Discussion paper

DP4771 Content and Advertising in the Media: Pay-TV versus Free-To-Air

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 more similar content whereas pay-tv stations differentiate their content. In addition, we compare the welfare properties of the two different schemes.

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Citation

Valletti, T and M Peitz (2004), ‘DP4771 Content and Advertising in the Media: Pay-TV versus Free-To-Air‘, CEPR Discussion Paper No. 4771. CEPR Press, Paris & London. https://cepr.org/publications/dp4771