Situations arise where there is need to support companies in specific sectors of the society to boost economic activities in the interest of the public. When such situations arise, government steps in to save such sectors from collapse by providing some form of support, especially financial assistance. This gives rise to what is called subsidy. It could be provide to save any sector in the economy, including the media sector. When it is targeted as assisting the media, what is provided is called media subsidy. First, what is a subsidy?
A subsidy is some form of assistance often provided by government aimed at assisting companies or businesses with financial relief of some kind. Subsidy is an incentive packaged as a form of financial aid or support made available to an economic sector primarily aimed at promoting economic and social policy or reviving that sector. Although subsidy is often provided by government, it could be used to refer to any type of support, including from Non Governmental Organizations (NGOs) to specific firms.
Media subsidy, therefore, is benefit extended to media organizations, usually by the government. This could come directly in form of a cash payment or indirectly in form of tax reduction on finished media products or production resources. The subsidy is basically given to remove some type of burden, and it is often considered to be in the overall interest of the public, given to promote a social good or an economic policy.
Media subsidies from government could be direct or indirect. Direct subsidies involve giving money to media houses as a way of assisting in funding of their operations. Indirect subsidies come in form of reduced taxes on resources for media productions and product distribution, payment of training programmes for journalists and other media workers, giving contracts to media houses to organize communication or other functions for government, among other such indirect assistance to media houses. Media subsidies are primarily indirect press subsidies. Most media houses reject subsidies from government for fear that this could influence editorial independence.
Media subsidies are given primarily to assist the media in the production of specific programme or product, or qualitatively diverse journalistic content, or to secure the financial survival of economically weak media. In Nigeria, government-owned establishments get subsidies since they cannot generate enough revenue to run their operations. However, private media establishment get indirect subsidies from government, though such transactions are mostly not made public. Many journalists in NIgeria receive monthly allowance from various state governments. This is a form of indirect subsidy since the head offices of these journalists do not usually approve acceptance of such allowances.
Subsidies are often given to reinvigorate a deeply struggling news media system. Indirect subsidy could be given by way of providing public funding for journalism, especially local journalism which is struggling the most for survival. Many local newspapers across the world have folded due to a world-wide decline in newspaper business, especially publication and sale of hard copies. Clara Hendrickson provides examples of how local journalism could be funded and these examples reflect a form of indirect subsidy. They are given a tax deduction for personal subscriptions to eligible local news organizations might incentivize more individuals to pay for local journalism and boost the revenues of local outlets; tax offsets for eligible production expenditures incurred by newsrooms could help defray the costs associated with original reporting; the tax code could encourage more newspapers to operate as nonprofits by treating newspapers’ advertising and subscription revenue as tax exempt and contributions as tax deductible; and a public fund for local journalism could provide grants to local newsrooms to experiment with new models and fund local reporting fellowships.
Government subsidies could be described as indirect payment revenue source since the media house does not get the money from the consumers. This is a strategy which applies to government owned media organizations in Nigeria. Most of these organizations can hardly survive on their own due to lack of direct and indirect payments from both the consumers and advertisers. They enjoy monthly subventions and subsidies from government that owns them as a way of survival. The products offered by most government establishments in Nigeria mostly do not appeal to many audience members who see these establishments as lacking objectivity due to government interference in editorial content. This includes the fact that the media industry is very competitive with privately owned media establishments offering quality contents to the public.