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Every Viewer has a Price: On the Differentiation of TV Channels

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  • Jonas Häckner
  • Sten Nyberg

Abstract

The authors analyzed the implications of targeted advertising on the equilibrium level of channel profile differentiation (e.g., in terms of political positioning), in free-to-air broadcasting industries. When consumers have no preferences over program content (e.g., entertainment vs. news) standard Hotelling type results apply. Market forces minimize differentiation while the optimal degree is at an intermediate level. As preferences over program content get somewhat stronger, the difference between optimal and market outcomes is initially reduced. However, when preferences over program content get more pronounced, minimal differentiation suddenly becomes optimal while market forces lead to excessive differentiation. Hence, policies aimed at increasing diversity are beneficial only when viewers care little about differences in program content.

Suggested Citation

  • Jonas Häckner & Sten Nyberg, 2012. "Every Viewer has a Price: On the Differentiation of TV Channels," Journal of Media Economics, Taylor & Francis Journals, vol. 25(4), pages 220-243, December.
    • Handle: RePEc:taf:jmedec:v:25:y:2012:i:4:p:220-243
    DOI: 10.1080/08997764.2012.729547
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    References listed on IDEAS

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    1. Dirk Bergemann & Alessandro Bonatti, 2010. "Targeting in Advertising Markets: Implications for Offline vs. Online Media," Cowles Foundation Discussion Papers 1758, Cowles Foundation for Research in Economics, Yale University.
    2. Ambrus, Attila & Reisinger, Markus, 2006. "Exclusive vs Overlapping Viewers in Media Markets," Discussion Papers in Economics 1178, University of Munich, Department of Economics.
    3. Ambrus, Attila & Reisinger, Markus, 2006. "Exclusive vs Overlapping Viewers in Media Markets," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 161, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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    More about this item

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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