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Active Learning and Research
Active Learning and Research
Economist John Brown's research ranges from the global to the local, and incorporates a historical perspective that helps provide insight into contemporary issues.

Meet the researchers: A liberating experience

Interview with Larson Bullock
During the summer between his freshman and sophomore years at Clark, economics major R. Larson Bullock '05 interned three days a week at a local radio station, WXLO in Worcester. Now in his senior year, Bullock is completing a senior honors thesis examining the effect of U.S. media market deregulation and associated radio station ownership restructuring on advertising rates and program variety. In a recent conversation, summarized below, he discussed his research.

Did you know when you came to Clark that you wanted to major in economics?

I think it took me until the end of my sophomore year to decide. I started out taking philosophy, geography—all different things. Then I took Economics 10, the introductory economics course. I really enjoyed it and continued taking more economics courses. I just added a minor in management this past year, because I'd completed most of the courses anyway.

How did you come to do a senior honors thesis in economics?

My professors encouraged me to do it. Also, I went to Academic Spree Day every year and saw the projects other students had done. And I'll be presenting there myself this year.

What is the subject of your honors thesis?

I'm looking at the effects of changes that have occurred in media market concentration—radio, specifically—since the Telecommunications Act of 1996. I was sort of inspired to look into this topic by some movies about mega-media conglomerates-notably Outfoxed—that I'd seen this past summer. I thought it would be interesting to examine the impact of deregulation and big media companies from an economic perspective.

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What do you mean by media market concentration?

A media market is said to become more concentrated when the ownership structure changes such that the same number of stations is now owned by fewer companies. When firms like Clear Channel own nearly ten percent of the radio stations nationwide, intuition alone suggests that individual markets must be controlled by a significantly smaller number of owners. Without getting into technicalities, the interesting economic question is whether these remaining companies exhibit increased market power; that is, whether they now have more influence over the prices they charge for advertising or the programming they provide.

Media deregulation has been very contentious. The Federal Communications Commission (FCC) web site says that the 1996 Act was the first major overhaul of telecommunications law in 62 years, and that its intention was to let any communications business-telephone, cable, and broadcast services—compete in any market against any other service.

Yes. Before the Act there were more stringent limitations on the number of media outlets in a given market area that could be owned by a single company. Many people worried that, if the Act were passed, large media companies would swallow up smaller competitors, potentially limiting the diversity of information and opinions accessible to the public. For example, instead of having 30 stations each with a different owner serving a single market area, after deregulation those 30 stations might be owned by just five companies.

What is a market area? How are you defining a market area?

When collecting data, I group stations, more or less, by the city from which they originate. Precise definition of a market is obviously not practically feasible, as signal overlap makes it exceedingly difficult to "draw the lines." For example, Boston's WBZ can be heard in the Mid-West, but is counted as a Boston station.

What size radio station market areas are you looking at in your research?

I'm looking at all U.S. radio market areas that are about the size of Worcester or a bit smaller—128 market areas in all. These are metro-ranked areas, an advertising term used to mean cities with about the same listening audience size. Professor Brown and I thought it likely that the most obvious effects of market concentration would be visible in market areas of this size. We guessed that really big markets like Los Angeles and New York would still have lots of stations with lots of owners, and thus would be less impacted by deregulation. On the other hand, really small market areas, those with only a couple stations tend to have insufficient data published about them.

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What variables are you comparing and for what time periods?

I'm looking at the number of radio station owners versus the number of stations in each market area, the number of programming formats available (for example, adult contemporary, hip-hop, country, etc.), and advertising rates. I'm comparing data from 1996—just before the Act was passed, with data from early 2005. I'm looking for any indications that large media companies are starting to dominate market areas.

What would indicate domination? How do you expect that the phenomenon of market concentration affect advertising rates and diversity of program formats?

Tough question! That's one of the key points in the development of the hypothesis— what does theory suggest will happen to price and variety? It depends on the degree of concentration and individual firm strategy. In terms of both price and variety, the balance of profit maximization and competitive pressures makes for uncertain outcomes. If, in a given market, individual companies have a lot of market power, the results may be very different than they would be if there were more competition. I guess the best response is one that explains what one hopes does not happen—that prices rise and format variety declines. This would generally be considered a welfare loss to customers, in this case, either listeners, advertisers, or both.

Where do you find your data?

A company called Standard Rate and Data Services (SRDS) maintains information about the characteristics of market areas that it sells to advertising agencies. For each market area they list the station specifics (ownership, format, etc.) and information about the age demographic that it targets. That's been my primary source. The Census data then adds market-level information on income, population and race.

Is that available online?

Yes, but it's not free. The company primarily targets advertisers and, consequently, charges fairly high prices. And the online database is also limited to the most recent data. So, I've been doing manual data entry from a reference journal published by SRDS into a spreadsheet. I can access that information at the Boston Public Library.

What software are you using?

I'm entering the data into Microsoft Excel and then using a statistical program called STATA to do the data analysis—generating appropriate variables, running regressions, etc.

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Can you comment on the difference between doing research and learning in a more traditional classroom setting?

Research is an opportunity to really get into something in a lot more depth—something that interests you. And it's great having an advisor to work with. You have a professor available all the time, but you're not under the same time constraints and project guidelines as in a regular class.

I assume your advisor helps you plan your work?

Yes. In addition to working with my advisor, Professor John Brown, who keeps me on track and dispenses invaluable advice, I attend an honors thesis course taught by Professor Wayne Gray. All the economics majors who are doing senior theses meet once every two weeks or so and give progress updates. Professor Gray gives us guidelines for writing and so forth—all the basics. Having both class time and an individual advisor creates an atmosphere of great support.

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Larson Bullock
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