Consolidation and Advertising Prices in Local Radio Markets
Keith Brown and George Williams.
Media Bureau Staff Research Paper 2002-4 (Sept 2002) relates the price of advertising to radio market concentration by examining the price charged to national and regional advertising agencies for local radio advertising, together with data on concentration in local radio markets. The authors employ fixed-effects regression and find that changes in local concentration from 1996-2001 explain 3-4% of the 68% increase in real advertising rates during that period.
They conclude that economic growth explains much of the other 65% and that national concentration does not appear to drive the increase in advertising prices. A greater presence of large national owners in a local market appears to decrease the advertising rates paid by national and regional advertising agencies.