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Oct. 27, 2009, 11 a.m.

How government money can corrupt the press: The story from Argentina

The element of the Downie/Schudson report that’s triggered the most fuss is its call for a larger role for the government in funding journalism — the creation of a “Fund for Local News,” supported by taxes or fees, that would support news organizations. And it’s true that the United States is a global anomaly in how little it spends to support journalism.

But an interesting new study gives some backing to critics who argue any government dollars come with strings attached.

The paper, by Harvard’s Rafael Di Tella and Northwestern’s Ignacio Franceschelli, analyzes Argentina’s four largest newspapers and finds a strong correlation between their willingness to cover government scandal and the amount of money they received from government coffers.

“There’s a huge correlation, controlling for everything,” Di Tella, the Joseph C. Wilson Professor of Business Administration at Harvard Business School, told me. “I’m interested in why people believe the things that they believe, and newspapers are extremely influential in that.”

Di Tella and Franceschelli compared two data sets covering the four major Argentine national dailies: Clarín, La Nación, Página 12, and Ámbito Financiero. The first was one they created: They took 10 years of each newspaper and measured the percentage of each paper’s front page taken up by stories about government corruption. That allowed them to compare how interested each paper was in covering corruption at any given moment, at least in comparison to its peer newspapers.

The second data set came from an Argentine NGO: details of how much the government spent in newspaper advertising, month-by-month and by newspaper. (The NGO had obtained the data through Argentina’s freedom of information act.)

Argentine governments have a long tradition of buying large amounts of advertising in newspapers. And the decisions of where to place ads is left to the government’s whims; in practice, advertising dollars (pesos, actually) are divvied up in ways that curry favor and reward media behavior. The paper quotes an Economist piece from 2006:

One of the government’s tools is money. The robust recovery in Argentina’s economy since its collapse of 2001-02 has boosted tax revenues. That has brought an eightfold increase in the real value of the federal publicity budget (to $46m in 2006) since [past president Nestor] Kirchner took office in 2003. Argentine governments have a long tradition of funneling official advertising to sympathetic media and withholding it from others.

Di Tella noted in our conversation that advertising revenues are only the most obvious and trackable form of government transfers to media. There are no doubt many other ways an Argentine administration can play financial favorites with a news organization.

More government money = less coverage of corruption

Their analysis found a “huge correlation” between, in any given month, how much money went to a newspaper and how much corruption coverage appeared on its front page. For example, if the government ad revenue in a month increased by one standard deviation — around $70,000 U.S. — corruption coverage would decrease by roughly half of a front page.

They also, in periods where newspapers were getting more money from the government, they produced fewer corruption scoops of their own and covered fewer of the scoops produced by other newspapers. (It should be noted here that the study only looked at the front pages of newspapers — so it’s possible rival papers were writing about the scandals uncovered by their peers. But if so, they were doing it on inside pages.)

Di Tella and Franceschelli also found that newspaper size was a notable buffer against the advertising-corruption connection. Corruption coverage in the larger newspapers (Clarín and La Nación) were less sensitive to changes in government advertising than coverage in the smaller newspapers. That would seem to back up the argument that a media world with a few larger players could have at least one advantage over a world of many smaller players. (Of course, there are lots of advantages in the other direction too.)

Lessons from the data

It should be noted that the evidence shows correlation, not causation. In other words, it’s not clear that more government money leads to less corruption coverage, or that less corruption coverage leads to more government money. But Di Tella said that, from his perspective, the difference isn’t particularly important, since either timing scenario indicates a non-independent press. He said the evidence they gathered seemed to support newspapers reacting to government money, not the other way around — but that the evidence on that point wasn’t as clear as their other findings.

The question that came to my mind when I saw the paper was whether ideology might be a confounding factor here. Say a conservative government came to power. It might choose to funnel more money to a conservative paper. And the conservative paper could choose to write fewer corruption articles about its favored government. Both could happen at the same time, but be independently driven by ideology, not cash payments.

But the study takes that into account by, for instance, tracking a particular newspaper’s coverage within a particular administration. Even when a liberal paper is covering a liberal government, month-by-month corruption coverage goes up or down as government ad payments go up or down. In fact, the data showed that government dollars were nearly five times as powerful in determining corruption coverage as the ideological proximity between newspaper and government decreased.

Di Tella told me his report should not be misinterpreted as saying that there’s no appropriate role for government funding in the news media. He sees the problem as the wide discretion Argentine governments have to dole out money as they see fit. If payments were determined by, say, a neutral formula based on circulation — or if they were set in stone far enough in advance that they couldn’t be influenced by government whim — many of the negative effects could go away.

If you’re a hard-nosed reporter looking for the bright side in all this data, it’s that the analysis also found very real rewards for corruption coverage among the newspapers’ audiences. One extra full front-page worth of corruption coverage a month was associated with a nearly 8 percent increase in circulation. So cutting back on corruption stories seems to lead to less circulation revenue — even if it’s associated with extra government money coming in.

POSTED     Oct. 27, 2009, 11 a.m.
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