Seminar: Mergers in the Dutch Radio Broadcasting Industry: Results of a Simulation Study

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Ryanne van Dalen (CPB)

Discussant: Thomas Michielsen (UvT)

Language: English

Registration:  Please register by sending an email to seminars@cpb.nl.

Abstract subject This paper analyzes the effects of a hypothetical non-consolidating merger in the Dutch radio broadcasting industry. For this purpose, we estimate an empirical two-sided model taking into account the feedback loops between listeners and advertisers. We clearly find evidence that listening behavior varies across demographic groups. Listeners aged below 35 years are less sensitive to advertising than other listeners. The simulation study shows that a consolidation of ownership results in higher profits for all radio stations. Merging stations have an incentive to increase advertising because the owner will capture some of the switching listeners. Non-merging stations will also increase their advertising volume. In other words, advertising efforts of merging and non-merging stations are strategic complements. A direct consequence of the rise in overall advertising is that the welfare of especially older listeners decreases.

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