Advertising and political bias in the media: the market for criticism of the market economy

American Journal of Economics and Sociology, The, July, 2002 by Daniel Sutter

The corporate bias argument must apply when transmission of anti-business messages is efficient and should amount to more than the natural bias of advertising. If anti-business messages fail to attract readers or viewers, transmission of these messages would be inefficient, so corporate advertising does not produce a market failure in this case. If anti-business messages were efficient but reached a small but loyal audience, alternatives to advertising support may be necessary. Audience payment is one possibility. (5)

To make the point more concrete, imagine a weekly television show, "Caveat Emptor," featuring exposes of the ways in which corporations harm society. If "Caveat Emptor" drew tiny audiences, its cancellation would not be a result of a pro-free-enterprise bias on the part of advertisers. If "Caveat Emptor" were cancelled despite being a consistent ratings winner, we would have an instance of political bias from corporate advertising. Claiming market failure is more problematic if "Caveat Emptor" never gets on the air. Nothing guarantees the discovery of a profit opportunity in a market economy. A conspiracy need not be in place to keep "Caveat Emptor" from being broadcast. Media managers might sincerely believe an anti-business message would fail to generate an audience; after all, Americans are fairly non-political. Many people have ideas for new shows or new products. In a market economy only a fraction of these shows ever make the air; only a fraction of new products ever reach stores. Undoubtedly some poten tial hits never get developed, or are delayed for years. Failure to recognize a specific profit opportunity does not necessarily signal institutional failure (Cowen and Sutter 1999). I restrict attention to the clearest case of pro-business political bias, where "Caveat Emptor" is efficient. The remainder of this paper critiques arguments that corporate interests would kill this program. (6)

III

A Positive Climate for Business is a Public Good

I DISTINGUISH TWO TYPES of anti-business messages. The first carries a message against corporations and private enterprise in general while the second criticizes a particular firm. Charges that corporations in general display no loyalty to their communities or workers are an example of the former; ABC's "20/20" segment on Food Lion grocery stores is an example of the latter. The first type of message potentially harms all businesses. The second type of messages harms the targeted company (or industry), but may have no effect on other businesses. (7) In practice, messages often have both effects: a story of defective products or deceit of customers by one company might inevitably suggest that other companies behave in this manner, and reporting often uses a specific case to illustrate a general point. I examine general messages first.

Ideas have consequences. Exposure to message after message portraying businesses in a dim light contributes to a political environment amenable to government regulation. Continual reporting that corporations provide customers with shoddy products, cheat workers out of their pensions and health insurance, poison the environment and export jobs to foreign countries contributes to a perception that the market cannot be trusted. (8)