Mimicking vs. counter-programming strategies for television programs

In this paper, I analyze the trade-off between mimicking and counter-programming strategies in the pay- and the advertiser-supported television industries. Two channels compete with respect qto both program profile and program quality. I show that profile differentiation is higher under pay-support than under advertiser-support, as a consequence of the inability of channels to compete in price under advertiser-support. I also show that program quality is higher under advertiser-support than under pay-support if advertising revenues are sufficiently high. Finally, I compare the market provision to the socially optimum provision of programs.