Springer-ProSiebenSat.1-Merger
economic competition represents an important element of media markets and, there-
fore, a competitive analysis is definitely part of the story of a media merger.
Considering the characteristics of public goods, one must distinguish between infor-
mation or content itself and the means by which it is distributed. While there is no
rivalry for information itself and no one can be excluded from an information once it
is published, there are means to exclude individuals from a print product containing
information. Even a television program broadcasted free-to-air is supplied although
viewers are not excluded through the price mechanism. Instead a second product,
namely advertising space as a normal private good is tied with the public good con-
tent, in order to finance it. So, the problem of public goods is solved by the market
itself through bundling content with advertising. Improved exclusion techniques, like
cable television and the digitalisation of distribution channels, make it even easier to
supply subscription-based TV-programs.
However, the dualism of content and advertising establishes a so-called two-sided
market characterised by a strong economic correlation between the outcome in the
two markets, e.g. audience share and advertising revenue (Dewenter 2004; Ander-
son/Gabszewicz 2006). If a TV-program reaches a high audience share advertisers are
very interested in transmitting their commercials in this program. The great demand
for advertising space leads to high advertising revenue that enables the station to fur-
ther improve its attractiveness. This again will boost the advertising demand and so
on. As a consequence, media enterprises face the task of optimising its price structure
in order to maximise the combined revenue of the two market sides. This is true for
the newspaper market but not entirely true for Free-TV because of the missing price
relationship between stations and viewers.8 From an economic point of view the bias
of market outcome in media markets caused by externalities is presumably of no
greater importance than in many other markets. The same applies to imperfect infor-
mation. Like utilities in the energy or transportation sector, some media distribution
channels are characterised by subadditive cost structures. This may lead to natural
monopoly, e.g. in cable television, but it is of no relevance in the present case because
no distribution market is regarded.9
In summary, despite some market imperfections and sector specifics, media markets
in principle can be subject to competition-economics analysis (Dewenter 2004;
Anderson/Gabszewicz 2006). However, inextricably intertwined with the economic
aspects of media markets, there exist important non-economic goals, such as freedom
of speech and pluralism, that give reasons for a media-specific regulatory framework
in addition to general competition law. The interrelation of economic competition and
journalistic pluralism on media markets remains a difficult and insufficiently explored
8 Consequently, the Free-TV market does not represent a prime example according to the definition
of two-sided markets by Rochet/Tirole (2004: 26).
For a more detailed analysis of the question in how far market failure in the TV market
justifies sector-specific regulation see Wacker (2007).