Competition and Media Performance – A Cross-National Analysis of Corporate Goals of Media Companies in 12 Countries

28 Pages Posted: 31 Mar 2016 Last revised: 16 Aug 2016

Date Written: March 31, 2016

Abstract

The mass media plays a crucial role in democratic societies. The assessment of the degree to which media companies contribute to the fulfillment of mass media’s democratic functions and serve the public interest is often referred to as media performance (McQuail, 1992). Competition is one key driver of company behavior within the structure, conduct, performance (SCP) framework. Theory – e.g. the financial commitment (Lacy, 1992) and the hypercompetition approach (Hollifield, 2006) as well as media bias literature (Sobbrio, 2013) – and empirical research (e.g. Russi et al., 2014) are ambiguous about its effect on media performance. Most importantly, most of existing research is usually bound to cultural contexts.

The objective of this paper is to empirically assess the effect of competition on media performance in a cross-national context. We assess media performance of media companies as the importance of journalistic goals within their corporate goal system. We employ a content analysis of letters to the shareholders in annual reports of over 50 media companies from 2000-2015 to operationalize journalistic goal importance. We then pair this data with indexes and proxies for competition – the Herfindahl-Hirschman Index (HHI) for national media markets, the National Media Power Index (MPI) (Noam 2015), and a dummy variable representing the existence of a strong Public Service Broadcaster (PSB).

Employing multi-level fixed effects regression analysis as well as fuzzy set Qualitative Comparative Analysis (fzQCA), first results suggest that competition (measured by the MPI) has a positive effect on the importance of journalistic goals. The existence of a strong PSB, on the other hand, appears to have a “crowding-out effect” on commercial media companies: they focus less on journalistic goals and more on economic goals compared to commercial media companies that do not compete with PSB.

We contribute to existing research in several ways. First, our approach of operationalizing company media performance by using letters to shareholders in annual reports is novel. Second, our dataset comprises companies from 12 countries and 5 continents, thus significantly expanding the scope of existing research in this domain and providing new opportunities regarding the generalizability of the results. Third, we employ a combination of empirical methods to validate our findings.

We are hopeful that this piece of research would be a worthy contribution to TPRC44, addressing the topics “Metrics and assessment of communications service performance with respect to policy goals” as well as “Competition, media ownership, antitrust, and the role of regulation in the market” and providing potentially valuable insights for policy makers.

(409 words)

We DO NOT wish to have this proposal considered for presentation in the poster session.

References: Hollifield, C. A. (2006). News media performance in hypercompetitive markets: An extended model of effects. International Journal on Media Management, 8(2), 60-69. Lacy, S. (1992). The financial commitment approach to news media competition. Journal of Media Economics, 5(2), 5-21. McQuail, D. (1992). Media performance. Mass communication and the public interest. London: Sage. Noam, E. (2015) Who owns the world's media? Oxford: Oxford University Press. Russi, L., Siegert, G., Gerth, M. A., & Krebs, I. (2014). The relationship of competition and financial commitment revisited: A fuzzy set qualitative comparative analysis in European newspaper markets. Journal of Media Economics, 27(2), 60-78. Sobbrio, F. (2013). The Political Economy of News Media: Theory, Evidence and Open Issues. Handbook of Alternative Theories of Public Economics, Chelthenam, Edward Elgar Press: 278-320.

Keywords: media economics, media performance, competition

Suggested Citation

Wellbrock, Christian-Mathias and Arango-Kure, Maria and Buschow, Christopher, Competition and Media Performance – A Cross-National Analysis of Corporate Goals of Media Companies in 12 Countries (March 31, 2016). Available at SSRN: https://ssrn.com/abstract=2757095

Christian-Mathias Wellbrock (Contact Author)

University of Hamburg ( email )

Von-Melle-Park 5
Hamburg, Hamburg 20146
Germany

Maria Arango-Kure

Independent ( email )

No Address Available

Christopher Buschow

Independent ( email )

No Address Available

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