Keith Brown

Network Revenues and African American Broadcast Television Programs

This article explores factors explaining program cast racial composition on television broadcast network programs. The roles of program type, cast composition, and viewer income on advertising revenue are examined. The analysis of the data yields several key findings. First, there is no bias against African Americans on the part of viewers or television networks when adjusting for viewer income and age. Second, African Americans have lower incomes and show a strong intensity of preference for programming featuring African American cast members. Therefore, despite the absence of bias, the advertiser-supported broadcast market likely produces less than the socially optimal amount of African American programming. This article provides policy recommendations to increase viewer benefits.

Bundling in Cable Television: A Pedagogical Note With a Policy Option

Bundling can be a pricing mechanism by which monopolists capture economic surplus from consumers.We suggest that given the cost structure of media markets, channel bundling in the cable and satellite market could also emerge in a competitive environment. A la carte channel pricing on cable television may or may not increase consumer welfare and could decrease total welfare. Because bundling may create other problems, policymakers may consider allowing cable and satellite networks to sell packages of channel space to viewers at a given price, allowing viewers to choose which channels they want in their packages. We term this option quasi-bundling.

Cable Service and Its Implicit Marginal Valuation

The objective is to estimate the implicit marginal value of channel offerings by cable systems in the USA. Hedonic analysis is a convenient framework in which to explore the relationship between the price of cable service and the channels offered by a cable system. Two separate hedonic equations are estimated-- one for the price of analog cable service and one for the price of digital cable service. With regard to the price of analog cable service, the implicit marginal valuation is statistically significant and positive for just 15 of 106 channel offerings and negative for seven channels. For the price of digital cable service, the implicit marginal valuation is statistically significant and positive for just eleven of 105 channel offerings and negative for five channels. The results suggest that a subscribers utility would be enhanced by a pricing structure different from the typical approach used by cable systems today of offering a bundled package consisting of several channels. One alternative is to allow consumers to subscribe to just those programming services for which they have a positive implicit marginal value (i.e. an a la carte pricing structure).