Entry Deterrence and Multidimentional Competition in the Satellite Pay-TV Market

This model analyses competition in the satellite pay-TV market. Duopolistic firms commit to offer TV programmes to attract subscribers to their broadcasting platforms. However, under certain cost conditions, a first mover advantage acquired in programmes can result in the monopolisation of the pay-TV market, due to network effects. Welfare analysis shows that consumers are better off with duopoly, particularly with symmetric duopoly. Total welfare can be higher under monopoly, but only in the region where the fixed costs of the TV programmes are low. Moreover, the model suggests that a more balanced (ideally, symmetric) duopoly, promoted with the antitrust intervention, would improve total welfare, with respect to the asymmetric duopoly that would affirm spontaneously. This model offers an analytical benchmark for some recent antitrust cases, where antitrust authorities have chosen to limit the accumulation of broadcasting rights as a mean to prevent the monopolization of the pay-TV market. In particular, our results support and even reinforce the rationale of the antitrust decisions adopted on the case of the proposed merger/acquisition between Telepiu' and Stream in Italy.