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Archive for October, 2009|Monthly archive page

Beware: Fair Housing Crackdown!

In Fair Housing Rules, Links, Rules&Regs on October 15, 2009 at 9:18 pm

The wrong words could cost you a fortune, and more folks are watching closer than ever before. Your competitors may be looking to turn you in. Worse yet, cash-strapped local agencies are scouring your Housing Ads for something to complain about. Formal complaints, when enforced and ruled against you bring fines in the $1,000s per word. Your settlement becomes their new funding stream.

Feedback I’m getting around the country: Bounty hunters are hungry. First step, be aware of and avoid the wrong words. Check out this word and phrase list. It’s intended as a guideline to assist in complying with state and federal fair housing laws. It is not intended as a complete list of every word or phrase that could violate any local, state, or federal statutes…new words get added by state agencies, court rulings, etc. But this is a really good reference.

If you don’t have a copy on file, here’s HUD’s Fair Housing Advertising Guidelines. If you already have this, it’s worth reading again. Then check out HUD’s Fair Housing and Equal Opportunity (FHEO) Main Page, which has updates and timely resources — and also links to state-specific information.

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Saving Newspapers, or…

In Competition, FCC, FTC & DOJ, Rules&Regs, Testimony on October 15, 2009 at 8:07 pm

…Corporate Bailouts. As I wrote before, there’s no shortage of voices on topic. Professors, Think Tanks, Foundations, Advocacy Groups, Big Media…and Us. We’re still at the beginning of this national debate, and we had a seat at the last House Committee Dog & Pony Show. There’s lots more to come and lots at stake. Next up are the Federal Trade Commission and the Federal Communications Commission, and we need to step up our united efforts immediately — Season starts in earnest next month!

Here’s what we can expect from Big Media: On display before a Senate subcommittee this summer, NAA’s reps got softballs on “competition” and hit them over the Sherman, Clayton and Cross-ownership walls, i.e. tear down the last legal barriers to total local market domination for “our survival.” Go figure, their reporters don’t spell it out that nakedly. And recently before the latest House Show, the voice for Gannett, Tribune, NewsCorp & Fortune 500 asked for Tax & Pension Relief.

Sounds good? Here’s my caution on NAA’s ask: Fails to note that businesses with revenue under $15 million got the 5 yr operating loss carryover (v. current 2 yr) as part of the stimulus package that passed. Those above a part of a fairly select group enjoying multiple other perks, loopholes and other advantages we don’t have. Factoring offshore havens, goodwill impairment write-offs and a host of other “savings” that come from complex organization and the ability to hire the very best accountants and tax attorneys, many of these folks already pay proportionately much less than we on gross revenues. (NOTE: They also have better access to cheaper capital, pay 20% less on health insurance not trapped in small group market, and on…)

And on deferred payment to defined benefit plans, just know that we’re all ultimately on the hook. At USPS this makes sense, where H.R. 22 tackles the double funding concession they made to get the Military’s rightful obligations off the Postal books. By contrast, USPS is multiples better funded than the private sector — and my real concern is the fall-back for Fortune 500 pensions is the Pension Benefit Guarantee Corporation (PBGC), which is so disastrously underfunded that over the last yrs they’ve redefined “underfunded” and “at-risk liabilities” a few times to make the looming Armageddon only look like Hiroshima. Big Biz’ underfunded pensions are backed by the underfunded PBGC, which is backed by we taxpaying citizens and small businesses.

Silver Lining in the Newsprint Cloud?

In Cap & Trade, Environmental Impact on October 15, 2009 at 6:51 pm

Check out this sustainably hopeful post at our sister blog for the MACPA Environmental Impact Committee. It takes a look at Business Week’s pessimistic account of the embattled paper manufacturing industry, whose fate seems to rest squarely on the embattled pay-to-read newspaper industry. For starters, they’re not the only folks that buy newsprint by the truckload….

United Policy Point #5: Support Fair Competition!

In FCC, FTC & DOJ on October 13, 2009 at 12:00 am

We need laws and rules that foster fair competition between media outlets in local media markets.

The high profile bankruptcies, historic revenue declines, diminished market cap and decimated newsrooms have led to all sorts of formal and informal thoughts about “saving newspapers” and “saving journalism.” As a party to several DC group discussions, I’ve certainly heard ideas about heavy-handed government involvement that could have the effect of picking winners and losers.

But some ideas on the corporate formation, bankruptcy and tax fronts are worth considering (ESOPs & L3Cs — not the Cardin non-profit bill! — Prepacks favoring local ownership following divested clusters). And of course, the largest media companies are using the crisis to call for loosening of antitrust laws on both the merger and predatory front. Nashville community papers’ complaint against Gannett is still under review, the DOJ has signaled that they’re not so far inclined to loosen the laws they rarely enforce now, the FTC will begin examining the state of journalism in December and the FCC will begin another full-blown look at Cross-ownership early next year, starting off with workshops early this November.

