Award Winner for Volume 3
Media Regulation, Competition Policy and Cross-ownership Schemes: The Case of Greece
The regulation of media, which is an important sector within broad cultural economy, runs into substantive difficulties when it interfaces with competition regulation. In this paper, the Greek experience on media regulation is discussed as a research input for the development of a theoretical approach that involves competition analysis. This discussion takes place in relation to similar international developments with a special focus on the Australian experience. In the Greek case, serious attempts to regulate aggressive media groups based on their market share and their involvement in other forms of business have failed because of incompatibility with competition law and erroneous restrictive regulation for political reasons. Therefore, the relation between media, family businesses, and cross-ownership schemes must be examined further. An analytical approach is proposed through the development of a basic model of private benefits for media based on core cross-ownership theory. The model demonstrates that cross-ownership schemes in the media can produce inefficient economic outcomes with high agency costs. The paper focuses on the possible interface of the media policy with the competition policy and the need to separate those two processes, since competition policy fundamentally addresses economic outcomes while media regulation deals with non-economic ones. Still, to the extent that the media are dominated by family businesses and cross-ownership schemes that are involved in other businesses, they can produce ineffective economic outcomes and agency costs in exchange for large private benefits (in the case of Greece, mainly from public contracts). Thus, the development of regulation on media requires a greater level of sophistication on the part of policy-makers so that the difficulties stemming from cross-ownership can be successfully addressed.
Much of my interest in writing this article comes from developing my research in behavioural economics and its impact on culture change. For example, in my 2015 book, The Political Economy of Status: Superstars, Markets and Culture Change I demonstrate the importance of visibility and media in modern socio-economic trends because the media, as a cultural and creative industry, facilitates relative comparisons, strategic considerations and preference formation for consumers and investors.
Institutional cultural change is a growing area of research in the context of regulation, such as the competition framework. The advantages and difficulties for promoting competition culture has been a fundamental concern for contemporary competition authorities around the world. Culture change implementation must be incorporated into the strategic planning of regulatory authorities to mitigate the risk of possible policy erosion or bottlenecks. However, institutional culture change in the area of competition is often resisted because of the idiosyncrasies, which are specific to the media.
The academic and professional literature concerning the relation of regulation of media and the framework of competition is somewhat focused more on particular elements of media regulation rather than examining the interdependence between media regulation and competition. Cross-ownership schemes provide an opportunity to build an integrative perspective. My article discusses the Greek experience on media regulation and develops a theoretical approach based on competition analysis. This study takes place in relation to similar international developments with a special focus on the Australian experience. More precisely, the article develops an analytical approach, which demonstrates that cross-ownership schemes in the media can interfere with the political process and produce inefficient economic outcomes with high agency costs in exchange for large private benefits (in the case of Greece, mainly from public contracts). Thus, the examination of suitable regulation on media requires a greater level of attention and sophistication on the part of competition policy-makers than what has been practiced so far.
This article is one of several steps that I have undertaken in my research to analyze the importance of cultural change management in the economic sphere. Besides building a comprehensive analytical framework, the article offers a practical platform for recommendation building by competition policy-makers so that the difficulties stemming from cross-ownership can be successfully identified and addressed and relevant culture change policies for the regulation of media can be implemented. Those recommendations can raise awareness also on several aspects of the policy-making process including societal and political stakeholders concerned with the status quo. Finally, those already engaged as practitioners in cultural and creative industries such as the media can hopefully be benefited also from new stimulating information to evaluate and improve their current practices.
—Theodore T. Koutsobinas