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Economic Perspectives on Media Mergers and Consolidation

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  • Anthony J. Dukes

Abstract

This article synthesizes several existing economic perspectives on the incentives for and consequences of media consolidation. Because of the two-sided nature of media markets, media mergers may lead to unexpected effects, which may not be deduced from common notions of industrial economics. We explore three such effects. In particular, we illustrate that media consolidation may lead to a reduced level of content diversity. Also, we present a recent theory that suggests conditions when a politically biased media may actually prefer competition. Finally, we illustrate how a media merger, or media consolidation in general, may lead to stiffer competition in the markets in which advertisers compete. This article is written for practitioners and regulators in the media and advertising industries. Furthermore, it is not intended to push a particular viewpoint or perspective. While non-technical, the arguments in the paper assume a background in introductory microeconomics. Dieser Artikel führt verschiedene ökonomische Sichtweisen auf Gründe für (zunehmende) Medienkonzentration und ihre Folgen zusammen. Da Medienmärkte durch die Existenz zweiseitiger Netzwerkeffekte geprägt sind, können Fusionen von Medienunternehmen zu unerwarteten Ergebnissen führen, die sich mithilfe der üblichen Konzepte der Industrieökonomik nicht erklären lassen. Im Mittelpunkt der Analyse stehen drei verschiedene Aspekte. Wir zeigen, dass (zunehmende) Medienkonzentration zu geringerer Programmvielfalt führen kann. Ferner präsentieren wir eine neue Theorie, die Bedingungen aufzeigt, unter denen es ein politisch einseitiges Medienunternehmen vorzieht, im Wettbewerb mit anderen Unternehmen zu stehen. Und schließlich zeigen wir, wie eine Medienfusion, oder generell (zunehmende) Medienkonzentration, zu stärkerem Wettbewerb in Werbemärkten führen kann. Dieser Artikel richtet sich sowohl an Praktiker der Medien- und Werbeindustrien als auch an den Gesetzgeber. Obwohl der Artikel selbst ohne eine formale Analyse auskommt, setzen die angeführten Argumente gute Kenntnisse grundlegender Mikroökonomie voraus.

Suggested Citation

  • Anthony J. Dukes, 2005. "Economic Perspectives on Media Mergers and Consolidation," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 74(3), pages 38-48.
  • Handle: RePEc:diw:diwvjh:74-3-5
    DOI: 10.3790/vjh.74.3.38
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    References listed on IDEAS

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    1. Anthony Dukes, 2004. "The Adverstising Market in a Product Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 327-348, September.
    2. Benham, Lee, 1972. "The Effect of Advertising on the Price of Eyeglasses," Journal of Law and Economics, University of Chicago Press, vol. 15(2), pages 337-352, October.
    3. Esther Gal-Or & Anthony Dukes, 2006. "On the Profitability of Media Mergers," The Journal of Business, University of Chicago Press, vol. 79(2), pages 489-526, March.
    4. Jack H. Beebe, 1977. "Institutional Structure and Program Choices in Television Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(1), pages 15-37.
    5. Michael Spence & Bruce Owen, 1977. "Television Programming, Monopolistic Competition, and Welfare," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(1), pages 103-126.
    6. Simon P. Anderson & John McLaren, 2012. "Media Mergers And Media Bias With Rational Consumers," Journal of the European Economic Association, European Economic Association, vol. 10(4), pages 831-859, August.
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    Cited by:

    1. Ralf Dewenter & Ulrich Kaiser, 2005. "Fusionen auf dem Printmedienmarkt aus wirtschaftspolitischer Sicht," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 74(3), pages 51-63.
    2. Björn Frank, 2005. "Ökonomische Argumente für publizistischen Wettbwerb," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 74(3), pages 64-72.

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