Base Model Assume that NBC Sports Philly and Comcast are NOT owned by the same company.

a What is the equilibrium affiliate fee, Prsn?

b What is the equilibrium number of subscribers, Q?

c What is the equilibrium subscription fee? Pdist?

d What is the profit for NBC Sports Philly?

e What is profit for Comcast?

f What is consumer surplus?

Vertical Integration

Now assume that NBC Sports Philly and Comcast are owned by the same company.

g What is the equilibrium number of subscribers, Q?

h What is the equilibrium subscription fee? Pdist?

i What is the profit for merged company?

j What is consumer surplus?

1 RSNs Suppose that NBC Sports Philly (an upstream RSN) has the rights to broadcast Flyers games. The marginal cost to produce a season of flyers games per subscriber is: Crsn = 0 Comcast is negotiating their per subscriber affiliate fee with NBC Sports Philly. The marginal cost for Comcast (a downstream distributor) to produce and air the Flyers games per subscriber is equal to the affiliate fee PLUS a procession cost of 10. So the marginal cost per subscriber for Comcast is: Cb = Prsn + 10 where Pron is the equilibrium affiliate fee charged by NBC Sports Philly, in cents. The demand for watching the Flyers season on TV by subscribers is given by: Pdist (Q) = 250 - 2Q where Q is thousands of subscribers and Pdist is the subscription fee to watch the Flyers season on TV, in cents. Unless otherwise noted, your answers should be in the same units as the problem specifies (thousands and cents)