Umbrella Competition in St. Louis
Umbrella Competition among Daily Newspapers:
A Case Study of the St. Louis, MO-IL MSA
Michael Zhaoxu Yan
Graduate Student
Department of Telecommunications
Indiana University, Bloomington, IN 47405
Tel: (812)3397897
E-mail: [log in to unmask]
Paper Submitted to
the Media Management and Economics Division of
the Association for Education in
Journalism and Mass Communication
Running Head: Umbrella Competition in St. Louis
Umbrella Competition among Daily Newspapers:
A Case Study of the St. Louis, MO-IL MSA
Abstract
Umbrella competition model has been used to examine newspaper competition
across cities boundaries. But extant research of the model has
generally
ignored comparing inter-layer and intra-layer competition.
This study tests the umbrella competition model by comparing the intensity
of inter-layer with that of intra-layer competition for newspaper
circulation in Madison county of the St. Louis, MO-IL MSA. The study
confirms the umbrella competition model, showing that inter-layer
competition between the metro daily and the suburban newspapers is more
intense than that among suburban dailies of the same layer. The
implications of the study are discussed in light of the most recent
discussions on intercity competition research.
Umbrella Competition among Daily Newspapers
in the St. Louis, MO-IL MSA
Introduction
The American newspaper industry since the World War II has been undergoing
a major structural change, that is, the decrease of metropolitan dailies
and the increase of suburban dailies and weeklies (Rosse, 1975).
Parallel
with this change is the shift of research focus from intracity
competition
to intercity competition (Compaine, 1982, Mishra, 1980).
An umbrella competition model has been advanced to describe intercity
competition in metropolitan areas (Rosse, 1975). The theory starts with
dividing the newspapers in a metropolitan area into four layers. The
first
layer is composed of metro dailies that provide regional coverage. The
second layer includes satellite city dailies. Satellite dailies are
similar
to the first layer newspapers in content, but more locally-oriented. The
third layer consists of suburban dailies, which are outside the
central ci
ty and very local in their coverage. The last layer is made up of
weekly
newspapers and shoppers, which are almost exclusively local in nature.
Newspaper competition, according to the umbrella model, is more intense
between layers than within layers. One of the reasons is that
newspapers
compete against each other for advertising and circulation along the
fringes of the markets. Because the geographic boundaries of daily
newspapers on the same level overlap only slightly, if at all, there is
little or no competition among the papers. On the other hand, because
of
the greater overlapping in coverage between higher and lower layers of
newspapers, newspapers between layers compete for readers and
advertisers
(Rosse, 1975).[1]
The trend of the growing newspaper monopoly in central cities and
increasing competition between metro and suburban newspapers have aroused
economic concern that metro dailies will eventually run suburban
newspapers
out of business (Roberts, 1981). A related ethical consideration is that
the social responsibility of a free press will be limited by
increasing
intercity competition and decreasing intracity competition (Rosse,
1975).
Subsequent studies of umbrella competition, however, have generated
mixed
results. In addition, Lacy and Davenport (1994) suggested that great
potential for newspaper competition exist when county, instead of city, is
used as the geographic market.
A small body of research of intercity competition has advanced since the
inception of the umbrella competition model. But extant research on
this
model has generally ignored comparing inter-layer and intra-layer
newspaper
competition, a necessary step toward validating the model. This study
chooses the St. Louis Metropolitan Statistical Area (MSA) to compare the
intensity of between-layer competition with that of within-layer
competition using regression analyses. The primary purpose is to test the
model in a more rigorous way.
Literature Review
As shown below, past research based on the umbrella competition model has
either taken the existence of umbrella competition for granted and
attempted mainly to gauge its impact on newspaper content and advertising,
or focused only on between-layer competition. In addition, few efforts
have
been made to test the umbrella competition model by comparing
between-layer and within-layer competition.
Lacy (1988a) is an example of studying the impact of intercity competition
on newspaper content. He found that the intensity of intercity newspaper
competition is positively related to the percentage of space in a
newspaper
devoted to news coverage and local news coverage. Although the study
showed that intercity competition is a stronger contributing factor to
more
news and local news coverage than intracity competition as well as other
variables including population, average household income and newspaper
circulation, it did not directly and systematically compare intercity
and
intracity competition.
In another study, Lacy (1990) looked at competition between metro dailies
and suburban weeklies, testing the hypothesis that "circulation of
metropolitan dailies and circulation of suburban weeklies within suburbs
will correlate positively with the same categories of suburban news,
editorials and advertising" (p. 789). He reasoned that if there are
similar
patterns of content-circulation correlations between metro dailies and
suburban dailies, there will exist substitutability and thus
competition
between these metro and suburban dailies. The result of this case
study
only partially supported his hypothesis with similar correlation
patterns
appearing only in the content areas of display advertising, insert
advertising and local sports.
