Crossownership and media concentration

Abstract

This paper investigates whether media concentration permits newspaper and group owners of television stations to charge higher advertising rates than other types of owners. The prior studies that have looked at this issue have had to rely on questionable data. This study focuses on more accurate data, i.e. selling prices. It is argued that the potential for higher advertising rates could cause newspaper and group owners to pay higher prices for television stations than other types of buyers. An empirical analysis was made of sales of television stations between 1960 and 1969. The results tend to show that newspaper owners were willing to pay higher prices. A second analysis was done to determine whether the higher prices were due to market power or economies of scale. The results tend to show that the higher prices were probably due to the market power possessed by newspaper owned stations, some of which spills over to the other stations in the market.