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 substantially 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.
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