Truth in Media

Competition between news outlets can bring their audience closer to the truth, but consumers' own preference for news that is more entertaining than informative may push them further away.

If news outlets fail to report the truth, can more competition in news markets help? The more points of view that are heard and defended, the more likely that people's beliefs will converge to the truth. However, many have questioned whether press competition is truly beneficial. Some cite Britain's BBC as an example of a high-quality public news network that is insulated from traditional product market competition. Others have argued that increased market pressure can sometimes lead to cutbacks in reporting and editorial quality and that falsehoods can persist for a long time despite intense competition among news outlets.

To evaluate to what extent competition leads to more accurate reporting, a study titled "Competition and Truth in the Market for News" by Chicago Booth professors Matthew Gentzkow and Jesse M. Shapiro brings together evidence from the authors' own work as well as other research on how increasing the number of independently owned media firms can affect various distortions that keep news outlets from reporting the truth. These distortions can come from either the supply side or the demand side of the media market.

Without competition, governments can manipulate the news and news providers can manipulate their audience by promoting their own agendas. Moreover, a media outlet with few or no competitors will have little incentive to invest in providing timely and accurate coverage. As a result, competition can help promote press independence, diversity of views, and investment in quality reporting by providing incentives that remove such supply-side distortions.

On the other hand, the power of competition to discipline biases that originate from the demand side of the news market is more ambiguous. If consumers actually prefer biased news because it confirms their prior beliefs or if they demand less socially relevant news—such as car chases and celebrity scandals—then competition may actually exacerbate these preferences by providing only the kind of news coverage that people want.

This is especially true if consumers read or listen to news that "slants" to their beliefs partly out of a desire to be entertained. On the other hand, if consumers choose like-minded sources because they truly believe that these are more accurate, then competition can still keep media outlets somewhat honest if they know that a rival firm can expose them for reporting something that is too far from the truth.

The idea that giving consumers what they want may lead to an abundance of less socially relevant news may be a powerful argument against competition in the media. While this cost must be weighed against the benefits of preserving independence and diversity of views in the press, it is unclear that a regulatory agency would be successful at making people consume the type of news that the government deems important. "That would rely on government doing a better job of figuring out what news people should hear and then forcing them to hear that news," says Gentzkow. "It is not obvious that the government is going to be very good at that."

Independence and Diversity

When U.S. network CBS received a dossier of photos and videos that graphically detailed detainee abuse by American soldiers in Iraq's Abu Ghraib prison in 2004, the chairman of the Joint Chiefs of Staff reportedly called CBS news anchor Dan Rather to ask him to suppress the photos and videos, partly for fear of the safety of American hostages. This is similar to an incident that happened in 1971 when the Justice Department asked the New York Times to stop printing excerpts of a top-secret government document known as the "Pentagon Papers." In this instance, the government tried to stop the press from publishing information that was potentially damaging to President Richard Nixon's administration.

These attempts eventually proved futile because there were competing news outlets that were willing to run the stories. To effectively keep the truth from coming out, the government would have had to persuade or coerce all firms to do what it wants. Not only would it be harder to control many competing firms at once, but the potential value to any media company of defecting from this tacit collusion would be too irresistible. "When we start from a situation where the government has successfully suppressed the pictures and no one is printing them, then the gain to being the one TV station or newspaper out of a hundred that does show them is going to be really big," says Gentzkow.

In fact, three weeks after CBS first obtained the information on Abu Ghraib, the New Yorker magazine also obtained copies of some of the photos. At this point, CBS made it clear that it could no longer hold the story. Similarly, even though the Nixon administration succeeded in forcing the Times to cease publication, the Washington Post was able to pick up printing where the Times had left off, a move that significantly enhanced the reputation of the Post nationwide.

Instead of pressure from politicians, owners of media firms may have different biases that are reflected in the news that they report. The Crédit Mobilier scandal of 1879 involving bribes paid mainly to Republican congressmen in exchange for favorable votes is a good example of the way partisanship in media firms affects the revelation of truth. In the wake of that incident, Democratic newspapers devoted significantly more space to the scandal and reported more of the key facts than Republican newspapers, according to a study by Gentzkow with Edward Glaeser and Claudia Goldin, both of Harvard University.

