Date Issued: 
September 1, 2002

Jonathan Levy, Marcelino Ford-Livene, and Anne Levine

OSP Working Paper 37 (Sept 2002) examines the future profitability of the broadcast industry, finding that it will depend on how well broadcasters respond to competition and cost pressures -- and on whether they can harness new technologies such as DTV and interactive services to their benefit. The television broadcast industry has entered the new millennium in good shape, but with many challenges on the horizon.

The paper notes that, although the past decade has seen a continuing erosion of broadcast audience and advertising shares, television advertising prices and revenues have continued to grow.  It concludes that DBS and the expansion in cable availability and channel capacity have created an increasingly competitive environment for television broadcasting. This will lead to continuing audience fragmentation and further pressure on broadcast advertising revenues.  Moreover, the increasing competition for program production resources has led to an increase in production costs.