The News Hour: Welfare Estimation in the Market for Local TV News

65 Pages Posted: 24 Nov 2015 Last revised: 2 Feb 2019

See all articles by Matthew Baker

Matthew Baker

CUNY Hunter College; CUNY - The Graduate Center

Lisa M. George

Hunter College, CUNY; The Graduate Center, CUNY

Date Written: January 31, 2019

Abstract

We estimate the welfare consequences of local news broadcasting decisions in advertiser-funded television, a central question in media regulation. We model programming decisions as the outcome of a discrete game played by rival stations that compete for advertising revenue (which depends on viewing) by setting lineups of local news and entertainment broadcasts. Using program-level data on television viewing and advertising prices during evening news hours, we find modest under-provision of local news relative to the levels that maximize viewership, a deficit of about 5 broadcasts per market or 10% of evening timeslots on average. Counterfactual simulations indicate two sources of welfare loss, from the higher value advertisers place on entertainment viewers in a two-sided market context but also from classic business stealing. Losses from competition predominate, with an estimated shortfall of 3 local news broadcasts or 6% of timeslots relative to schedules that maximize joint station profits.

Keywords: Television, media, welfare, news

JEL Classification: L82, L1

Suggested Citation

Baker, Matthew and George, Lisa Megargle, The News Hour: Welfare Estimation in the Market for Local TV News (January 31, 2019). Available at SSRN: https://ssrn.com/abstract=2694687 or http://dx.doi.org/10.2139/ssrn.2694687

Matthew Baker

CUNY Hunter College ( email )

695 Park Avenue
New York, NY 10065
United States

CUNY - The Graduate Center ( email )

365 Fifth Avenue
New York,, NY 10016
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Lisa Megargle George (Contact Author)

Hunter College, CUNY ( email )

695 Park Avenue
New York, NY 10065
United States

The Graduate Center, CUNY ( email )

365 Fifth Avenue
New York,, NY 10016
United States

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