Abstract
In this paper, we analyze the equilibrium amount of entertainment in news coverage of newspapers and television stations. We find that a shift in the inclination to read, expressed by a shift in the (psychological) distance costs, induces both media outlets to incorporate more entertaining elements in news coverage. The introduction of commercial television, however, which leads to a unilateral fall in the distance costs to the television broadcast, yields different results. It induces a negative effect on the profits of both media outlets, and increases price competition. Furthermore, the newspaper offers less while the television channel offers more entertainment. Overall, this leads to a marginalization of informational content, as the television channel gains market shares at the expense of the newspaper.
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