A public and private-choice model of broadcasting

This paper has established a framework for the analysis of program diversity and audience shares under different regimes of ownership, regulation, and channel quality. The model is one of comparative statics, and lends itself to analytical solutions. It can serve as a tool to clarify programming decision-making and the impact of various institutional arrangements. The audience maximization of commercial broadcasting leads to program quality similar to that of a direct democratic process. To create a bias towards quality, alternative mechanisms had to be introduced. That, together with the potential for the propaganda use of broadcasting and the potentially large rents of controlling a scarce channel, made questions of broadcast policy extraordinarily hard-fought, especially in European countries. However, the emergence of alternative distribution channels and payment mechanisms has moved television programs much more into the mainstream of economic transactions. In consequence, the need to use the political arena to assure the supply of certain programs has declined, the marginal losses to incumbent channels has successively decreased, and the propaganda reach has been reduced by the spread of programs over the distribution. Therefore, liberalization is less resisted because the stakes have become lower. There are, however, some losers, in relative or absolute terms, of a multichannel media landscape, in particular the traditional public-broadcast institutions. Not only does their audience share decline, but, most fundamentally, an important part of their programming function, together with the influential constituencies that go with it, is taken away by regular market participants. Thus, while the analysis predicts a decline in the importance and intensity of media policy discussion, the major exception will be the friction accompanying the decline in the scope of public broadcasting. Copyright Martinus Nijhoff Publishers 1987