Handbook on the Economics of the Media
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Handbook on the Economics of the Media

Edited by Robert G. Picard and Steve S. Wildman

This Handbook explores the economic features of the media and its infrastructure to provide readers with a sophisticated understanding of the critical issues and their influence on companies, audiences and regulators. The contributors explore and explain the impact of underlying factors such as multi-sided platforms, advertising and industry structure. They assess the unique economic factors affecting print, broadcast and broadband-based media, and highlight how the economics of the media can influence policy making. Each original chapter introduces the reader to a specific topic, reviews the literature on the development of knowledge in the field, explores critiques of the approach, and provides an understanding of applying this knowledge and the implications.
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Chapter 2: Vertical ownership, technology and programming content

Sung Wook Ji and David Waterman


In this chapter, we investigate two different economic determinants of the quantity and diversity of television programming. One is the effects of vertical integration between programming networks and content suppliers, or between those networks and retail level programming distributors (such as cable television systems) on the menus of programming available to consumers. The other is the effects over time of technological advances in the distribution and exhibition of television and video media programming. Although we consider theoretical developments in some instances, our primary focus is on empirical research. We report on a considerable amount of empirical research that has investigated the effects of vertical integration on television programming menus. Much less systematic research, however, has investigated the effects of technological change on programming supply, and we rely primarily on descriptive data in that part of the chapter. As will also be apparent, however, the effects of technological change have undoubtedly been far more dramatic than those of vertical ownership. We begin in Section 1 with a review and analysis of empirical research on the effects of vertical integration in the broadcast and cable television industries. We then turn in Section 2 to a more speculative consideration of how advances in technology since the 1970s have affected the supply of television programming. In the Section 3 conclusion, we consider the emerging role of Internet television distribution and draw links between vertical integration and technological change. There is a long history of policy concerns about vertical integration in television.

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