Media Competition, Multimarket Contact, and Viewpoint Diversity

Abstract

Media regulators in many Western countries aim to ensure that consumers have access to diverse viewpoints in news coverage. A common argument is that this goal can be best achieved if there are enough independent sources in the market, implying that media policies should foster media competition. However, the effects of competition on viewpoint diversity are theoretically ambiguous, and empirical evidence is scarce. We address this gap by compiling a comprehensive dataset on the Swedish newspaper industry, covering multiple waves of mergers and acquisitions. To address endogeneity concerns, we exploit changes in multimarket contact between companies caused by out-of-market effects of ownership changes. Our results indicate that the consolidation of the industry substantially raised the average number of multimarket contacts, which induced newspaper companies to differentiate their slant more. As a consequence, the diversity of political viewpoints decreased both within companies and at the local market level, leading to reductions in readership. The findings suggest that increasing concentration of media ownership may have negative implications for democratic processes.

Keywords: consolidation, media bias, mergers and acquisitions, newspapers, ownership concentration

JEL Classification: D72, L10, L82