Commentary

Early Outlook For Publishers As Democrats To Control Senate

Publicly traded publishers rallied yesterday as several stock-market indexes hit record highs after the Senate runoff elections in Georgia. The early results gave investors a clearer view of the political outlook for the next couple of years, removing a key uncertainty about fiscal policy.

Democrats will control the U.S. Senate for the first time since 2015. They will set the agenda for at least the next couple of years, with a slim majority in the House of Representatives and President-elect Joseph R. Biden Jr. in the White House. Their policies are likely to affect the publishing industry in several ways.

Economic Stimulus
Without Sen. Mitch McConnell (R-Kentucky) and other fiscal conservatives standing in the way of more stimulus to help lift the pandemic-battered economy, it's more likely the Biden administration will spend more freely to speed the recovery. Measures to avoid a deeper recession -- such as sending out $2,000 to people -- would stimulate the economy and help publishers more generally.
More specifically, some publishers may qualify for relief grants, venture-capital funding and low-interest loans that Biden proposed during his campaign. Of course, the best stimulus will be to bring an end to the pandemic.
Taking on Big Tech
While the market rallied yesterday, the stocks for Amazon, Apple, Facebook and Google owner Alphabet declined somewhat as investors weighed how a Democrat-controlled Senate will affect big tech companies. Their dominance in digital media has profound implications for publishers that have blamed them for anti-competitive behavior, censorship and profiting from harmful misinformation and hate speech.
It's too early to tell whether recent antitrust lawsuits against Facebook and Google will lead to curbs on their market dominance, and the effect on publishers. A Democrat-controlled Senate is likely to seek stricter regulation of tech giants, which may be positive for the publishing industry.
Higher Business Taxes
During the campaign, Biden pledged to raise the corporate tax rate to 28%, undoing the Trump administration's cut to 21%. It's unclear whether Biden will follow through with that plan, given that the U.S. economy is still weak and unemployment is the highest in seven years. Keeping a lower rate would help publishers free up income to keep people employed and plow back into their business.
It's more likely that taxes on people making more than $400,000 in wages or self-employment income will be higher. That higher personal tax rate isn't likely to affect publishers -- unless of course, we're talking about independent bloggers making money on Substack.

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