Discussion paper

DP9079 Advertising and the Distribution of Content

This paper examines incentives for exclusive distribution of content in the presence of advertising. A monopoly seller of content - such as televisation rights to popular sports - may contract with one or both of two competing distributors, charging lump-sum fees. When distributors are subscription-funded, exclusive sale to a single buyer is the seller's profit-maximising choice, even when distributors also sell advertising airtime. When distributors are purely advertising-funded, however, non-exclusive contracting may instead be preferred. Advertising revenues accruing directly to the content provider may also generate a preference for non-exclusivity even when selling to subscription-funded distributors. The analysis has implications for the distribution of content to pay TV and free-to-air broadcasters, and for internet distribution of content.


Weeds, H (2012), ‘DP9079 Advertising and the Distribution of Content‘, CEPR Discussion Paper No. 9079. CEPR Press, Paris & London. https://cepr.org/publications/dp9079