Media Conglomeration, Local News, and Capital Market Consequences

Abstract

We examine the effect of news media consolidation on local business coverage and its consequences for firms, investors, and capital markets. Using television transcripts, we find a substantial drop in coverage of local firms following the consolidation of local television stations associated with Sinclair acquisitions. Local information search, institutional portfolio local bias, and overall retail trading decrease for firms in treated geographic areas. Results are most pronounced for small firms, for stations with higher ex ante viewership, and for stations with greater reductions in local coverage. Our results provide insight into the consequences of media consolidation for local business coverage, firms, investors, and capital markets.

Keywords: media conglomeration, local news, local bias, investor geography

JEL Classification: D83, G11, G12, G14, L82, M40