Recent comments from the White House indicate that the competing ideas could be closer to becoming laws in the not so distant future. FYI, the US Chamber joined with big media and NAA & NAB against us on NBCO, and beyond FCC jurisdiction, they’re also on their side at FTC, DOJ and Congress favoring more consolidation and leverage in local markets, but we might have common ground on the corporate formation, bankruptcy and tax fronts.

United Policy Point #2: Support Net Neutrality!

In FCC, FTC & DOJ, Network Neutrality, Rules&Regs on October 12, 2009 at 11:50 pm

We need laws and policies that protect open and neutral digital networks, and otherwise prevent arbitrary discrimination against traffic and content. In the past, arguments that this was a solution in search of a problem might have made sense.

But now all of the major players — Verizon, AT&T, Comcast, Cox — have been caught tampering with internet traffic — each had previously denied till exposed. Combine that with public statements that they’d like to charge for priority delivery and site-specific load speeds, this is a really big deal. Consider the new Yahoo! & AT&T ad sales partnership, where the national carrier could guarantee the ads they sell load in a heartbeat, and all those they compete with get stuck in molasses.

Our emerging digital enterprises are at risk, but recently introduced H.R. 3458, the Internet Freedom Preservation Act would keep us from being extorted or discriminated against. And just last week the FCC announced a formal Rulemaking to protect open and neutral digital networks. The major monopoly providers are opposed, and since Verizon’s point man chairs this committee at the US Chamber, they oppose on behalf of all business big and small, and several astroturf are also joining the fray.

Our Industry Needs United Voice on Key Policies…

In Cap & Trade, Do-Not-Deliver, Do-Not-Mail, Environmental Impact, FCC, FTC & DOJ, Healthcare Reform, Legal Advertising, Network Neutrality, Rules&Regs on October 12, 2009 at 11:35 pm

…being written in real-time!

As many of you already know, I spent years working inside our industry and now advocate for the specific interests of our industry. Officially, I only consult for MACPA, but in practice I always help any publisher, anywhere, anytime. Those efforts benefit dual members and often publishers well outside the Mid-Atlantic. Today, we and our advertisers — small business, generally — are under assault by both government and much larger competitors. Since the election, a slew of new front groups launched claiming to speak for broad constituencies — from the “public” generally to “small business” specifically. Meanwhile, recent surveys show that 76% of small businesses feel nobody’s speaking for them — but the biggest businesses are spending more than ever to claim to speak for all business.

It would be extremely helpful for me to be able to point to a statement of common purpose when I’m tackling regional and national issues. Current conditions make it more important than ever that the entire industry unite around a few national policy priorities. I’m asking that you please consider adopting some formal positions — a resolution for your board to vote on that your association joins in formally endorsing any, hopefully all of the following:

• legislation affording the legal ability of audited free community papers to publish and bill for legal advertising and public notice;

• laws and policies that protect open and neutral digital networks, and otherwise prevent arbitrary discrimination against traffic and content;

• laws and rules that foster fair competition between media outlets in local media markets;

• voluntary efforts towards greater community recycling, full-circle recycling of newsprint, and incentives towards availability and use of higher recovered fiber newsprint;

• passage of a federal shield law for reporters;

• steadfast opposition to all threats to distribution, including all levels of laws, ordinances and predatory practices relating to: rack, carrier and mail.

• Bonus: Any statements on some key small biz provisions on health care reform would be great, too. All other suggestions welcome!

Beware Federal Regs: Red Flag & Product Safety

In Links, Rules&Regs on October 12, 2009 at 9:50 pm

You’ll need to pay attention to a couple of obscure, new Federal Regulations: The FTC’s Red Flag Rule & the CPSC’s Product Safety Bans on Used Kids’ Stuff.

From the bowels of bureaucracy, the unelected faceless folks that made rules that impact our daily lives, come these efforts to curb identity theft and save children from the harms of toys once recalled but recycled below the retail radar. From the Federal Trade Commission comes the Red Flags Rule, with more in the way of clear guidance to come before they begin enforcement this November 1st. Businesses that extend credit to individuals will be expected to have a written policy in place to detect suspicious activity that could evidence or lead to identity theft. Neither one-off, nor business customer transactions are covered in the scope, but ongoing billable relationships with sole proprietors appear for the moment to require particular scrutiny — as guidance is released, I will share a model policy handbook to handle dealings with contractors and doing-business-as type accounts.

As for the Consumer Product Safety Commission and the “Improvement Act” of the same name, there are new guidelines and ongoing rulemaking process. It is illegal for anyone — from thrift stores to your neighbor by way of yard sale — to sell merchandise recalled from the retail market. And there’s a bigger budget for enforcement, especially for children’s toys, clothing and cribs. Publishers seem to be off the hook for penalties, but it might be good to suggest some warnings for ad copy on choking hazards of small toys. Otherwise, here’s the link to the Official Handbook to point clients to for their own protection.

