Newspapers and Parties: How Advertising Revenues Created an Independent Press

Abstract

Does economic development stimulates media freedom? Do higher advertising revenues make media outlets more willing to be independent from external political groups of influence? I use data on 19th century American newspapers to show that in places with higher potential advertising revenues newspapers were more likely to be independent from political parties. I …find similar results when local advertising rates are instrumented by regulations of outdoor advertising and of newspaper distribution. I also show that newly created newspapers were more likely to enter the market as independents in places with higher advertising rates. Finally, I present evidence that economic development alone cannot explain the observed growth of independent newspapers, and some political factors also played the role.