Happily Ever After? – Vertical and Horizontal Mergers in the U.S. Media Industry

Abstract

This paper provides an economic analysis of recent vertical and horizontal mergers in the U.S. industry for audiovisual media content, including the AT&T-Time Warner and the Disney-Fox mergers. Using a theory-driven approach, we examine economic effects of these types of mergers on market competition, focusing on digital media content distribution. In doing so, we address three research questions: (i) Is the current development of analyzing industry with its recent merger activity concerning? (ii) Would vertical or horizontal integration be more preferable for overall welfare and competition in this industry? (iii) What are implications for antitrust policy? We conclude from our analysis that in the already highly horizontally concentrated U.S. market for audiovisual content the process of further vertical integration creates concerns from a competition policy perspective. Moreover, even though horizontal concentration on some of the market stages may be anticompetitive as well, vertical integration is likely to be more harmful. As a consequence, we recommend a stricter approach to vertical merger control in this industry, as well as a more active abuse control against already vertically-integrated media companies.

The Economics of Influencers and Social Media Stardom

“…At the time of writing, dynamics in this market are high and intensive with legacy media in full swing to respond to the double challenge of social media platforms and on-demand streaming services. This includes a wave of -especially vertical -integration (Stöhr et al 2020) as well as the parallel experimentation with new concepts and the mixture and convergence of existing formats: advertisingbased elements in Netflix, paid-for content on YouTube, new mixtures of advertising and contents, etc.…”

The battle of YouTube, TV and Netflix: an empirical analysis of competition in audiovisual media markets

“…Furthermore, consumption behavior is so differentiated that these interrelations may differ across, inter alia, daytimes, consumer intentions, and genres. Thus, a careful analysis of the actual competitive effects is necessary when assessing joint venture projects or mergers and acquisitions among these players, including vertical effects (which are not part of our analysis; but see, e.g., Stöhr et al 2020). Moreover, unilateral business strategies need to be observed and considered as well, in particular, if these strategies aim at or result in a walled garden type of offering, i.e., proceed in the direction of a closed ecosystem protected against outside (maverick) competition.…”

The Battle of YouTube, TV and Netflix – An Empirical Analysis of Competition in Audio-visual Media Markets

“…Thus, a careful analysis of the actual competitive effects is necessary when assessing joint venture projects or mergers and acquisitions among these players, including vertical effects (which are not part of our analysis; but see e.g. Stöhr et al 2020).…”