Wednesday, December 08, 2004
Murdoch's Media Merger
The liberal bloggers out there have a hard time not to cry foul over business deals.
I do not defend everything Fox News does. But neither do I defend what other broadcasting networks do. The sad truth about arguments as the one in the link above, is not so much that they disagree with Fox, as the fact that they imply that people they disagree with should not have the right to operate in the first place. From a microeconomic perspective, this is a ludicrous position.
As if the following: If person a can atract five people to gather around a table, he can (and has to right to) unify them all according to his beliefs. If he can gather five million people in front of his tv-channel, all of a sudden he's a villain.
Clearly, this line of reasoning doesn't hold water. The mere implication of an overwhelmingly influential media network doesn't necessarily lead to the conclusion that the merger is an economic bad. Only when social returns (on a market of information) are hurt by such an investment can we talk about a predatory dominant actor in the economy. Interestingly enough, the one position which would instantly refute the right for Fox to acquire more stations -- the position of someone who is advocating a public service broadcasting network -- is the very one that does in fact hurt the market for information by developing a monopoly, overcharging consumers, penalizing them for their efforts to get alternative information (by driving up prices on alternative media outlets, via regulations) and creating economic bads by lowering social returns within a market, dominated by scarce or non-existant competition.
I do not defend everything Fox News does. But neither do I defend what other broadcasting networks do. The sad truth about arguments as the one in the link above, is not so much that they disagree with Fox, as the fact that they imply that people they disagree with should not have the right to operate in the first place. From a microeconomic perspective, this is a ludicrous position.
As if the following: If person a can atract five people to gather around a table, he can (and has to right to) unify them all according to his beliefs. If he can gather five million people in front of his tv-channel, all of a sudden he's a villain.
Clearly, this line of reasoning doesn't hold water. The mere implication of an overwhelmingly influential media network doesn't necessarily lead to the conclusion that the merger is an economic bad. Only when social returns (on a market of information) are hurt by such an investment can we talk about a predatory dominant actor in the economy. Interestingly enough, the one position which would instantly refute the right for Fox to acquire more stations -- the position of someone who is advocating a public service broadcasting network -- is the very one that does in fact hurt the market for information by developing a monopoly, overcharging consumers, penalizing them for their efforts to get alternative information (by driving up prices on alternative media outlets, via regulations) and creating economic bads by lowering social returns within a market, dominated by scarce or non-existant competition.
