Vertical Integration in Multichannel Television Markets: Revisiting Regional Sports Networks Using Updated Data
Georgi Giozov, Nauman Ilias, Mark Israel & Allan Shampine
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In an article published in 2013, Kevin Caves, Chris Holt, and Hal Singer analyzed data on regional sports networks (RSNs) to assess the Federal Communications Commission’s (FCC’s) bargaining-theory-based prediction that affiliate fees charged by a vertically integrated RSN to downstream distribution rivals would be higher than what an independent RSN would charge. They estimated an econometric model built on prior modeling by the FCC and found empirical evidence supporting the FCC’s prediction, with an economically and statistically significant vertical integration premium. As a result, they claimed that “any potential efficiencies arising from vertical integration in the industry should be weighed against the prospect of increased content costs and the potential for reduced output and economic welfare.” In this article, we show that those results do not hold up to updates in the underlying data—either on the original time period (given revisions to the data) or on a more recent time period, or a combination of the two. Indeed, overall, the results are more consistent with lower prices due to vertical integration than with higher prices. Consequently, the 2013 study’s policy conclusions are not, in fact, supported by the updated data.
Cite as
Georgi Giozov, Nauman Ilias, Mark Israel & Allan Shampine, Vertical Integration in Multichannel Television Markets: Revisiting Regional Sports Networks Using Updated Data, 4 Criterion J. on Innovation 1 (2019).
Georgi Giozov is a Senior Vice President with Compass Lexecon based in Washington, D.C. Mr. Giozov has contributed to expert testimony and provided trial support in a number of antitrust matters. He has performed and managed economic and econometric analyses in various competition matters, including price fixing litigations and merger proceedings. In his prior engagements, he has served clients in a variety of industries, including consumer products, electronics, rail transportation, energy, pharmaceuticals, and telecommunications. Mr. Giozov received a Master’s degree in Applied Economics from Johns Hopkins University. He also holds a B.A. in Economics, summa cum laude, from Connecticut College.
Nauman Ilias is a Senior Vice President with Compass Lexecon based in Washington, D.C. He specializes in the economic, statistical, and financial analyses of merger, antitrust, litigation, and public policy matters. He has extensive experience applying advanced econometric and simulation techniques to issues in economic consulting. Dr. Ilias has a broad exposure to several industries including airlines, consumer products, electricity, metals, and telecommunications. His responsibilities have included identifying key economic issues, developing relevant analytical and empirical methodology, processing and analyzing large data sets, computing economic damages, and assisting experts and clients through all phases of the litigation process. Dr. Ilias holds a Ph.D. in Economics (University of Pennsylvania), an M.S. in Finance (University of Maryland), and a B.S. in Electrical Engineering (Georgia Tech).
Mark Israel is a Senior Managing Director at Compass Lexecon. Dr. Israel has substantial experience applying economic analysis and econometric tools to antitrust cases including mergers, joint ventures, regulatory proceedings, and litigation matters, in the United States and internationally. He has served as an expert for both government agencies and private parties, in cases involving industries such as telecommunications, cable television, broadband internet service, airlines, health insurance, food distribution, railroads, shipping, financial markets, nuclear waste disposal, consumer retail, and many others. Dr. Israel has written numerous academic articles on topics including competition economics, merger policy, telecommunications, airlines, insurance markets, and applied econometrics. His research has been published in leading scholarly and applied journals including, among others, The American Economics Review, The Rand Journal of Economics, The Review of Industrial Organization, The Journal of Competition Law and Economics, and The Review of Network Economics, and has been presented to business, government, and academic audiences around the world. Dr. Israel holds a Ph.D in Economics (Stanford University), an M.Sc. in Economics (University of Wisconsin-Madison), and a B.A. in Economics (Illinois Wesleyan University).
Allan Shampine is an Executive Vice President with Compass Lexecon based in Chicago. He specializes in telecommunications, payment systems and intellectual property. He has performed analyses in major mergers, regulatory proceedings, and private antitrust, patent and securities litigation, both in the United States and abroad, and has provided reports or testimony for the ITC, District Courts, the Federal Maritime Commission, the FCC, the European Commission, Korean Fair Trade Commission, Chinese National Development & Reform Commission, the Info-Communications Development Authority of Singapore, and the Australian Competition and Consumer Commission. Dr. Shampine has a Ph.D. and an M.A. in Economics from the University of Chicago. He received a B.S. in Economics and Systems Analysis summa cum laude from Southern Methodist University. Dr. Shampine has authored scholarly articles published in The Antitrust Law Journal, Antitrust, Antitrust Source, The Review of Network Economics, Journal of Intellectual Property Law & Practice, The Milken Institute Review, Technological Forecasting & Social Change, The Journal of Evolutionary Economics, The Texas Intellectual Property Law Journal, and The American Journal of Agricultural Economics. He has presented his research in various venues, including conferences at Harvard, Oxford, the Bank of Canada and the Federal Reserve Bank of New York. He is an editor for the American Bar Association’s Antitrust Source and the editor of the book entitled Down to the Wire: Studies in the Diffusion and Regulation of Telecommunications Technologies.
