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

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Businesses as a group have an interest in maintaining a belief in the free enterprise system. The public attitude toward business, however, is a public good--all businesses share the same political climate, regardless of whose advertising supports the transmission of hostile messages. If critical messages get transmitted, all firms face future regulation and taxation even if they did not support transmission. Firms could free ride on other companies' efforts to control news content. Although the political climate of business is a function of the sum of all messages delivered to the public, the marginal effect of any one message on expected future regulations must be close to zero. The expected cost to a corporation from a general anti-business message is small.

Proponents of the corporate bias thesis maintain that businesses will not support such messages. To consider what this entails, suppose "Caveat Emptor" draws a huge audience each week with its criticism of a market economy. The program avoids singling out specific firms for criticism. Should a company buy ads on this show? Advertising reaches this large audience, with the corresponding benefits. Boycotting "Caveat Emptor" may not result in the show's demise; many ads support broadcast of any one episode, and other companies may simply step in to buy the remaining ads. The marginal effect of this week's or season's stories is modest and remote. The show's political content is for all intents and purposes irrelevant in the decision to advertise. A firm's gain from reaching "Caveat Emptor's" large audience would outweigh any collective interest in public attitudes. In fact, many observers criticize television's willingness to accommodate viewers' preferences with dubious programming: "Size of the audience is wha t counts.... The content of a program is almost incidental. If people want to watch it, then the network wants to show it" (McCabe 1987:298).

The "power" of advertising to squash general anti-business messages requires successful collusion among businesses. Business faces a prisoner's dilemma problem in controlling news content similar to maintaining a cartel. Cartels are notoriously unstable, despite the much stronger common interest of firms in one industry to raise their prices. The corporate bias thesis requires collusion across the entire economy, not just in one industry, and with less at stake for the individual firm than with price collusion. To the extent that businesses can cooperate, maintaining price collusion should be a higher priority than blocking anti-business messages.

Defecting from the advertising cartel might even benefit a firm in the event of future regulation. Advertising on "Caveat Emptor" might allow a company to establish a reputation as an enlighted business. Companies have tried to improve their public image through support of public affairs programming; Alcoa, for instance, responded to the negative publicity of its anti-trust suit by sponsoring Edward R. Murrow's "See It Now" program on CBS in the mid-1950s. Subsequent regulatory and tax measures might contain loopholes to reward the enlightened businesses that supported "Caveat Emptor" during the struggle. (9)