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              Economics and Analytics
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              Working Papers

  Market Size and Local Television News Author Names(s)
                  Kim Makuch and Jonathan Levy

        
                  **Date Issued:**
        January 15, 2021

        
          Body
                  **OEA Working Paper 52**

**Abstract:** We examine the relationship between the number of independent local television news operations in a market and market size. Estimating a series of ordered logit and ordered probit entry models using 2019 data, we find a strong relationship between market size, measured by number of television households, and the number of independent local television news operations, with diminishing returns to market size. Using the estimated models, we determine market size thresholds above which we predict a market will be able to sustain two, three, or four or more local news operations.

Through its broadcast station ownership rules and review of proposed mergers, the FCC advances three policy goals: competition, diversity, and localism. This analysis sheds light on the effects of FCC regulation of station ownership on the policy goals in markets of different sizes. In some markets, there may be a tradeoff between localism and diversity. In these cases, a merger that eliminates a source of local news may be optimal, even though it reduces viewpoint diversity, if the merged entity improves the quality or increases the quantity of local news programming, strengthening localism. This analysis could help policymakers assess whether a market is likely able to sustain the current number of local news operations or whether a proposed merger is likely to result in a favorable tradeoff of diversity for localism.

**OEA Working Paper 52**
	News Release

      
              **Date Last Updated or Reviewed:**
          January 15, 2021
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