Ad Tax Threat in PA…

In Ad Tax, Testimony on October 12, 2009 at 8:48 pm

…Defeated! 101 days past the Constitutional Deadline, after a tortured process that saw countless proposals to expand the 6% sales tax on goods and services, we finally have a New Budget. Our threat here was unfortunately not unique. AdvertisingAge reports today on the growing trend in cash-strapped states to seek “soft targets,” specifically Advertising and related services.

We argued against any expansion of Sales Tax generally, further detailing how a specific Ad Tax would cripple Us and our Advertisers. Bolstered by member surveys, we showed that before even attempting to collect the first penny for the state, we would be collectively in the hole hundreds of thousands of dollars we just don’t have, because we cannot simply press a magic button on a cash register. What we do for a living requires very expensive proprietary front end systems, most needing upgrades or all out replacement, and then a cascade of other costs and burdens. All before the mere attempt to collect. Which only then would be followed by the pass-along brick wall, subsequent reductions, a lose-lose situation at the worst possible economic time on Main Street.

Here’s a sample of correspondence with PA Legislators:

RE: Opposition to Taxing Advertising

Hand Delivered – September 15, 2009

Dear Budget Conference Committee Members:

The Mid-Atlantic Community Papers Association is deeply concerned by comments that continue to be floated publicly about broad expansions to the Sales and Use Tax. We empathise with the dire predicament our Commonwealth faces, and we do not envy your monumental challenge to craft a fair and balanced budget.

Please know this: Our publishers operate on the front lines of the economy, providing the glue that bonds neighbors and the merchants on Main Street. We share a singular perspective on the condition of truly local commerce. Our collective enterprise serves the unique and most critical function of communicating between Mom and Pop businesses and their customers.

We admit candidly that if we were in your shoes we might be tempted to gaze longingly at spreadsheets circulating that promise a windfall buffet of “new revenue.” Should the mood suddenly swing in favor that commerce-killing option, we urge you to consider Three Critical Tests for fixing any new bulls’ eyes:

1. Is it a simple “sale at retail” or a complex range of commerce-driving services?

2. Is it a luxury or a necessity — a want or a need?

3. Would any new burdens of collection be minimal or disproportionately onerous?

Our member publishers would be forced to spend hundreds of thousands of dollars — money they do not have — on new software before even attempting to collect the first penny for our Commonwealth. Then double that with costs of programming, training, administration and compliance, and even new computers — all incurred before even attempting to collect the first penny of sales tax.

Community papers cannot simply press a button on a cash register and try to begin passing 6% on to our struggling customers, automatically collecting fees on diminished volume. In community publishing, the advertising “transaction” is actually a discrete set of simultaneous processes linked to billing. We rely on industry-specific, proprietary and usually customized software, which is available from only a select group of specialized vendors. The license, the programming, the training and the hardware upgrades alone will cost fortunes we just do not have.

The new burdens of sales tax collection will be disproportionately onerous on the community paper publishing industry. But that is only the beginning of the cascading disasters and counter-intended outcomes on Main Street, PA. Publishers from every corner of the state provide a granular view of the stark realities they and their advertisers struggle with today without a 6% penalty:

• An Historic Number of Small Business Doors have Shuttered — Reality in Downtown, PA

• 6% is Roughly Double the Last Average Rate Increase — For Many, No Increase for Years

• A 6% Ad Tax Can’t Be Passed Along — Much or Most Will Be Offset by Diminished Advertising

• A 6% Ad Tax Simply Cannot Be Swallowed Without Additional Job & Healthcare Losses

………………………………………

Details from the MACPA Member Ad Tax & Local Economic Survey:

QUESTION: When was last time you raised (or decreased) rates? What Percent?

– “in 2009 I decreased rates 25% on the rate card.”

– “Retail ROP rates were held across the board for 2009”

– “Last time was May of 07 at 3%”

– “no change for a few years”

– “August 2008 – 3%”

– “2008, 4%”

– “1/1/09 5% (Only raise in 3 years)”

– “not raised rates in nearly 4 years. If anything we have had to find ways of providing more value for no additional cost. A rate hike of 6% would be unacceptable to advertisers of all levels from local to national. We would more than likely have to eat the increase to sustain volume.”

– “July 2008, 4 to 5%”

– “Last year: What %? just 3”

– “We have been fortunate to be able to keep our same rate for the past 3 years by keeping a low overhead and constantly looking for ways to cut costs.”

– “haven’t raised the price for 3 years. Classified also is only raised every two years.”

– “2008, -3% Note: that’s decrease!”

