1. TV viewing is the most popular leisure pursuit in the UK. At any one time of the evening, 44% of the population is sitting in front of a TV

2. Terrestrial TV Traditional method of receiving TV was through an analogue signal, received through a roof-top aerial Capacity to broadcast a strictly limited number of channels Oligopolistic market – very high barriers to entry, including a licence from the government Channel 4 in 1982, Channel 5 in 1997

3. TV Oligopoly No scope for price competition All channels were ‘free to air’ ITV, Channel 4 & Channel 5 funded programming & made profit through advertising revenue BBC is a public service broadcaster & is funded through licence fees

4. BBC Charter 1 January 2007 – 31 December 2016 BBC should provide wide range of content, across every genre, trying to reach the greatest possible range of audiences Programmes should be Of high quality Challenging Original Innovative Engaging

5. BBC v. ITV Is there evidence of competition? Downward trend in audience share for both BBC1 and ITV since 1980 1991 onwards, alternatives to terrestrial channels became available ITV in particular has lost share to newly available channels (closer substitutes?)

6. Changing market Rapid advance of technology Choice of platform (method of receiving signals) Digital offers 4 methods: Set top box linked to existing aerial/TV Satellite dish Cable television Internet Digital spectrum can carry many TV channels Subscription TV channels

7. Competition between platforms Satellite (Sky is only provider) Cable (NTL/Telewest is only provider following 2005 merger) Set-top box (Freeview or Top-up TV)

8. Competition Digital platforms Oligopolistic Channels on each platform are much the same Non-price competition – limited scope Significant price competition between different platforms Installation costs Subscription packages pricing

9. Monopolistic competition Many similar channels available 37 shopping channels Barriers to entry? Freedom of entry (contestability) will lead to situation where owners of TV channels make little, if any, supernormal profit and an economically efficient outcome is achieved

10. TV – really contestable? Economies of scale High cost of producing quality programmes Danger of market failure in absence of government regulation of market for TV

11. Externalities & TV What are the positive externalities? What are the negative externalities? Does the TV market take these into account?

12. Are TV signals public goods? Non-rivalrous? Non-excludable? Free-rider problem? Quasi-public goods?