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Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters

Author

Listed:
  • Yong Liu

    (School of Management, Syracuse University, Syracuse, New York 13244)

  • Daniel S. Putler

    (Sauder School of Business, University of British Columbia, Vancouver, British Columbia, Canada V6T 1Z2)

  • Charles B. Weinberg

    (Sauder School of Business, University of British Columbia, Vancouver, British Columbia, Canada V6T 1Z2)

Abstract

Competitive behavior in commercial television broadcasting is modeled to examine program choice and the effects of more channels being available on firm strategy. Specifically, broadcasters compete by selecting both the "type" and quality level of a program to offer, but do not compete on price. We obtain five major results. First, a comparison of monopoly and duopoly markets indicates that broadcasters in an industry with a larger number of competitors may provide programs of lower quality compared to broadcasters in an industry with a smaller number. Second, in terms of viewer welfare, having more channels available is not necessarily "better." Third, broadcasters tend to choose an intermediate level of differentiation in terms of the types of programs they provide, resulting in a "counterprogramming" strategy. In other words, avoidance of price competition is not required for competitors to differentiate themselves from each other. Fourth, if one broadcaster starts the evening with a higher-quality (higher-rated) program than its competitor, its second program should also be of higher quality. Finally, a broadcaster's first program should be of equal or higher quality than its second program. Put another way, it always behooves a broadcaster to "lead with its best."

Suggested Citation

  • Yong Liu & Daniel S. Putler & Charles B. Weinberg, 2004. "Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters," Marketing Science, INFORMS, vol. 23(1), pages 120-133, July.
    • Handle: RePEc:inm:ormksc:v:23:y:2004:i:1:p:120-133
    DOI: 10.1287/mksc.1030.0042
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    References listed on IDEAS

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    1. repec:inm:ormksc:v:21:y:2002:i:2:p:119-138 is not listed on IDEAS
    2. Goettler, Ronald L & Shachar, Ron, 2001. "Spatial Competition in the Network Television Industry," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 624-656, Winter.
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