– “We have not raised our rates in 5 years. We have been hit hard with the current economic times. We deal with small local businesses that are struggling.”

QUESTION: Across the board, what portion of a 6% hike could you pass along?

– “0!”

– “Probably half that at best”

– “None”

– “Would have to try to pass all of it on. Couldn’t absorb it”

– “We would just eat the whole amount”

– “Very little”

– “A rate hike of 6% would be unacceptable to advertisers of all levels from local to national. We would more than likely have to eat the increase to sustain volume.”

– “typically we get 50% of a rate increase”

– “A sales tax on advertising is another tax on the already-struggling businesses in our area. Sales taxes are on the consumer. But our “consumers” are businesses.”

– “We couldn’t pass much more than 1% along. If we passed an additional 3% along we would most likely see $10,000.00 less in revenues.”

QUESTION: Or, how much of a 6% Ad Tax would be met with decreased ad size and/or volume?

– “Most of it”

– “Many will have to reduce size, cut zone coverage”

– “Would no doubt lose volume, and they’ll lose business too”

– “It would reduce ad size by as much as 10%”

– “THIS WILL RESULT IN LOST INCHES AS SMALLER MOM & POPS LOOK FOR WAYS TO KEEP THEIR EXPENSES FROM SKYROCKETING. THAT WILL TRANSLATE TO FEWER SALES AT RETAIL”

– “25% at bare minimum”

– “That’s difficult to put a number to. But I’m certain larger ads would be reduced in size, some advertisers would advertise every other week rather than every week.”

– “This would result in many advertisers either cutting back on size or volume of ads. Lose-lose”

QUESTION: Bottom line net loss in dollars if Ad Tax enacted?

– “60%”

– “$30,000”

– “too hard to determine, well into six figures”

– “Net loss of probably $1,000 to $1,200 per week”

– “Loss could be well over $100,000”

– “$1,680 per week”

QUESTION: On Front End Software — You would need to tag classifieds, display and inserts as both taxable & tax exempt, bill & collect accordingly, and send reports and a check to the state on a regular basis. Can your current software do this?

– “NO!”

– “Our current software would not be able to handle all you have listed”

– “NOPE!”

– “no it cannot”

– “Our ad order entry system is antiquated. Having said that, even newer models would need to be modified to accommodate for change in process. It would take time and money. Dollars we don’t have at this time. Given lean operation we don’t have the resources to manually manage the new billing challenges the sales tax would provide.”

– “No, will need new system, new servers, probably new workstations”

– “Current software will work, with some serious tweaking — I hope”

– “No, our IT staff says we’ll need another system.”

– “Definitely not. For what we paid, this is unbelievable”

QUESTION: Rough estimate of cost to upgrade, program & train on a new front end system?

– “$50,000 minimum”

– “Don’t really know, it would involve program and that is expensive!”

– “based on recent rfp, roughly $40-80k to upgrade and flow”

– “$25k in software costs…minimum $20k in training”

– “several thousand dollars, if we can patch, tens of thousands more likely”

– “the cost to get another program would be at least $50K”

– “At least $20,000 for bare bones function”

QUESTION: Ballpark cost for additional accounting relating to sales tax collection?

– “$30,000”

– “This would simply be an accounting nightmare-period.”

– “Additional expense $5,000 per year.”

– “at least another $20k”

– “A few thousand dollars.”

– “extra hour a day for our office workers $150 week, someone to collect figures and file taxes $150 week….And heaven help us if we lose an employee and must retrain someone. As a small business ourselves, just thinking about the extra bookwork, etc. is a nightmare! That’s the problem with being a small business. We try to do everything ourselves and can only do so much”

– “$300 per week”

QUESTION: How many local advertisers have closed their doors in last 12 months?

– “Hard to put a number on closings but more importantly, the remaining businesses are spending 15-20% less on advertising”

– “About 15”

– “We know of about 5 local advertisers who are oob”

– “not very many! we have been lucky”

– “15% and that’s conservative”

– “Over two dozen, with many more to come I fear.”

– “too many to count”

– “Too Many, and another huge batch are faced with the dilemma of the cost of an ad OR paying healthcare OR Wal-mart”

– “116”

– “a f—ing ton”

– “WAY WAY TOO MANY”

– “4 that affected us”

– “About one in 15 local businesses”

– “Our local business scene has drastically changed. The amount of stores that are vacant is staggering. I don’t have a number”

– “6 of my top 10!”

………………………………………………….

The consensus of first-hand publisher accounts conclude that home town economies are teetering on an historic brink. Attempts to place an additional 6% hurdle between any new product or business and their cash-strapped clients will be met with counterproductive reductions in consumption, and steep new margins that can neither be passed along nor absorbed. Any new sales tax will ultimately trigger incalculable job loss. For these compelling reasons, we ask that you please reject any proposals to Tax Advertising.