Lacy (1985) measured between-layer competition as perceived by suburban
newspaper executives. In this survey, suburban editors and publishers
in
metro areas with monopolized central markets perceived circulation
competition from metro dailies to be greater than advertising competition.
On the other hand, those in areas with two or more separately owned
and
operated newspapers in the central market perceived advertising
competition
more intense than circulation competition. The study also found that
advertising competition was more influenced than circulation competition
by
distance between the metro cities and suburban cities.
However, Niebauer Jr. et al (1988) found that the newspaper market
structure of the central city did not extensively influence either the
existence of suburban newspapers or their circulation. On the other
hand,
as population increases, the circulation of suburban newspapers
increases;
as the circulation of the metro daily increases, the circulation of
suburban dailies decreases; as the distances of the suburbs from the
central market increases, the circulation of the metro daily in the
suburbs
decreases.
As one of the few studies that directly tested the validity of umbrella
competition model, a historical account by Tillignhast (1988) of the
southern California papers in the Los Angeles area showed that competition
among these papers was limited to between-layer competition and there
was
little within-layer competition among the dailies. But another case
study
came up with different results. Devey (1989) aggregated the total
circulation of newspapers in each of the three umbrella layers (metro,
satellite and suburban) in the Boston MSA and found that circulation of
lower-level newspapers increased at a faster rate between 1945 and 1985
than that of metropolitan newspapers. This was due to the proportionate
decrease of population in the central city and population growth in
satellite cities and suburbs. More importantly, she found that there was no
between-layer competition in this case. One of the reasons for this could
be the competitive central market in the Boston MSA which facilitated
the
continuing growth of satellite and suburban newspapers.
These two studies also have their limitations. While Tillinghast (1988)
was historical and descriptive, Devey (1989) only looked at
competition
between higher-level and lower-level newspapers, ignoring competition
between lower-level newspapers. Besides that, the latter study used
aggregated circulation data for each layer and overlooked the fact that
umbrella competition might exist only in some counties within a
metropolitan area.
Hypotheses and Methods
By stating that between-layer competition is more intense than
within-layer competition in a newspaper market, the umbrella theory
factually involves the comparison of between-layer and within-layer
competition. But as the above literature review shows, this has been
traditionally neglected. This study thus goes back to the starting point
to
test the generality of the umbrella competition model.
To do this, we first need to test whether there is inter-layer competition
between a metro daily and the suburban dailies. Then we need to test
whether there is competition among suburban dailies in the same layer.
Finally, we have to find out whether the competition between the metro
daily and the suburban dailies is greater than the one among suburban
dailies.[2]
The Newspaper Market of the St. Louis MSA Metropolitan Statistic Area is
often used to study umbrella competition because generally metro
dailies
cover this geographic area and the proposed umbrella competition is
more
likely to occur here (Morton, 1983).[3] The St. Louis MSA used for the
present
study includes nine counties, five from state of the Illinois and four
from the state of Missouri. They are Clinton, Jersey, Madison, Monroe,
and
St. Clair in Illinois, and Franklin, Jefferson, St. Charles and St.
Louis
in Missouri.
Table 1 shows the daily(ies) each of the nine counties can get access to
and their circulation and market share (in parenthesis) in the
counties in
1992. As shown, Madison, St. Louis, St. Clair and Jefferson are the
only
four counties in the MSA that have their own daily(ies). Of the nine
counties, two (Franklin and St. Charles) have only one daily, the central
metro daily St. Louis Post-Dispatch ("Post" hereafter). Five counties
(Clinton, Jersey, Monroe, St. Clair and Franklin) have one metro daily
and
one suburban daily. Two counties (Madison and St. Louis) have one
metro
daily and two or more suburban dailies.
------------------
Table 1 about here
------------------
Lacy and Davenport (1994) classified newspaper markets into eight
structural types and specified the type of competition potential each type
of market would have (see Table 2). According to Table 2, in the St.
Louis
MSA, five counties (Clinton, Jersey, Monroe, St. Clair and Franklin)
where
there are one metro and one suburban daily have the potential for
inter-layer competition only while there is potential for both inter-layer
and intra-layer competition in Madison and St. Louis counties which
have
one metro daily and two or more suburban dailies. Since the purpose of
the
study is to compare inter-layer competition with intra-layer
competition,
and also because the St. Louis Countian and the St. Louis Record have
very
small circulation in St. Louis county, only Madison county is included
in
this study.
