Abstract
Analyzing a panel dataset tracking format changes and ownership consolidation in local radio markets, we find that format changes frequently have enabled stations to improve their performance, The success of reformatting varies widely across format, and the likelihood that changing to another format will boost station performance declines as that format space becomes more crowded, Successful reformatting is not limited to large radio groups, In fact, weak evidence that radio groups garner economies of scope from owning multiple stations in the same format is the only indication we find that larger radio groups have been able to choose formats strategically in order to obtain a boost in their listening shares. In the face of substantial and, ongoing ownership consolidation in local radio markets, our results suggest that format changes by smaller station groups may counter the potential exercise of market power by a radio group that acquires a substantial share of a particular audience demographic through merger.
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Charles Romeo is a Research Economist with the US Department of Justice. Andrew Disk is a Vice President with CRA International. He was the Acting Chief of the Competition Policy Section of the US Department of Justice when this research began. We thank Sean Ennis, Russell Pittman, William Drake, Alan Baughcum, and seminar participants at the FCC for many helpful comments. The views expressed are those of the authors, and do not purport to represent the views of the Department of Justice. The usual further disclaimers apply as well.
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Romeo, C.J., Dick, A.R. The Effect of Format Changes and Ownership Consolidation on Radio Station Outcomes. Rev Ind Organ 27, 351–386 (2005). https://doi.org/10.1007/s11151-005-3494-z
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DOI: https://doi.org/10.1007/s11151-005-3494-z