Media Conglomeration, Local News, and Capital Market Consequences

We examine the effect of news media consolidation on local business coverage and its consequences for firms, investors, and capital markets. Using television transcripts, we find a substantial drop in coverage of local firms following the consolidation of local television stations associated with Sinclair acquisitions. Local information search, institutional portfolio local bias, and overall retail trading decrease for firms in treated geographic areas. Results are most pronounced for small firms, for stations with higher ex ante viewership, and for stations with greater reductions in local coverage. Our results provide insight into the consequences of media consolidation for local business coverage, firms, investors, and capital markets. This paper was accepted by Eric So, accounting. Funding: Financial support from the Brigham Young University Marriott School of Business, Purdue University Mitch Daniels School of Business, and Kenan-Flagler Business School is gratefully acknowledged. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.02247 .