-------------------
Table 2 about here
-------------------
There are four major dailies in Madison county. Post is the metro daily.
The Alton Telegraph ("Alton") and the Edwardsville Intellegencer
("Edwards
") are published in Madison county while the Belleville News Democrat
("
Belle") published in St. Clair county. All together, the latter three
are
regarded as being in the same layer. Hence, this study examines the
competitive relationship among Post, Alton, Edwards and Belle in Madison
county.
According to Table 1, in 1992, the three-firm concentration in Madison
county was 56.6%. The Lacy competition index[4] was only 4.6. This
shows that
newspaper market in Madison county is much competitive.
As having been pointed out widely, newspapers, under the umbrella model,
compete within and between layers for content, advertising and
circulation.
Circulation competition is examined in this study only for the reason of
simplicity.[5]
Previous research suggests that inter-layer circulation competition be
expected here because of the monopolistic structure of the central
market
in the St. Louis MSA (Devey, 1989, Lacy, 1985). Further, if the
umbrella
competition model holds here, there is inter-layer competition between
Post
and Alton, Edwards or Belle, and there is little, if any, intra-layer
competition among Alton, Edwards or Belle. In addition, inter-layer
competition is greater than intra-layer competition.
To examine the inter-layer competition, the following hypothesis is
tested.
H1: The circulation of Post is predictive of that of Alton in Madison
county.
To look at the intra-layer competition, the following hypothesis is
tested.
H2: The circulation of Belle is not predictive of that of Alton in
Madison county.
Since Alton and Edwards originate in the same county, circulation
competition between them is expected. The following hypothesis is formed to
test this.
H3: The circulation of Edwards is predictive of that of Alton in
Madison county.
To compare the inter-layer and intra-layer competition, the following
hypothesis is built.
H4: The circulation of Post is predictive of that of Alton over and above
that of Belle and of Edwards in Madison county.
Because Post, Belle and Edwards also compete against each other in Madison
county, an interaction effect could occur as a result of the competition
among the three dailies and in turn could result in competition
against
Alton. The following hypothesis is thus developed to take into account
the
interaction effect.
H5: The circulation of Post is predictive of that of Alton over and
above that of Belle, that of Edwards, and the interaction effect
among
Post, Belle and Edwards.
Circulation data from 1970 to 1992 of the newspapers were taken from
Circulation collected by the American Audit Bureau of Circulation.[6] The
study used SAS single and multiple regression analyses.[7]
Results
The results of the regression analyses are reported in Table 3. Five
regression analyses were done. F, R-square and P values are reported for
each regression analysis. In addition, for the last two regression
analyses
involving multiple variables, F, R-square and P values are reported for
each variable.
------------------
Table 3 about here
------------------
Inter-layer competition The regression of Post's circulation on Alton's
shows that the circulation of Post accounted for 76.7% of the total
variance of that of Alton. This is statistically significant (p<.05). Also,
there is a negative relationship between the circulation of Post and that
of Alton. H1 is supported.
Intra-layer competition The circulation of Belle only accounted for 6.7%
of the variance in the circulation of Alton. There is a negative
relationship between the circulation of Belle and that of Alton. But the
result is not statistically significant (p>.05). H2 is supported here.
The circulation of Edwards does not predict that of Alton, either,
contrary to expectation (F=.01, P>.05). H3 is rejected. This shows that
although Alton and Edwards are based in the same county, they do not
compete against each other for circulation.
Inter- and Intra-layer competition The circulation of Post, Belle and
Edwards altogether predicted 87.4% of the past changes in the
circulation
of Alton (F=34.72, p<.05). A further look at the individual F values
shows
that the circulation of Post has greater predicting power (F=96.16,
p<.05)
than Edwards (F=7.56, p<.05) and Belle (F=5.99, p<.05). H4 is
supported.
Note here that while neither Belle nor Edwards is predictive of Alton
alone, both of them show a significantly negative relationship with Alton
here. This means that there is an interaction effect among Post, Belle
and
Edwards.
When the interaction effect is added to the regression analysis as an
independent variable, the variance of Alton's circulation accounted for
by
these variables increased from 87.4% to 91.3% (F=36.94, p<.05). All of
the
variables show a negative relationship with Alton. Again, Post's
circulation (F=104.82, p<.05) predicts that of Alton over and above that of
Belle (F=12.04, p<.05) and Edwards (F=11.99, p<.05) and the interaction
among Post, Belle and Edwards (F=6.36, p<.05). H5 is supported.
