Comments on Della Vigna and Kennedy

Joel WaldfogelMoscow

October 28, 2011

Neat paper!

• Oodles of evidence trained on question: “does joint ownership of media outlet and movie studio cause better reviews?”– “oodles” means N → ∞

• Compelling controls, believable estimate• Comments– Earnest praise– Finding’s meaning– Effect of “concentration”

• Elements of a good story…

villains

heroes

• Bias-detecting sleuths

Characters you’re not sure about until the end

Make a wish

• Suppose you wanted to know whether films receive better reviews at studio-owned media outlets

• Wish list: it would be nice to have a context with – Change in ownership, with reviews before and after– Data on multiple outlets’ reviews of same movies– Half a million observations

• Amazingly, this is what Stefano and Alex have!

Drum roll, please

• We have countenanced the devil• …and what does he look like?

Regular vs diabolical reviews

Another perspective

Answer: 3 points at Fox-owned, 0 at Time Warner, on a mean review of 60

Economic vs statistical significance

• N → ∞– SD of mean: σ/√N– Many things will become statistically significant – Will see *** in tables, but size matters

• Aside– Suppose N had been merely 100,000– Could have convinced me of no effect– Effect is hard to detect

Implications of results

• Does ownership affect reviews?– A series of case studies– Yes at Fox, no at Time Warner– Yes for some reviewers, no for others

• Would like an explanation of why sometimes yes

What is the policy takeaway?

• Don’t let Murdoch own stuff?

• or

• “on balance, no evidence that it matters much”

Paper Motivation

• “Does Media Concentration Lead to Biased Coverage?”

• What do you think when you hear “media concentration”?

Possible effects of “concentration”

• Product positioning incentives associated with joint ownership– Internalization of business stealing externalities– This paper’s not about that

Competition and product quality?

• Does competition keep reviewers honest vs undermining ability to finance high fixed costs

• Would require variation in amount of competition• Not what this paper wants to be about

Product positioning and owner preferences

• Related to– Podolny and Scott-Morton • what movitates wine makers – “Love or Money?”

– Race and ownership • FCC had traditionally tried to promote minority

ownership

• Maybe change title– “concentration” evokes the wrong imagery here

Another point of contact

• This is a merger retrospective– Cf. Ashenfelter, Hosken, etc.

• Usually, look at price changes following merger– Selected sample of allowable mergers– Here, merger likely exogenous

• Post-merger product repositioning

Thanks

• Neat paper!• Impressive exercise• Convincing estimates