Media Mergers in Nested Markets

David Martimort and Wilfried Sand-Zantman

No 23-1492, TSE Working Papers from Toulouse School of Economics (TSE)

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.

Keywords: Media; competition; merger (search for similar items in EconPapers)
JEL-codes: G34 L22 L82 (search for similar items in EconPapers)
Date: 2023-12-05
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind, nep-mic, nep-pay and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:128764

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