This paper analyses how contractual arrangements for the sale and resale of premium programming affect competition in the pay-TV market. Competition is less effective when resale contracts specify per-subscriber fees rather than lump-sum payments. When premium programming is sold at terms similar to those observed in the UK, consumers can be made worse off than in the absence of premium programming. A number of potential remedies are considered. A ban on exclusive vertical contracts would intensify downstream competition and transfer the benefits of premium programming to consumers.
Contracts and competition in the pay-TV market
OTTAVIANI, MARCO M.
2001
Abstract
This paper analyses how contractual arrangements for the sale and resale of premium programming affect competition in the pay-TV market. Competition is less effective when resale contracts specify per-subscriber fees rather than lump-sum payments. When premium programming is sold at terms similar to those observed in the UK, consumers can be made worse off than in the absence of premium programming. A number of potential remedies are considered. A ban on exclusive vertical contracts would intensify downstream competition and transfer the benefits of premium programming to consumers.
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