Profit Over Public Good: The Impact of Investment Firm Ownership on Local News and Political Behavior

Abstract

Local newspapers play an important role in informing the public and holding elected officials accountable, yet the consolidation of newspapers under an increasingly small number of owners has raised questions about the commitment of newsrooms to reporting on local politics. Of particular concern is the rise of newspaper owners that deal primarily in investment and not the media industry, such as private equity firms and hedge funds. I document 856 instances of ownership changes among daily newspapers between 2004–2020, with just under half involving a purchase by an owner who primarily deals in investments. I find that a newspaper’s acquisition by an investment-owner leads to more stories about national politics and fewer stories about local politics relative to acquisitions by other types of owners. I also find that a transition to investment ownership leads to reductions in both citizen knowledge and voter turnout. While the effects are not uniformly large or statistically robust across all outcomes, the results are broadly consistent with concerns that investment ownership may weaken local coverage and reduce political engagement in local politics.