Newspaper and Television Station Joint Ownership

• Author: Bruce M. Owen
• DOI: 10.1177/0003603X7301800405
• Published date: 01 December 1973
• Date: 01 December 1973
• Subject Matter: Article

NEWSPAPER AND TELEVISION STATION

JOINT OWNERSHIP

by

BRUCE

M.

OWEN-

1.

INTRODUCTION

The problem of

joint

ownership

interests

in mass com-

munication media

has

become an

important

policy issue."

The

structure

of the

industry

has received the attention of

economists, political scientists, popular magazines,

and

con-

gressional committees." Most of this discussion has been con-

cerned with exploring the actual extent of joint ownership

interests,

and

with the dangers to

First

Amendment freedoms

which joint ownership seems to imply. Relatively little atten-

tion has been

paid

to the traditional issues of

industry

struc-

ture

and

pricing behavior.

It

is the purpose of this

paper

first to examine

very

briefly some of the problems of

industry

structure

which give

rise to a public policy dilemma in the communications media,

and then to present some empirical results on the actual price

effects of joint ownership.

-Assistant Professor of Economics, Stanford University.

AUTHOR'S

NOTE:

I am deeply indebted to Professor James N. Rosse,

who is, however, not responsible for

any

remaining errors.

1See, for instance, Federal Communications Commission,

"Further

Notice of Proposed Rule Making," Docket 18110 (22 FCC 2d 339

[1970] ).

2

E.~.,

Editors. The Atlantic Magazine, "The American Media

Barons"

(July

1969) ; H. J. Levin, Broadcast Regulation and Joint

Ownership of the Media (1960); J. N. Rosse,

"Daily

Newspapers,

Monopolistic Competition,

and

Economies of Scale," American Eco-

nomic Review (May 1967); Bryce W. Rucker, The First Freedom

(1968) ; U. S. Senate, Subcommittee on

Antitrust

and

Monopoly of

the Committee on the Judiciary, Report 607, "Monopoly Problems in

the Regulation Industries,

Part

2: Television" (1957, 1958).

787

788

THE

ANTITRUST

BULLETIN

2.

THE

DILEMMA

OF

PUBLIC

POLICY

The issue can be very briefly stated. Technology

and

eco-

nomics favor ahigh degree of concentration in the transmis-

sion of mass communications messages; there

are

economies

of scale,

at

least, in many

important

dimensions of the trans-

mission function. On the other hand, democratic ideology

requires

that

there be relatively free access to the mass

communications channels

for

all citizens and all interests.

On the purely economic level the communications media

are

an example of the familiar

and

difficult problem of having

to make a trade-off between cost economies of scale and

monopoly losses from concentration. The political issue

favors atomistic competition,

but

implementation of such a

policy by itself constitutes violation of another taboo: the

government

must

not

"interfere"

with the freedom of the

press.

The economy of scale which is most obvious in the media

revolves about the public good

nature

of messages. The cost

of producing amessage is a fixed cost to be

spread

over the

recipients of a broadcast or newspaper.

In

addition, there

are

economies of scale in the production of newspapers-

and

zero marginal costs in the transmission of television and

radio signals. Indeed, television broadcasts have been used

extensively in the

literature

as an example of a

pure

public

good,"

Attention here is focused on the immediate issues of joint

ownership among existing media institutions. The Congress

has

passed legislation to exempt newspapers

from

the

•

Rosse,

supra note 2.

4J. M.Buchanan, "Public Goods

in

Theory and Practice," Journal

0/ Law and Economics (October 1967);

Jora

Minasian, "Television

Pricing and the Theory of Public Goods," Journal of Law and Eco-

nomies (October 1964) ; P. A. Samuelson, "Public Goods and Sub-

scription TV: A Correction of the Record," Journal 0/ Law and

Economies (October 1964).