence coverage.

“In general, the SPJ code of ethics calls on journalists to act independently and avoid conflicts of interests,” Pitsch said, speaking only in his capacity as SPJ president. “If a government agency wants to advertise with any media, generally those news and advertising departments are separate. I think readers, viewers and listeners understand that.”

And the State Journal, where Pitsch is an assistant city editor, has covered WEDC without any apparent or perceived conflict of interest, it would seem.

So what’s the difference between WEDC spending $40,000 in the State Journal and the UW trading WCIJ two rooms and Internet access for paid student internships and lecturing – another mutually beneficial, voluntary free-market transaction?

On its face, the relationship between WCIJ and the UW-Madison poses no ethical concerns, Pitsch said.

WCIJ has reported somewhat unfavorably on the UW system, including a story on a questionable bidding process for a new scoreboard at Camp Randall Stadium, home of UW Badger football. The organization also has covered underreporting of sexual assaults at University of Wisconsin system schools and recently UW’s continued relationship with WiscNet, a nonprofit Internet service provider the Legislature forbade from servicing the UW.

The center is contractually required to “avoid giving the appearance that it is an agent of UW” and disclose that its work doesn’t represent the views of UW-Madison.

David Ward, interim chancellor of UW-Madison, has asked Walker to veto the provision in the budget bill that would ban WCIJ from its arrangement with UW-Madison and prohibit UW employees from doing any work related to the WCIJ as part of their official duties.

“However, the greater concern than the impact this provision would have on the university’s ability to interact with the WCIJ is the broader notion of the Legislature mandating with which organizations university faculty and staff can and cannot partner and collaborate,” Ward wrote in a letter.

“The best and brightest researchers – and entrepreneurs, and families, and investors in Wisconsin’s economy – cannot function when a government body holds more sway over their decisions than years of careful experience,” he wrote.

It would be like the Legislature telling WEDC’s marketing team where to spend its advertising dollars, which it can do.

Walker, who can veto words and sentences from the budget bill, is staying quiet, for now. Spokesman Tom Evenson told Wisconsin Reporter “any veto provisions will be announced when he is ready to do so.”

Contact Ryan Ekvall at rekvall@wisconsinreporter.com

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Ryan Ekvall uncovers government waste, fraud and abuse for Wisconsin Reporter. His work has appeared at Reason, Fox News and Human Events. Send Ryan a tip at rekvall@watchdog.org.

  • jacklohman

    How much of Walker’s $30M filtered down to media? Our system is broken, actually corrupt, and the state media therefor wants to keep it broken.

  • Cindy K

    (Sorry if this ends up here twice. Had trouble with Disqus.)

    Yes, it’s a subsidy. No tax dollars should find their way to help you – or any other media – function.

    I still love you bunches, though. You’ll find a way to continue to do good work.