Newspaper financial disclosure rule thrown out by federal court

Newspaper financial disclosure rule thrown out by federal court

01/29/96

HAWAII–A new state law requiring Honolulu’s two major daily newspapers to disclose their financial records is unconstitutional, the federal District Court in Honolulu ruled in early January. The law, known as Act 243, would have required the Honolulu Advertiser and the Honolulu Star-Bulletin, which publish under a Joint Operating Agreement (JOA), to surrender their state tax returns and any other requested financial reports to the state Attorney General for review.

The federal court held that the law could potentially restrict freedom of expression, possibly inhibiting the papers from criticizing state officials for fear of retaliation in the auditing.

In addition, the court deemed that the law is in fact preempted by the 1970 federal Newspaper Preservation Act (NPA). The NPA exempts newspapers from antitrust laws when a JOA is formed at a time when one paper is financially unstable. The Advertiser was a failing company when the agreement was established, granting the papers protection under the NPA.

The state, which contends that the law is not nullified by the NPA and that it does not violate the papers’ constitutional rights, will appeal in late January. The state said its purpose in attempting to enact the law is to gain information which will convince Congress that the two newspapers, both profitable at this time, should no longer be given antitrust protection. (Hawaii Newspaper Agency v. Hawaii; Media Counsel: Jeffrey Portnoy, Honolulu)