Platform strategy of terrestrial TV broadcasters

Abstract

Terrestrial broadcasting network is the main delivery platform of terrestrial broadcasters and its coverage represents the capacity. We study economic impacts of coverage on TV service markets, which consist of broadcasters and pay‐TV operators with retransmission, by dividing the market into “inside” and “outside” the coverage. Our results suggest that the broadcaster ends up with two extreme options in equilibrium: not operating networks or operating networks at a full capacity. However, the former option is not desirable if the retransmission fee changes according to the coverage. On the basis of the main results derived, implications for broadcasters and the government are discussed.