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A Portfolio Theory Approach to Network Program Selection

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  • Barry Litman
  • Seema Shrikhande
  • Hoekyun Ahn

Abstract

This article proposes a new approach to explaining network program selection behavior. It draws on literature in the area of finance to build a model of networks' program choice. The basis for the model is the traditional theory of portfolio selection. It will be argued that networks' management of program schedules is analogous to the management of a portfolio of investments. Networks maximize profits or returns while minimizing risk, and invest in programs to achieve this goal. Programs are, in effect, a network's assets. A network's selection of programs is motivated by its desire to maximize returns for a given level of risk. Therefore, its selection of programs and construction of a program schedule can be conceived of as an exercise in selecting financial securities in a portfolio. The network investor strives to develop a portfolio of securities that fulfills its investment objective. Earlier studies have looked at factors governing the cancellation and renewal of programs. A portfolio theory approach goes beyond these studies and provides a more comprehensive understanding of the factors that determine the selection of programs and the resulting optimal program mix.

Suggested Citation

  • Barry Litman & Seema Shrikhande & Hoekyun Ahn, 2000. "A Portfolio Theory Approach to Network Program Selection," Journal of Media Economics, Taylor & Francis Journals, vol. 13(2), pages 59-79.
    • Handle: RePEc:taf:jmedec:v:13:y:2000:i:2:p:59-79
    DOI: 10.1207/S15327736ME1302_2
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    Cited by:

    1. Richard D. Wang & J. Myles Shaver, 2014. "Competition-driven repositioning," Strategic Management Journal, Wiley Blackwell, vol. 35(11), pages 1585-1604, November.
    2. Richard D. Wang & J. Myles Shaver, 2016. "The Multifaceted Nature of Competitive Response: Repositioning and New Product Launch as Joint Response to Competition," Strategy Science, INFORMS, vol. 1(3), pages 148-162, September.
    3. Tsuji, Masatsugu & Ichikawa, Yoshiharu, 2014. "Evaluating the product portfolio of Japanese public service broadcaster: Consumer vs. citizen's view," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106883, International Telecommunications Society (ITS).

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