Discussion
To test the umbrella competition model, this study chooses Madison County
in the St. Louis, MO-IL MSA to examine the inter-layer and intra-layer
newspaper competition for circulation.
The regression analyses show that in Madison county, the circulation of
the county's major daily Alton Telegraph faces competition mainly from
the
higher level metro daily St. Louis Post-Dispatch. There are negative
relationships between the circulation of Alton Telegraph and that of
Belleville News Democrat and of Edwardsville Intellegencer. But they are
not statistically significant. Obviously the competitive power of the
metro
daily St. Louis Post-Dispatch is overwhelming. Therefore, overall, the
study testifies to the existence of umbrella competition in this county
in
the case of Alton Telegraph.
The implication of the study is double-sworded. First, it shows that
although there are fewer and fewer cities in this country that have two
or
more dailies, newspaper competition still exists on the county level.
The
study seems to support Lacy and Davenport (1994)'s suggestion that
county,
instead of city, be the appropriate level for describing the market
structure of newspapers. But, despite the competition potential, the
presence of umbrella competition, especially the overwhelmingly
competitive
power of the metro dailies in the county markets as revealed in the study,
also echoes concern that the increasing competition from metro dailies
would drive suburban and satellite newspapers out of business. In the
St.
Louis MSA, there are two counties without any other dailies except the
metro daily.
Since several daily newspapers have been co-existing in Madison county for
decades, it would be interesting and meaningful to find out how the
suburban dailies compete with each other and with the metro daily. Future
research of content and advertising competition among these newspapers
should provide more insights on newspaper competition in this market.
This study is confined to only one county with a particular market
structure in the St. Louis MSA, although this is practically the only place
that can be included in the study. This area also has a monopolistic
central market structure with the St. Louis Post-Dispatch dominating the
market. On the one hand, it should not be surprising that the nature
and
extent of umbrella competition differ in different markets, and
individual
market analysis has been shown to be able to better describe the
reality of
newspaper competition (see, e.g., Lewis, 1995). On the other hand, we
should go further than market-by-market case studies. Lacy and Davenport
(1994) divided the county newspaper markets into eight structural
types. We
may want to ask: would there be similarities among markets of same
structural types in umbrella competition? More research with more
generalizability needs to be done for the umbrella competition model to
develop to the point that "it can predict the results or explain the
nature
of intercity competition in individual markets" (Lacy, p. 70, 1988b).
References
Compaine, B. M. (1982). Who owns the media? Concentration of ownership in
the mass communication industry. White Plains, New York: Knowledge
Industry
Publications, Inc.
Devey, S. M. (1989, Spring). Umbrella competition for newspaper
circulation in the Boston Metro Area. Journal of Media Economics, 2, 31-40.
Grotta, G. L., Larkin, E. F., & Carrel, Jr., B. J. (1976). News versus
advertising: Does the public perceive the journalistic distinction.
Journalism Quarterly, 53, 448-521.
Lacy, S. (1984). Competition among metropolitan daily, small daily and
weekly newspaper. Journalism Quarterly, 61, 640-644.
Lacy, S. (1985). Monopoly metropolitan dailies and inner-city competition.
Journalism Quarterly, 62, 640-644.
Lacy, S. (1987). The impact of intracity competition on daily newspaper
content. Journalism Quarterly, 64, 281-290.
Lacy, S. (1988a). The impact of intercity competition on daily newspaper
content. Journalism Quarterly, 65, 399-406.
Lacy, S. (1988b). Competing in the suburbs: A research review of intercity
newspaper competition. Newspaper Research Journal, 9 (2), 69-76.
Lacy, S. (1990). Correlation of newspaper content with circulation in the
suburbs: A case study. Journalism Quarterly, 67, 785-793.
Lacy, S., & Davenport, L. (1994). Daily newspaper market structure,
concentration, and competition. Journal of Media Economics, 7 (3), 33-46.
Lacy, S., & Simon, T. (1993). The economics and regulation of United
States newspapers. Norwood, New Jersey: Ablex.
Lewis, R. (1995). Relation between newspaper subscription price and
circulation, 1971-1992. Journal of Media Economics, 8 (1), 25-41.
Mishra, V. M. (1980). The future of the newspaper industry in America:
Some research contingencies and portents. Gazette, 26, 16-29.
Morton, J. (1983, July/August). Hitting the markets. Washington Journalism
Review.
Niebauer, Jr., W. E., Lacy, S., Bernstein, J. M., & Lau, T. (1988).
Central city market structure's impact on suburban newspaper circulation.
Journalism Quarterly, 65, 339-406.
