Are Local TV Markets Separate Markets?
In sweeping revisions the US Telecommunications Act of 1996 relaxed rules respecting broadcast TV ownership regulations. In particular Congress directed the Federal Communication Commission (FCC) to conduct a rulemaking on whether the 'duopoly rules' preventing businesses from owning multiple broadcast stations in the same market should be relaxed, modified or eliminated. Naturally, this directive raises questions concerning competition. Specifically, would concentration and consolidation of local media firms have deleterious effects on advertising rates, output and consumer choice? In the present paper we examine, using own-price and cross-price elasticity demand estimates, the question of whether local TV markets constitute a separate market for advertising. Our structural tests, with appropriate caveats, reveal that local TV advertising is not, by itself, a distinct market - one relevant for antitrust action.
Volume (Year): 7 (2000)
Issue (Month): 1 ()
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