Media Mergers and the Ideological Content of Programming

Media outlets sometimes incorporate ideological content into their programming. Such content may simply be a form of product variety, but it may also be due to media outlet owners who are willing to sacrifice some profit in order to engage in ideological persuasion. In this paper, we assume the existence of such owners, and we compare the amount and type of persuasion that will occur under two regimes: one in which mergers are prohibited and the other in which they are permitted. The results for the “no-merger” regime are: (i) there will be diversity of persuasion (i.e., more than one variety of persuasion will exist in equilibrium) if and only if the ideological preferences of the different types of potential owners are not too different; and (ii) total persuasion is higher when these ideological preferences are less similar. The main results for the pro-merger regime are: (iii) mergers between firms with identical ideologies cause total persuasion when to increase; and (iv) mergers between firms with different ideologies cause total persuasion to increase as long as the persuasion utility function is not too concave. We also sketch some (incomplete) results regarding the ways in which the possibility of a merger changes the equilibrium market structure. Obviously, one such possible change is a merger, and it turns out that the possibility of a merger can influence the market structure even if a merger does not take place. The model has implications for merger policy and for the current debate surrounding the change in FCC rules on media concentration. David J. Balan (contact author) Patrick DeGraba Abraham L. Wickelgren Bureau of Economics Bureau of Economics Bureau of Economics Federal Trade Commission Federal Trade Commission Federal Trade Commission 600 Pennsylvania Avenue 600 Pennsylvania Avenue 600 Pennsylvania Avenue Washington, DC 20580 Washington, DC 20580 Washington, DC 20580 (202) 326-3214 (office) (202) 326-2855 (office) (202) 326-2470 (office) (202) 326-3443 (fax) (202) 326-3443 (fax) (202) 326-3443 (fax) [email protected] [email protected] [email protected]