Indonesia | Economics

Saturday, December 09, 2006

The economics of broadcasting

An economist friend, Aco, once complained of Minister of Information Sofyan Djalil's decision to limit the number of television stations, calling Djalil's assertion that intense competition would reduce program quality illogical.

I was skeptical of Aco's assertion. Last week's Financial Times, John Kay explains the economics of broadcasting. As I suspected, Djalil's argument wasn't so illogical after all.

PS: There is also this NBER Paper on the topic which, near the end, points out that "It is common to hear that the proliferation in the US television market has led in a decline in programming quality". Unfortunately, the paper offers neither support nor rebuttal of this casual observation.


  • who's to judge quality?

    if it's the average public eyes, then, like it or not, the 'quality' is there already. if it's the marginalised eyes (yours and mine, i presume), then it's a matter of calculated investment strategy by any of either the old-big or new-small stations. smaller number of stations (which may result in bigger size of each) only matters if the risk in investing in our kind of eyes is too high for the small stations -- else a new small station may profitably niche itself to us.

    but nonetheless, if one day the array of programs does change to our flavor, we would happily declare that the quality of indonesian televisions has increased. but wouldn't those soap-opera-eyes out there sadly say otherwise? unless tv may change people's preference, which is an interesting topic for another day.

    By Anonymous tirta, at 12/09/2006 10:56:00 pm  

  • Arya, thanks for keeping up on this issue. The idea of doing a research on it is even more amplified.

    By Blogger aco, at 12/10/2006 06:46:00 pm  

  • too many stations can harm democracy too.

    one hypothesis is that one highly controlled channel tv is better for democracy because people are forced to different point of views.

    By Anonymous weakties, at 12/11/2006 05:00:00 am  

  • The TV remote is a powerful tool. If you don't like the program you can use it to switch to another channel, or if there's nothing good you can turn it off and do something else.

    By Anonymous Pasha, at 12/12/2006 04:32:00 pm  

  • Aco,

    Research between competition and quality of goods has already been researched in IO. Salop with his circular city and another paper (i Forgot who) with his Linear city are amongst the first paper who discuss ofthis topics..

    So, I do not think it is still a fancy topics to research, unless you have something new :D

    By Anonymous ado, at 12/12/2006 06:32:00 pm  

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