TY - JOUR
T1 - Market foreclosure and vertical merger
T2 - A case study of the vertical merger between Turner Broadcasting and Time Warner
AU - Suzuki, Ayako
N1 - Funding Information:
I would like to thank Joseph Harrington and Matthew Shum for their advice and encouragement. I would also like to thank the editor, an anonymous referee, Gregory Leonard, Robert Moffitt, Steffen Reinhold, Katie Winder, Tiemen Woutersen and seminar participants at various institutions for their helpful comments and suggestions. Financial support from Grant-in-Aid for Scientific Research, Ministry of Education, Culture, Sports, Science and Technology is gratefully acknowledged.
PY - 2009/7
Y1 - 2009/7
N2 - We employ an event-study methodology, the event being the vertical merger between Time Warner and Turner Broadcasting, distribution and programming, respectively, in the cable television industry. We assess the effects of the merger on final prices, subscriptions, and carriage and marketing decisions of Time Warner. The analysis finds several interesting facts. First, foreclosure in Time Warner markets following the merger is observed for the rival channels that are not integrated with any cable distributors. Second, the Turner Broadcasting channels that increased market shares because of this merger appeared to be foreclosed by Time Warner prior to the merger. The preference for own channels by Time Warner persisted, despite a lower quality of channel bundles in its markets; efficiency gains from the merger were not passed on to consumers.
AB - We employ an event-study methodology, the event being the vertical merger between Time Warner and Turner Broadcasting, distribution and programming, respectively, in the cable television industry. We assess the effects of the merger on final prices, subscriptions, and carriage and marketing decisions of Time Warner. The analysis finds several interesting facts. First, foreclosure in Time Warner markets following the merger is observed for the rival channels that are not integrated with any cable distributors. Second, the Turner Broadcasting channels that increased market shares because of this merger appeared to be foreclosed by Time Warner prior to the merger. The preference for own channels by Time Warner persisted, despite a lower quality of channel bundles in its markets; efficiency gains from the merger were not passed on to consumers.
KW - Antitrust
KW - Foreclosure
KW - Vertical integration
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U2 - 10.1016/j.ijindorg.2008.12.003
DO - 10.1016/j.ijindorg.2008.12.003
M3 - Article
AN - SCOPUS:67349120236
VL - 27
SP - 532
EP - 543
JO - International Journal of Industrial Organization
JF - International Journal of Industrial Organization
SN - 0167-7187
IS - 4
ER -