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Tuesday, October 02, 2012

Report Reveals State Media Ownership (BBC & C4) Is Corrupting And Has "No Benefits"

  This is taken from this pdf report from Harvard,which examines media ownership worldwide and concludes that there is a strong correlationn between state ownership and autocracy, poverty, poor health outcomes and general bad government.

  The assesments of the amount of state ownership are open to question.
   For example concluding that Russian TV is 96% state owned because it is owned by private companies in which the Russian government has a virtually controlling share.

   Another assessment is that in Britain the state only owns 60% of media but this excludes the fact that Channel 5 does virtually no News coverage while the state owned BBC1,2 & C4 specialise in news and current affairs. Excluding C5 would make it 75% (legally a business counts as monopoly at 70%). In fact it is fairly clear that, because of the disparate news coverage between the remaining channels (not to mention the sometimes heavy handed state domination of ITV) that the state controls well over 80% of broadcast terrestrial news in the UK. Pigou was an economist who said that government intervention was likely to be in the public interest, hence the frequent mentions of a "pigouvian world".

Some excerpts from the report:

We examine the patterns of media ownership in 97 countries around the world. Public choice theory is the theory that , while those running the state may claim that they are doing whatever they do to "protect the most vulnerable in society" or whatever the current shibbolth is, that the results show they are only serving their own interests.

We find that almost universally the largest media firms are owned by the government or by private families. Government ownership is more pervasive in broadcasting than in the printed media. We then examine two theories of government ownership of the media: the public interest (Pigouvian) theory, according to which government ownership cures market failures, and the public choice theory, according to which government ownership undermines political and economic freedom. The data support the second theory. (P1)

public choice theory holds that a government-owned media outlet would distort and manipulate information to entrench the incumbent politicians, preclude voters and consumers from making informed decisions, and ultimately undermine both democracy and markets. Because private and independent media supply alternative views to the public, they enable individuals to choose among political candidates, goods, and securities—with
less fear of abuse by unscrupulous politicians, producers, and promoters.

Moreover, competition among media firms assures that voters, consumers, and investors obtain, on average, unbiased and accurate information. The role of such private and competitive media is held to be so important for the checks-and-balances system of modern democracy that they have come to be called “the fourth estate,” along with the executive, the legislature, and the courts. (P2)
  Many hypothesize that the “amenity potential,” also known as “the private benefits of control,” arising from owning media outlets is extremely high.
In other words, the nonfinancial benefits, such as fame and influence, that are obtained by controlling a newspaper or a television station must be considerably higher than those that come from controlling a firm of comparable size in, say, the bottling industry. Economic theory then predicts that private control of media firms should be highly concentrated: the control of widely held firms with a high amenity potential is up for grabs and cannot be sustained in equilibrium.9 Our findings are broadly consistent with this prediction. (P3)
  We find that government ownership of the media is greater in countries that are poorer, have greater overall state ownership in the economy, lower levels of school enrollments, and more autocratic regimes. The last finding in particular casts We then consider the consequences of state ownership of the media, as measured by freedom of the press, political and economic freedom, and health outcomes. To this end, we run regressions of a variety of outcomes across countries on state ownership of the media, holding constant various country characteristics. We find pervasive evidence of “worse” outcomes associated with greater state ownership of the media (especially the press). The evidence is inconsistent with the Pigouvian view of state ownership of the media. (P4)     The degree to which family ownership media can iinterlink with state ownership is given on Page 15, showing how thr otherwise admirable Lee family ruling that country and the state itself hold, through a labyrinthine series of links, at least 74.46% of the media.   families and the state own the media throughout the world (Figure 4). In the sample of 97 countries, only 4 percent of media enterprises are widely held. Less than 2 percent have other ownership structures, and a mere 2 percent are employee owned. On average,
family-controlled newspapers account for 57 percent of the total and familycontrolled television stations for 34 percent of the total. State ownership is also vast. On average, the state controls approximately 29 percent of newspapers and 60 percent of television stations. The state owns a huge share—72 percent—of the top radio stations. On the basis of these findings, for the remaining analysis we classify ownership into three categories: state, private

(which is the sum of the family, widely held, and employee categories), and other.

The nearly total absence of firms with dispersed ownership in the media industry is extreme, even by comparison with the finding of high levels of ownership concentration in large firms around the world. This result is consistent with the insight that the large amenity potential of ownership of media outlets creates competitive pressures toward ownership concentration.

In a sense, both governments and controlling private shareholders get the same benefit from controlling media outlets: the ability to influence public opinion and the political process. (P17)
  World ownership tables (P18 and following)   Alternatively, from the political perspective, privately owned newspapers are easier to censor than privately owned television. Because television can be broadcast live, control of content is more likely to require ownership. In this case, governments that want to censor news would own television. (P22)   None of the top five stations in Brazil, Mexico, Peru, and the United States are state owned; this occurs in only one other country (Turkey) in our sample. In Western Europe, in contrast, a substantial number of public broadcasters push the regional state ownership average to 48 percent by count and 55 percent by share. (P23)   Levels of state ownership of the radio are lower in countries with higher primary school enrollments. Perhaps most interestingly from the theoretical perspective, levels of state ownership of all forms of media are sharply and statistically significantly lower in less autocratic countries.(P25)   The data show that state monopoly is largely a feature of poor countries—there is almost no incidence of state monopolies of newspapers, and relatively few of television, in the upper two quartiles of income distribution. (P26)   Luigi Zingales31 argues that one benefit of private media is to provide information for stock market participants, thereby improving security pricing and revealing abuses by corporate insiders. The last row of Table 7 shows that greater state ownership of the media is associated with a lower number of companies (per capita) listed on the national stock market. These results suggest that state control of information flow is detrimental to financial development, which is consistent with the public choice theory.(P29)   Lenin asked a pointed question: whom is the free press for? Our analysis has focused on political and economic freedom, but a Pigouvian could presumably argue that the true benefits of state ownership accrue to the disadvantaged members of society. Freed from the influence of the capitalist owners, state-controlled media can serve the social needs of the poor. A public choice theorist would argue, in contrast, that the government woulduse its ownership of the media to muzzle the press and to prevent the disadvantaged groups from voicing their grievances. Government ownership should then be associated with inferior social outcomes.
The contrasting predictions of the two views can be evaluated empirically.

Table 8 reports the relationships between state ownership of the media and health indicators, holding constant our usual controls. Countries with greater state ownership of the media exhibit lower life expectancy, greater infant mortality, and less access to sanitation and health system responsiveness.

Private media ownership is associated with health as well as economic and political outcomes, which is consistent with the public choice but not with the public interest theory. (P32)
  At some broad level, these results are unsurprising, as intellectuals since John Milton in the seventeenth century have advocated free press and independent media. Still, the results do provide support for the public choiceagainst public interest theory of media ownership in an environment where, as Coase has argued, the public interest case is especially strong. Yet the data are inconsistent with these Pigouvian arguments and reveal no benefits of state ownership (P38) -------------------------------     This is not entirely supportive of free marketism, since it concludes that the disproportionate ownership of the media by family groups can only be corrupting and is inevitable in a wholly free market.. Nonetheless it is a damning condemnation of state ownership of the media.     Britain, with the BBC & Channel 4, is by no means the most corrupted, not even the worst among wealthy countries, but it does tend that way. It is one of the worst in the Anglosphere countries.     Solutions tomorrow.

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