Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls

Authors: Graham Beattie, Ruben Durante, Brian G. Knight and Ananya Sen

Management Science, Vol. 67, No 2, 698-719, February, 2021

Do mass media bias content in favor of advertisers? If so, what market conditions limit or exacerbate this bias? We examine the relationship between advertising by auto manufacturers in U.S. newspapers and news coverage of car safety recalls between 2000 and 2014. This context allows us to separate the influence of advertisers, who prefer less coverage, from that of readers, who prefer more information about the safety risks associated with the recalls. Consistent with theoretical predictions, we find that newspapers provide less coverage of recalls issued by manufacturers that advertised more regularly on their pages over the previous two years. The effect is especially pronounced for more severe recalls, which are more likely to hurt manufacturers’ reputations. Competition for readers from other newspapers mitigates proadvertiser bias, and competition for advertising by online platforms exacerbates it. We also present suggestive evidence that less news coverage of recalls is associated with more fatal car accidents.