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Ruben Durante, Sciences Po Print
Tuesday, 25 April 2017, 14:00 - 15:15

Ruben Durante, Sciences Po

Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls

Abstract: Do media outlets bias news content in favor of advertisers? We study this question by examining the relationship between advertising spending by car manufacturers in U.S. newspapers and news coverage of major safety recalls issued between 2000 and 2014. Examining car safety recalls allows us to separate the effect of advertisers’ influence from that of readers’ tastes which, in this case, should lead to more coverage as owners of recalled vehicles demand more information about the safety risks associated with the recall. Consistent with the predictions of our theoretical model, we find that recalls involving a given manufacturer receive significantly less coverage on newspapers in which that manufacturer advertised more over the previous two years. We find that pro-advertiser bias is more pronounced in markets with a single newspaper, which indicates that competition - and the related reputational concerns - mitigates capture by advertisers. Finally, increased competition for advertising revenues from online platforms makes newspapers more vulnerable to the pressure of advertisers.

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