Picard on the Closure of The News of the World

Prof. Picard comments,

Perhaps it was embarrassment—but it was more likely the loss of revenue, the loss of almost $3 billion in market value for the parent company because of declining share prices, the hundreds of millions of pounds in damages that will have to be paid, and the fact that the paper’s meltdown was endangering Murdoch’s takeover of BskyB—that led him to kill the paper.

I tend to agree with him on this one. There is no reason Rupert Murdoch would have shut down a profitable portion of his portfolio to save face because that does not make economic sense. Similarly, I think McChesney and the others have it wrong. It is foolish to ascribe Murdoch a partisan hack. He is a businessman first and foremost, and an extremely successful one at that. He goes for the money, and there is a lot of advertising dollars in creating a cohesive narrative that engages those on the right. One of the core beliefs of this narrative is the “power and influence of liberal media,” which McChesney et. al. so vehemently try to dispute.

There is an easier way.

Many conservatives charge that the national news media exhibit a liberal bias, despite surface appearances of impartiality. Charges of a liberal bias essentially require the existence of a news cartel. Is the structure of the news industry capable of sustaining a cartel? A liberal news cartel requires collusion among news organizations and constraint of maverick outlets. Cartels are always vulnerable to defection. Indeed, many critics who accuse the media of a liberal bias are likely skeptical of the ability of businesses to maintain stable cartels without government assistance. Competition usually forces firms to cater to their customer’s preferences. Yet critics allege that all major national news organizations present the same biased coverage, which is more liberal than the median voter. A liberal media represents a failure in the news market.

That is from Daniel Sutter’s amazing 2001 paper entitled “Can the Media be so Liberal? The Economics of Media Bias.” Highly suggested.

Leave a Comment.