But the fact that both types of newspapers existed means that a reader who picked up both newspapers would eventually learn the truth. If Democratic newspapers always reported Republican scandals, and if Republican newspapers always reported Democratic scandals, then all scandals would be exposed. Thus, the more media firms with different biases the more likely it is that any given fact will be reported. Moreover, Gentzkow and his coauthors observed that Republican newspapers eventually reported just as many of the key facts of the scandal because they were afraid of damaging their papers' credibility, knowing that their readers would eventually find out the truth from their competitors.

Competition also strengthens a firm's incentives to invest in the resources and skills needed to get to a story first because a media firm's reputation ultimately determines sales. If consumers in media markets cannot tell beforehand the quality of the stories that will be produced by a particular news outlet, then they must form expectations about quality based on past coverage. In this case, competition makes it easier for people to compare news coverage of different outlets, which in turn drives firms to invest in better reporting.

Moreover, the same investments that allow firms to get a scoop or an exclusive—such as highly skilled reporters and editors—also contribute to the overall accuracy, comprehensiveness, and quality of analysis in news reports.

Slanting Toward Consumer Tastes

Assuming that consumers value the truth, competition can push firms to produce accurate, quality content when governments or news companies try to distort the truth, or when firms have no incentive to invest in good reporting. But if the distortions are driven by the demands of consumers themselves rather than government or media firms, it becomes less clear whether competition can be effective in promoting unbiased news.

Previous studies have found that consumers prefer news sources that confirm their prior beliefs. In fact, a research paper by Gentzkow and Shapiro finds that newspapers choose their political slant based on their readers' ideological beliefs. This means that a news outlet with mostly liberal readers, for instance, would avoid reporting news that puts Democratic politicians in a bad light because it conflicts with its target readers' preferences. If firms distort the facts to cater to consumers' tastes, then competition may be powerless in promoting the truth.

This is especially true if consumers read or listen to such biased news because they want to be entertained. Rush Limbaugh's views may be very conservative, but his radio show is currently one of the most popular in the country. While the presence of other news sources may bring consumers' beliefs somewhat closer to the truth, it is unlikely that competition from CNN, for instance, would prompt Limbaugh to moderate his own content.

Moreover, competition might make it easier for consumers to self-segregate according to their ideological beliefs because there are more sources available so that it would be easier to avoid hearing information that might contradict their beliefs. The internet is one place where ideological segregation may be possible because people can easily visit a very large number of sources. But a new study by Gentzkow and Shapiro finds that most people who visit very conservative or very liberal sites actually get most of their news from less conservative or less liberal sites, which prevents their overall news consumption from being too extreme.

On the other hand, Gentzkow and Shapiro also argue in another paper that if people sincerely believe that like-minded sources are more accurate, then competition will give news outlets an incentive to stay as close to the truth as possible for fear that their audience will walk away. "If Fox News skews things in a conservative direction by making things up, then competition will serve as a check on that," says Gentzkow.

Hard News vs. Soft News

The other possible source of demand-driven bias is that consumers favor "soft news" about car chases and celebrity scandals over "hard news" that contains more socially relevant information. As a result, firms in a competitive market would respond by supplying mostly soft news. Policy makers might make this an argument for limiting competition in the media and for why a government agency should be given the task of producing more socially desirable news.

A government-controlled company might be less likely to pander to people's tastes for sensationalism, but it is unclear how successful the government would be in getting people to watch or read the kind of news that it thinks is appropriate for citizens. Increasing the supply of politically relevant programs would be futile if few people watch them or if the information is not absorbed by those who do. The NewsHour with Jim Lehrer on public television is generally viewed as an example of high-quality journalism but it attracts fewer viewers than Fox News or CNN.

A regulator would also have to find a way to limit consumers' supply of more entertaining choices. This is a tall order because it would have to either nationalize a large share of the media or enforce content regulations that apply to all major news outlets. Even if these measures were possible, most people might end up not watching any news at all, which would make them less informed than before.

While increasing the coverage of certain news could improve welfare, it is not always easy to define which stories are socially relevant. The Monica Lewinsky scandal is often cited as an example of typical low-value "soft news," but that incident eventually led to a presidential impeachment. Even if a consensus develops later on which news is most politically relevant, accomplishing the same in real time can be very difficult. "In a democracy where people have a lot of choices about how to spend their time, regulation that forces people to watch a news program that they don't want to is pretty challenging," says Gentzkow.