period of their data.
35
They find that greater ownership by large national radio companies
is associated with lower advertising prices. However, as they note, to interpret this second
correlation, it is important to recognize that SQAD-estimated prices are largely based on
prices charged to regional and national advertisers who may be simultaneously buying
commercials in several markets. The fact that national radio firms reduce prices to these
buyers, with whom they may enjoy some economies of scale or scope by selling com-
mercials in many markets simultaneously, does not necessarily imply that they also reduce
prices to local advertisers. This matters because local advertisers account for the majority
of station revenues (2006 BIA data would put the average at around 70%, and it has sub-
sequently risen to around 75%)
36
, and one might imagine that local advertisers are less
able to substitute to other media than national advertisers.
Chipty (2007) also estimates reduced-form regressions to examine the relationship
between concentration and advertising prices, using a cross-section of data from 2006,
but also using a wider range of SQAD prices (for example, for different dayparts, and
measures based on both costs per thousand listeners and costs per share point) than Brown
and Williams. Chipty finds no significant relationship between local concentration and
her measures of advertising prices but, like Brown and Williams, she finds a weak neg-
ative correlation between ownership by national radio firms at the local level and prices
once she controls for market demographics. However, this carries the same caveat about
interpretation as the Brown and Williams study, and in fact, using a sample of data on
programming content, she shows that there is no significant relationship between the
national ownership and the quantity of advertising on the radio, whereas a general decline
in advertising prices would have led one to expect an increase in the amount of adver-
tising.
Sweeting (2008) does find a positive effect of ownership by large, national radio
companies on the number of minutes of advertising using a panel of playlist data from
relatively large music stations during the time period 1998–2001. The effect is of mod-
erate size: around 0.6 more minutes of commercials per hour, or roughly 5% of the aver-
age commercial load for one of the stations in the sample.
37
Consistent with the lack of
price effects of changes in local concentration in the other reduced form papers, Sweeting
35
As part of its investigation into the merger between Global Radio and the Guardian Media Group’s radio
business, the
United Kingdom Competition Commission (2013) performed a detailed price-
concentration analysis, and found that “the presence of fewer good radio alternatives, and/or where
the radio alternatives are not as good, is associated with higher advertising prices” (Appendix I, p. I1).
Unfortunately, the magnitudes are not disclosed in the published report for confidentiality reasons.
36
Conversation with Mark Fratrik of BIA/Kelsey, February 13, 2015.
37
Sweeting’s analysis is based on imputing the number of minutes of commercials using gaps between songs
when some commercials were being played. It is therefore possible that this result instead reflects the fact
that national owners tend to insert more non-commercial talk programming (e.g., promotions, sponsor-
ship information) around commercial breaks rather than increases in the length of breaks themselves.
Sweeting also looks at hours outside the morning drivetime period, which has been the focus of other
studies.
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Radio