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

85 Pages Posted: 24 Nov 2015 Last revised: 16 Mar 2017

Matthew Baker

CUNY Hunter College; CUNY - The Graduate Center

Lisa Megargle George

Hunter College, CUNY; The Graduate Center, CUNY

Date Written: February 22, 2017

Abstract

We estimate the welfare consequences of local news broadcasting decisions in advertiser-funded television, a question that has played a central role in US regulation of media markets. We treat station broadcasting decisions as the outcome of a discrete game in which stations choose programming to maximize advertising revenue, which depends upon viewership. Using program-level data on television viewing and advertising prices during the 5-8 p.m. evening news hours, we find that local news is under-provided relative to the viewer optimum. Counterfactual simulations suggest that welfare loss arises in part from the higher value advertisers place on entertainment viewers in a two-sided market framework. However in many markets additional local news broadcasting would increase joint station revenues as well as viewing, indicating that classic business stealing also plays a role in welfare outcomes.

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 (February 22, 2017). 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
United States

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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