This article examines the deregulation of cross-broader broadcasting to test its impact on strategies pursued by EU member states. It modifies our understanding of regulatory competition through an institutional explanation of the process. The European Union’s Television Without Frontiers (1989) Directive provided a framework for regulatory competition in television broadcast markets. Despite a high level of investment flight, member states did not automatically respond with deregulation but were compelled to do so by the European Court of Justice. Therefore national deregulation in this field was not a natural response to the preference of economic actors or an objective of state policy; it was driven by the European institutions.