Content and advertising in the media: Pay-tv versus free-to-air

Martin Peitz and Tommaso Valletti

International Journal of Industrial Organization, 2008, vol. 26, issue 4, 949-965

Abstract: We compare the advertising intensity and content of programming in a market with competing media platforms. With pay-tv, media platforms have two sources of revenues, advertising revenues and revenues from viewers. With free-to-air, media platforms receive all revenues from advertising. We show that if viewers strongly dislike advertising, the advertising intensity is greater under free-to-air television. We also show that free-to-air television tends to provide less differentiated content whereas pay-tv stations always maximally differentiate their content. In addition, we compare the welfare properties of the two different schemes.

Date: 2008
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Citations: View citations in EconPapers (182)

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Working Paper: Content and Advertising in the Media: Pay-TV versus Free-To-Air (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:26:y:2008:i:4:p:949-965

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