The Market for Diversity in Television News Media Economics Workshop New Economic School, Moscow October 28-29, 2011 Lisa George Hunter College and the Graduate Center City University of New York Felix Oberholzer-Gee Harvard Business School

Question How does competition among local television stations influence diversity in local news programming? Do viewers value this diversity? Implications – Welfare? – Political engagement? – Policy?

What We Know Theory – Incentive to differentiate depends on relative importance of price competition & market cannibalization effects Empirical Evidence: – Radio (Berry & Waldfogel, 2001; Sweeting 2010) – Newspapers (George 2007) – TV (Baker & George 2011) Business stealing matters, consumption effects less clear

What We Don’t Know What dimensions of differentiation matter to consumers in news markets? – Politics? – Issues? – Race? – Localism?

Why Diversity Matters Some illustrations – Hispanic political participation – Newspaper readership – Political competition & turnout

Hispanic Political Participation Source: Oberholzer-Gee & Waldfogel, AER 2009

Variety in Newspaper Markets Distance (DMA) Unique Beats (DMA) Topics Covered (DMA) Per Capita Sales (ABC) (1)(3)(5)(6) (1)(2) Owners (1.86)+(2.36)*(4.43)**(2.88)** (1.83)+(0.46) Papers (2.30)*(0.37)(1.08) (1.38) Constant (6.70)**(5.34)**(18.28)**(10.22)** (17.61)* * (14.27)* * N DMA's Source: Lisa M. George, Information Economics and Policy, 2007

Political Competition & Diversity Source: Lisa M. George, Content in Campaigns, 2011

Why Study TV News? TV News remains the primary news source for US households. Source: Pew Research Center for the People and the Press, Ideological News Sources: Who Watches and Why. September 10, Sample size about 1500.

Why TV is Hard to Study Typical empirical strategy – Identify changes in diversity measures from (exogenous) changes in market structure TV News – Static markets with very limited entry & exit – Regulated ownership Need to measure content directly or infer variety from demand

Empirical Approach Demand-side diversity measures Supply-side diversity measures – Issues, Politics, Race, Geography How do they relate – – To each other? – To news viewing? – To ownership and other policy variables?

Data Newsbank Transcripts – 40 markets, FCC Market Structure Data – Number of stations and owners Nielsen Viewership – One month (all 210 markets) in 2006, 2008, 2010 – Total viewing by timeslot & program type – Black & Hispanic viewing (not used here)

Demand-Side Diversity Measures Lead-in effects are important in TV – Cost of changing the channel Consumer tendency to switch channels from prime time programming to local news reveals programming differentiation. Two illustrations...

Local News Viewing... Lead-in Matters Local News and Entertainment Viewing -- Station Shares by Network Local News & Lag News Viewing Population Share

Local News Viewing... Loyalty Matters Local News and Entertainment Market Shares by Day (2010)

Measuring Differentiation ABC News NBC News NBC Prime ABC Prime Other

Estimating Differentiation Lagged Viewing (LV) coefficients measure diversity. Pairwise estimates are summed across competitors for a station-market-year measure. Alternatives & adjustments I= Local News Indicator for S = {1,0} LV = Lagged Viewing for S S={ABC, CBS, NBC, FOX, Other} m=market = 210 DMA’s, y=Year={2006, 2008, 2010} D= Day ={M, T, W, Th, F}, T= ½ Hour Timeslot {9pm-12am}

Station Cross-Effects Prime Time ABCCBSNBCFOXOther Local News ABC CBS NBC FOX Other NA Average effect of an additional prime-time viewer on local news viewing. Pairwise effects summed over competing (off-diagonal) stations.

Supply-Side Diversity Measures Basic Measure – Word Counts – Word share (keyword frequency/total words) – Market Deviations in word shares Issues: “Policy Agenda Projects” categories – Keywords matched to categories – Inductive keywords (next round) Politics & Race – Members of Congress by party & race (Shares & Totals) Geography & Localism – Local place names & local titles

Mean Word Share (%) (N=1523) Market St. Deviation (N=398) Crime Weather Government Business & Economics Foreign Affairs & Trade Education Defense TV & Media Social Welfare Health Traffic Infrastructure & Environment Sports Ideological Issues Labor & Employment Taxes Agriculture Death Notices Issue Diversity Metrics

Political Diversity Metrics Mean Word Share (%) N=1523 Market Standard Deviation N=398 Ethnicity & Race All Minority Non-Hispanic White Party & Office Democrats House Republicans House Democrats Senate Republicans Senate Politician Counts MeanSt. Dev. Total Covered Politicians 5626 Average Share of Stations Covering 44%5.9%

Local Diversity Metrics Mean Word Share (%) N=1523 Market St. Deviation N=398 Place Coverage Local Government Titles Place CountsMeanSt. Dev. Total Place References Average Share of Stations Covering61%5%

Some Results Diversity and market structure Diversity and content – Issue Diversity – Political Diversity Diversity and viewership

Larger markets, more differentiation. More stations (owners), less differentiation. No relationship between racial diversity and differentiation. Market-level measures do not get us far. Differentiation & Market Structure

Differentiation & Coverage (Word Shares) ****** ******** ****** * All issues included in each specification, split table.

Differentiation & Coverage (Word Deviations) ****** **** **** All issues included in each specification, split table.

Differentiation & Politics Specifications with network interactions indicate this is not a FOX effect, but rather a CBS effect.

Differentiation & Race Covering minority politicians does not contribute to loyalty.

Differentiation & Viewing (All Stations)

Differentiation & Viewing (Most Differentiated Station)

Some Conclusions & Extensions First attempt to measure diversity in local television news Initial evidence on points of differentiation + Ideology -Government + Politicians Differentiation increases viewing, largest effect for stations Still to do – – Inductive differentiation measures – Adjusted loyalty measures Extensions – Station loyalty & the market for advertising – Minority coverage & viewership