Diversified Programming in Broadcasting Markets: News vs. Entertainment

Abstract

This paper examines how increases in broadcast channels affect equilibrium in broadcasting markets and social surplus. In our model, viewers have preferences for many potential varieties of news and entertainment programs. Our model explains different market phenomena: the previous limited market primarily provided news programs, whereas in today’s highly competitive market, there are an increasing number of entertainment programs. We also identify two types of market failure. The first arises from broadcasters’ strategy to provide programs that target the general public, rather than dedicated viewers. The second arises from a news-viewing externality that encourages political accountability. We provide the optimal public intervention that corrects these market failures.