Vertical integration in media industries

In recent years convergence in information industries has often taken the form of vertical agreement between different stage of the value chain and with content owners and distribution channels in a prominent position, suggesting an increasing degree of vertical integration. But when considering indicators at firm level, as the value added to revenues ratio, emerges often a reduction in vertical integration degree. In newspaper and television industries, firm used to be almost completely integrated vertically while nowadays they shifted outside several stage of production and at the same time emerged robust intermediate markets In some case technological innovation appears to be an enabling factor like in printing, but in other cases as in audiovisual production rent extraction by scarce artistic factors appears to be a major force. In the first part the paper explore the determinants of vertical integration in media industries confronting the approaches of transaction costs and property rights, with special reference to the case of television production. In this market the make or buy boundary must be defined in detail and the extreme cases of complete internal production or buying an off the shelf program are declining in favor of mixed choice where resources and risks are both internal and external. In the second part the paper proposes some preliminary empirical analysis. For newspaper and television industries the value added to sales ratio is computed for several year in order to observe the vertical integration choice over time. At European level all the decisions of the commission relating to media industries in merger and acquisition proposals are analysed and classified in vertical and horizontal integration.