Does Conflict of Interest Lead to Biased Coverage? Evidence from Movie Reviews∗

Media outlets are increasingly owned by conglomerates, inducing a conflict of interest: a media outlet can bias its coverage to benefit companies in the same group. We test for bias by examining movie reviews in media outlets owned by News Corp, such as the Wall Street Journal, and Time Warner, such as Time. We find higher ratings for 20th Century Fox movies in News Corp. outlets compared to movies by other studios. To disentangle bias from correlation of taste, we introduce and validate a novel matching procedure using individual movie ratings from online platforms. Using this procedure, we find no evidence of bias in News Corp. nor Time Warner outlets. We reject even small effects, such as bias of one extra star (out of four) every 13 movies. We test for differential bias when the return to bias is plausibly higher, examine bias by media outlet and by journalist, as well as editorial bias. We also consider bias by omission–whether media outlets are more likely to review highly-rated movies by affiliated studios–and conflict of interest within a movie aggregator. In none of these dimensions do we find evidence of bias. We relate to previous work and discuss three explanations for the lack of bias in our setting: high values of media reputation, organizational features in a conglomerate, and low returns to bias. ∗A previous version of this paper circulated in 2011 with the title ‘Does Media Concentration Lead to Biased Coverage? Evidence from Movie Reviews’ with Alec Kennedy as collaborator. Ivan Balbuzanov, Alden Cheng, Natalie Cox, Tristan Gagnon-Bartsch, Jordan Ou, Brian Wheaton, and Xiaoyu Xia provided excellent research assistance. We thank Marianne Bertrand, Saurabh Bhargava, Fanny Camara, Lucas Davis, Casey Dougal, David Dranove, Matthew Ellman, Ignacio Franceschelli, Matthew Gentzkow, Fabrizio Germano, Austan Goolsbee, James Hamilton, Ali Hortacsu, Emir Kamenica, Brian Knight, Jesse Shapiro, Christopher Snyder, Noam Yuchtman, Joel Waldfogel and audiences at Brown University, Boston University, Chicago Booth, the New York Media Seminar, the Paris School of Economics, the University of Chicago, UC Berkeley, at the 2011 Media Conference in Moscow and the 2015 Media Bias Workshop in Hamburg for very helpful comments. We also thank Bruce Nash for access to data from the-numbers, as well as helpful clarifications about the industry.