by media out lets to tell a memorable story, the so-called"narrat ive imperative". With categorical readers, it pays the monopolist news supplier to spin the news in order to make them memorable even in the absence of any ideology. This spin -the need to tell the story orting b The m nteresting issues arise when we consider compet ition among media out- lets. Such compet it ion is an import ant argument for free press: despite the ideolog ical biases of individual news suppliers, the truth comes out through competit ion. We show that,with Bayesian readers, this is indeed the case: competition undoes the biases from ideology. Wit h readers who are categorical thinkers, however, the conse quences of competit ion are more complex. We show that, in the absence of ideology, compet ition act ually reinforces the adverse effect s of spin on accuracy. Not only do the media out let s bias news reporting, but the stories reinforce each ot her. As each paper pins stories, it increases the incentives of later outlet s to spin. This piling on of storie neans non-ideological compet ition worsens the bias of spin. Moreove In can exac- erbate the influence of one-sided ideo logy. When the first news out let that uncovers the story is ideological and later ones are not, the first one sets the tone and later ones his spin. This can explain why and how inside s leak infor mat ion t news out let s: their principal mot ivat ion is to control how t he story is event ually spun. Our the ting falls between t is that readers demand, and media outlet s supply, pure informat ion about polit ical and economic market s, and thereby facilit ate better consumer and voter choice(Coase 1974, Besley and Burgess 2001, Besley and Prat 2002, Djankov et al. 2002, Stromberg 2001, Dyck and Zingales 2002). The opposite but also plausible view, pursued by Mencken(1920) and Jensen(1976), sees the medi grounding in reality. The perspect ive of t his paper is that media out let s provide neit her unadulterated infor mation, nor pure entertainment. News out let s may be biased for ideological reasons. And consumers, while not desiring pure entert ainment as might be the case wit h sensational or human int erest stories, do indirect ly affect news content Dyck and Zignales(2002)go further and examine how private incentives might bias corporate newsby media outlets to tell a memorable story, the so-called \narrative imperative". With categorical readers, it pays the monopolist news supplier to spin the news in order to make them memorable even in the absence of any ideology. This spin - the need to tell the story - is also a source of reporting bias. The more interesting issues arise when we consider competition among media out￾lets. Such competition is an important argument for free press: despite the ideological biases of individual news suppliers, the truth comes out through competition. We show that, with Bayesian readers, this is indeed the case: competition undoes the biases from ideology. With readers who are categorical thinkers, however, the conse￾quences of competition are more complex. We show that, in the absence of ideology, competition actually reinforces the adverse eects of spin on accuracy. Not only do the media outlets bias news reporting, but the stories reinforce each other. As each paper spins stories, it increases the incentives of later outlets to spin. This piling on of stories means non-ideological competition worsens the bias of spin. Moreover, spin can exac￾erbate the in uence of one-sided ideology. When the rst news outlet that uncovers the story is ideological and later ones are not, the rst one sets the tone and later ones reinforce this spin. This can explain why and how inside sources leak information to news outlets: their principal motivation is to control how the story is eventually spun. Our theory of news reporting falls between two extremes. The traditional view is that readers demand, and media outlets supply, pure information about political and economic markets, and thereby facilitate better consumer and voter choice (Coase 1974, Besley and Burgess 2001, Besley and Prat 2002, Djankov et al. 2002, Stromberg 2001, Dyck and Zingales 2002).1 The opposite but also plausible view, pursued by Mencken (1920) and Jensen (1976), sees the media as entertainment, with no obvious grounding in reality. The perspective of this paper is that media outlets provide neither unadulterated information, nor pure entertainment. News outlets may be biased for ideological reasons. And consumers, while not desiring pure entertainment as might be the case with sensational or human interest stories, do indirectly aect news content 1Dyck and Zignales (2002) go further and examine how private incentives might bias corporate news reporting. 3