Ofcom has published a report by DotEcon on the economics of potential consumer benefits arising from local media mergers. Local media consolidation, particularly in the declining local newspaper sector, was the topic of a 2009 review by the OFT alongside the Digital Britain interim report, which concluded that in future merger cases the OFT should turn to Ofcom for a ‘local media assessment’ (LMA) to inform its decision on whether to refer a notified merger to the Competition Commission.
Merger impacts on consumers in commercial media markets – one of the topics an LMA might address – are among the most difficult for competition authorities to analyse because of the intangible nature of the content and ‘quality’ dimensions that define a media product, and because the link between price, cost and willingness to pay is obscured by the presence of another set of customers, namely advertisers. Our report looks at the theory and evidence for the circumstances in which local media mergers could create benefits to readers, listeners or viewers that might be weighed against a lessening of competition for advertising customers, and how these propositions could be examined in practice.
DotEcon’s report, entitled ‘A Framework to approach benefits to consumers in Local Media Assessments’, is available from the Ofcom web site or can be downloaded here.