Competitive aspects of the Norwegian Broadcasting Corporation’s (NRK) radio services : advertising and diversity in a two-sided radio market

Abstract

There has been an ongoing debate in Norway on how the state-owned, commercial-free broadcaster, NRK, influences commercial agents in different media markets. Up to this point, little research has been done on NRK’s impact on the radio market. This thesis examines the competitive effects of NRK’s radio services when focusing on listener welfare. Through a content analysis, a double-coverage analysis and a survey revealing diversion ratios, we establish that NRK competes hard with commercial broadcasters in the hit-radio segment, although less fierce with P5 Hits and Kiss than what was expected from the general media coverage. We develop a theoretical model to consider the effects on advertising and diversity, and thereby listener welfare, in a market with the commercial-free broadcaster, NRK, present. We find that NRK’s presence would lower the advertising level, and that the commercial stations would differentiate to soften the competition. We further find from the empirical analyses, slight tendencies that NRK may work as a block, forcing the commercial stations to some extent to differentiate in order to be able to air advertising. The content analysis finds that there is a significantly lower level of advertising in the hit-radio market compared to the somewhat comparable market comprising P4 and Radio Norge. We explain this by the presence of NRK in the hit-radio market and that advertising quantities are strategic complements.