A Stitch in Haste

In introductory economics classes, instructors and textbooks sometimes use the small-town newspaper as (perhaps the only viable) example of a true "natural monopoly" (i.e., one that is not the result of government-imposed barriers to entry).

The idea is that with relatively high fixed costs (e.g., printing presses) and relatively low demand (i.e., readers), two or more competitors simply couldn't operate profitably. It's either one monopolist or no service at all.

Few would argue, especially in the Internet age, that this particular example of natural monopoly represents any real threat to either readers or to freedom of the press, or that such an innocuous, and strictly local, phenomenon needs to warrant the attention of the federal government.

Few, but not none:

Nevada's largest evening newspaper, The Las Vegas Sun, has agreed to be folded into its much larger morning rival, the Las Vegas Review-Journal.
...
The plan must get the Justice Department's O-K because the two papers have a joint operating agreement allowing them to share some business operations. The new arrangement would allow the Sun to keep its liberal editorial voice.

Circulation has slipped by a-third at the Sun over the last two years, and lags far behind the editorially conservative Review-Journal.

"Slipped" is putting it mildly: the Review-Journal reports that the Sun's circulation is a puny 28,000. It would almost certainly have gone out of business before long.

The Review-Journal, meanwhile, is not owned by one of the major newspaper conglomerates, but rather by the relatively minor Stephens Media Group.

And still the federal government has to get involved.

Between the Antitrust Division of the Department of Justice, the Federal Trade Commission, state regulators and whatever industry-specific bureaucracy may assert jurisdiction (e.g., the FCC for media mergers), it's astounding that any companies ever get to merge. (And of course, if Europe gets involved, then the probability of obtaining approval sinks like a stone.)

It's one thing to investigate, punish and undo misconduct regarding business combinations (but keep in mind that "misconduct" is defined obscenely broadly under U.S. antitrust law). And if matters of national security are concerned (e.g., consolidations in the defense industry), then perhaps some government scrutiny might be warranted.

But a (quasi-)merger of two local newspapers? Give me a break.

As the saying goes, when all you have is a hammer, everything starts to look like a nail. Antitrust jurisdiction, to the extent it should exist at all, should obviously be subject to an automatic exemption for de minimus transactions like this.

What a nice headline that would make.