Self-Dealing or Market Transaction?: An Exploratory Study of Vertical Integration in the U.S. Television Syndication Market

Abstract

This study explores the programming relationship between vertically integrated station groups and their affiliated syndicators in the context of two frameworks associated with the advantages of vertical integration: the transaction cost and vertical foreclosure theories. The programming sources for various stations that are vertically integrated with syndicators were assessed. The results indicated that leading television station groups had purchased relatively more products from their vertically integrated syndicators. The pattern of internal transfer through vertical integration was especially apparent in the acquisition of newer first-run products that are associated with uncertain quality and less audience information. The findings generally support the transaction cost theoretical perspective. However, the data did not paint a picture of market foreclosure in this industry.

Research on the Motion Picture Industry: State of the Art and New Directions Off the Beaten Track Away From Theatrical Release

“…Vertical integration, however, resulted in market foreclosure if distributors and exhibitors are under same ownership. Oba and Chan-Olmsted (2006) come to similar conclusions. The integration of distribution and exhibition has led local broadcasters to buy increasingly in-house.…”