How Broadcasting Quotas Harm Program Diversity Mathieu Perona∗

Broadcasting quotas of domestic contents are commonplace in developed countries, be it for radio or television programming. The core argument for them is to promote diversity by making more room for domestic content. By doing so, they increase the sales of domestic content and hence foster a more diverse production. However, this intuitive reasoning ignores the trade-off between repetition (broadcasting more of the same) and new program diffusion that the broadcaster faces. If each consumer cares only about a small fraction on the total contents of the program, and that some con-tents are more popular than others, a broadcaster confronted to a quota will find optimal to compensate for the reduction of foreign programming by increasing the number of broad-casts of substitutable domestic programs for the most popular contents. Total broadcasting time being limited, this will force the broadcaster to slash marginal (less popular) types of programming, both domestic and foreign. The net effect of a quota can thus be a net reduction in programming diversity, in the form of a concentration of programming on the most popular contents and a disappearance of less popular genres. In a competitive setting, our setup concurs with the idea that competition between broadcasters also reduces diversity of programming compared with a similar situation un-der monopoly. Using a Stackelberg competition framework, we show that the incumbent broadcaster concentrates on the most popular genres. Since they affect both competitors symmetrically, quotas have the same effect under competition than with a monopoly, thus adding up the two diversity-reducing effects. These results thus call for a re-assessment of the quota policy in the broadcasting indus-try