Television, television, television....
Yes, I have been obsessed with television over the recent years. Maybe, because of this hypnotic monster piece from the seventies.
https://lnkd.in/en4vnj5V
This obsession somehow paid off in the end and, in this respect, I am very happy to report that the paper with my old buddy Wilfried Sand-Zantman entitled ``Media Merger in Nested Markets" has been accepted today in the
Journal of Economics and Management Strategy.
This paper was written following discussions with teams at Altermind, TF1 and M6 at a point in time where a possible merger between TF1 and M6 was envisioned. One argument heard against this merger was that it would help this entity to monopolize the upstream market for advertising. We argue in this paper that this argument only looks at one (easy) face of the coin. Competition on the media markets takes place actually between various ecosystems (pay-Tv, Free to Air, platforms...) and viewers make nested choices among those alternatives, choosing first between ecosystems and then between channels within an ecosystem. Ecosystem Effects may then transform the quality of programs as public goods for all channels within this ecosystem. Well..., then competition across channels may induce undersupply of quality, shift away consumers and, because TV channels are two-sided platforms, advertisers. So the question is what might be the magnitude of these Ecosystem Effects?....We did not provide any econometrics but instead ran polls that brought evidence that some viewers at least act in this nested manner. Which means that the Ecosystem Effects cannot be so easily dismissed....
https://lnkd.in/enMc9aHg
Abstract: We analyze the effect of media mergers in a model that stresses, on the one hand, the fact that media are two-sided platforms willing to attract advertisers and viewers and, on the other hand, that strong competitors have emerged to challenge traditional media on both sides. We show that a merger has two conflicting effects on traditional media’s incentives to invest in quality programs and to exploit their market power. When competition is primarily between traditional media, a Business-Stealing Effect dominates, and the merger is detrimental to advertisers and viewers. When the competition is mainly between the traditional media and their new competitors, an Ecosystem Effect dominates, and the merger benefits advertisers and viewers. We extend this setting to discuss the role of financial constraints that might limit investments in the quality of programs and show that the same effects are at play