Rosse, J. (1975). Economic limits of press responsibility (Discussion
paper No. 56). Palo Alto, CA: Stanford University, Studies in Industry
Economics.
Tillignhast, D. (1988). Limits of competition. In R. G. Picard, J. P.
Winter, M. E. McCombs, & S. Lacy (eds.), Press concentration and
monopoly:
New perspectives on newspaper ownership and operation. Norwood, NJ:
Ablex.
Table 1 Circulation and market share of the dailies in the St. Louis MSA in
1992
Alton@
Edwards
Belle
Fetus
Post
Countian
Record
Clinton
1953
(16.7%)
1263
(10.8%)
Jersey
3019
(40.3%)
547
(7.3%)
Madison
25940*
(27.2%)
6498*
(6.8%)
6051
(6.3%)
21606
(22.6%)
Monroe
1765
(20.8%)
1516
(17.8%)
St.Clair
38274*
(40.2%)
12322
(12.9%)
Franklin
5404
(18.5%)
Jefferson
*#
13192
(21.5%)
St.
Charles
24845
(30.7%)
St.Louis
242803*
(44.4%)
1280*
(.2%)
1063*
(.2%)
MSA
28959
(3.1%)
6498
(.7%)
48224
(5.2%)
323498
(34.6%)
1280
(.1%)
1063
(.1%)
@ Alton=Alton Telegraph, Edwards=Edwardsville Intellegencer,
Belli=Belleville News Democrat, Fetus=Fetus County Democrat, Post=St.
Louis
Post Dispatch, Countian=St. Louis Countian, Record=St. Louis Record.
* Home county circulation.
# Fetus is a non-ABC (Audit Bureau of Circulation) newspaper. The
information of the daily is not available.
Source: Circulation 1993. New York: American Newspaper Market, Inc.
Table 2 Types of Daily Newspaper Market Structure, Percentages of Counties
with Various Types and Their Competition Potential
Type of Structure
Type of Competition Potential
Percentage (1988)
No daily newspapers
No competition
1.1%
Only one daily newspaper
No competition
29.6%
Two or more metro dailies
but no suburban or satellite dailies
Intralayer competition
3.0%
Two or more satellite dailies
but no suburban or metro dailies
Intralayer competition
22.5%
One metro daily and
one suburban or satellite daily
Interlayer competition
22.1%
One metro daily and
two or more suburban or satellite dailies
Inter- and intra- competition
13.7%
Two or more metro dailies and
one suburban or satellite daily
same as above
5.5%
Two or more metro dailies and
two or more suburban or satellite dailies
same as above
2.5%
Source: adapted from Lacy & Davenport (1994), p. 39.
Table 3 Results of Regression on Circulation of Alton
H1: Post
F value R-square P
56.05 .767 .00
H2: Belli
1.22 .067 .29
H3: Edwards
.01 .006 .92
H4: Post, Belli and Edwards
34.72 .874 .00
Post
96.16 .923 .00
Belli
5.99 .06 .03
Edwards
7.56 .07 .02
H5: Post, Belli, Edwards and Interaction
36.94 .913 .00
Post
104.82 .71 .00
Belli
12.04 .08 .00
Edwards
11.99 .08 .00
Interaction
6.36 .04 .02
Notes:
[1] Lacy & Simon (1993) proposed to add two more layers to the mod
el. One is a layer of
national newspapers above the metro d
ailies. The other is a layer of group-owned,
non-daily news
papers in suburban areas in the bottom. They also pointed out that the numb
er of layers vary in different markets. In addition, there
has always been a practical
problem in distinguishing the s
econd and the third layer newspapers in many areas due to
t
he difficulties in defining satellite cities. In most cases where the bound
aries of the
second and the third layers blur, researchers
simply clustered the two layers into one
(Lacy, 1984).
[2]
Only two layers, the metro daily and suburban dailies, are discussed in t
his study
because information on weeklies over the years is
not consistent and always available.
[3] Umbrella competition could exis
t in counties outside of the metropolitan areas (Lacy
and D
avenport, 1994).
[4] This is determined by subtracting the market penetra
tion of the second largest
circulation newspaper from the p
enetration of the largest circulation newspaper in a
market
(Lacy, 1987).
[5] Examining advertising and content competition requires
other data, especially
qualitative data, and additional re
search design, e.g., content analysis, which are beyond
the scope of this
study.
[6] The 1980-1983 data for Post and the 1973-1977 data for Belle
are not
available.
[7] The study only predicts the circulat
ion of Alton. More analyses could be done
by treating Edwards
or Belle as dependent variable.
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