DP14494 Media Competition and News Diets

Author(s): Charles Angelucci, Julia Cagé, Michael Sinkinson
Publication Date: March 2020
Date Revised: March 2021
Keyword(s): advertising, bundling, Local News, media, newspapers, Split-Ticket Voting, Television
JEL(s): D4, D7, L11, L15, M37, N72
Programme Areas: Public Economics, Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14494

News media operate in two-sided markets offering bundles of content to readers and selling readers' attention to advertisers. Technological innovations in content delivery, such as the advent of broadcast television or of the Internet affect both sides of the market, threatening the basic economic model of local news operations. We examine how the entry of television affected local newspapers as well as consumer news diets in the United States. We develop a model of local media and show that entry of national television news could reduce the provision of local news. We construct a novel dataset of U.S. newspapers' economic performance and content choices from 1944 to 1964 and exploit quasi-random variation in the rollout of television to show that this new technology was a negative shock in both the readership and advertising markets for newspapers. Newspapers responded by providing less content, particularly local news. We tie this change in consumer news diets to a decrease in split-ticket voting in elections.