Media Mergers in Nested Markets

David Martimort and Wilfried Sand-Zantman
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David Martimort: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Wilfried Sand-Zantman: ESSEC Business School and THEMA (UMR 8184) - ESSEC Business School - THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université

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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)
Date: 2024-10
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Published in Journal of Economics and Management Strategy, 2024, ⟨10.1111/jems.12618⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04925984

DOI: 10.1111/jems.12618

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