Broadcast companies spent about $10B last year for TV stations — and the acquisition spree will continue in 2014 with help from the two big rivers of cash, Moody’s Investors Service says in a report out this morning. “Larger …
EL SEGUNDO, Calif. And ENGLEWOOD, Colo., Jan. 27, 2014 – DIRECTV (NASDAQ: DTV) and DISH Network L.L.C., a wholly owned subsidiary of DISH Network Corporation (NASDAQ: DISH), have joined forces to offer an addressable advertising platform of unprecedented scale and reach for political campaigns. The strategic relationship will allow participating statewide political campaigns to target their TV ads at the household level within 20+ million DIRECTV and DISH homes.
The DIRECTV-DISH arrangement will focus on political TV advertisements only, while the companies’ other media sales efforts will continue to operate independently.
Wells Fargo Securities’ Marci Ryvicker tracks political ad spending more closely than anyone on Wall Street, so I was pleased to see her weigh in this morning on what’s ahead for 2014. She agrees with the consensus view that spending will be down vs 2012, which included the presidential race, but up from 2010, the last mid-term election campaign. Her take: Fundraisers will collect about $6B (-7% vs 2012) with $4.8B (-7%) going to ads including $3B (-11%) for television. Within the medium, local TV stations will see $2.4B (-14%), with cable collecting $480M (+3%), and national networks winning $96M (-8%). Ryvicker’s estimate for local TV is a little lower than Moody’s forecast this week for as much as $2.6B, but she says that her prediction is “likely conservative.” She expects about $1.5B to be spent on public policy and issue ads, up from $1B in 2010. That will be “the big positive swing factor here, especially since this is the second full election cycle post the significant Citizens United case,” the U.S. Supreme Court’s 2010 decision that took limits off the amounts that corporations and unions can spend to support or oppose candidates. She expects lots of spending on ballot measures involving economic reforms, same-sex marriage, and marijuana legalization. But about a third of the issue spending likely will be used to debate the Affordable Care Act, likely to be an issue in at least 15 states. Opponents of Obamacare have so far spent five times as much as supporters. Total spending on ACA-related ads could go as high as $1B: Insurers may spend an additional $500M, but it would be seen as healthcare advertising, not issue advertising.
Doesn’t that violate a Newtonian law that compels spending on political ads to grow into infinity? You might think so considering that the total has increased every two years since 2002, and only fell in three years since 1980 (that would be 1990, 1998, and 2002).…
The returns are in and show that this year’s elections provided a bigger windfall for TV providers than expected by Wells Fargo Securities’ Marci Ryvicker — who’s followed this stuff closer than just about anybody. Campaigns and interest groups spent $2.8B on local TV, $104M at national networks, and $467M on cable she reports this morning based on information from Kantar Media’s Campaign Media Analysis Group. The total TV spending is +23.3% vs. the 2010 elections, and +35.3% vs. the 2008 presidential election year. Television accounted for about 65% of all of this campaign’s political ad spending, which came to $5.19B, +14% from 2010. Ryvicker says that the political outlays for TV were $200M higher than she anticipated.
UPDATE: Gannett challenges SNL Kagan’s estimate that sales of political ads at the company’s TV stations will decline 10.1% vs 2008. Gannett Broadcasting President Dave Lougee recently told analysts that the company expects election-related ads to hit a ”new high” in 2012 following Q3 sales of $42M, +61.5% vs 2008.
PREVIOUS, 11:53 AM: The situation is kind of like a children’s soccer game where everybody’s a winner — except, perhaps, the viewers in battleground states who’ve been bombarded with campaign related commercials. Local TV stations likely will end up with anywhere from $2.6B to $2.8B in political ads this year, according to two projections today. SNL Kagan has a lower number, which is still a 68% increase vs four years ago. The 10 largest publicly traded broadcast TV affiliate groups should end up with $625.3M, +41.9%. The research firm says that Mitt Romney outspent President Obama in TV and radio ads in swing states including Ohio, Pennsylvania, and Florida. Gray Television will wind up with about $90.5M, up 86.7% vs 2008 followed by Gannett with $84.5M (-10.1%), E.W. Scripps with $79.5M (+93.8%), and Sinclair with $75.0M (+82.5%).
Two Wall Street analysts point to that conclusion in reports this morning that examine the estimated $2.8B being spent on local TV this presidential election cycle from different perspectives. Only about 800,000 voters are even persuadable this year, Wells Fargo Securities’ Marci Ryvicker notes citing information from Kantar Media’s authoritative Campaign Media Analysis Group. Even more startling, she says, “the BEST way to reach such voters is through ‘fringe’ programs such as Jeopardy and Wheel Of Fortune.” Thus far the biggest surprises in the campaign have been that spending is stronger than she expected in Wisconsin, but weaker in Pennsylvania and Missouri.
Wells Fargo Securities’ Marci Ryvicker tracks political ad spending closer than just about anybody on Wall Street, and just raised her forecast (previously $4.9B) after watching cash gush into TV stations. Her new total compares with $4.6B spent in 2010. But it really stands out relative to the totals during the last two years that included presidential races: If Ryvicker’s right, then political ad sales this year will be 23% higher than in 2008, and up 95% vs 2004. She figures that local stations will account for 54% of the total spending, while 2% will go to networks and 9% to cable operators.
Political pros took a keen interest in July in markets including Zanesville, Ohio; Sioux City and Davenport, Iowa; Charlottesville, Virginia; and Las Vegas and Reno, Nevada. They saw the biggest increase in political ad spending relative to their market size in the month according to a report out this morning from Wells Fargo Securities’ Marci Ryvicker. The prolific analyst tracks political spending closer than just about anyone on Wall Street. She says that campaigns have spent $765.6M on TV so far in 2012 (ending July 29). The vast majority of that — $579.6M — went to local stations, including $120.7M in July. Of the local total so far in 2012, 42.5% was for presidential campaigns, 21.8% for ballot initiatives, 18.6% for Senate races, 7.6% for House contests, 5.0% for gubernatorial races, and 4.4% for other. The top markets measured by dollars spent are Cleveland ($24.8M); Los Angeles ($20.6M); Tampa ($19.4M); Washington, DC ($18.2M); and Las Vegas ($17.2M) — with much of the cash going to outlets owned by Fox, CBS, NBC, Sinclair, and Disney. But Ryvicker notes that these cities typically end up on top because of their size, not because they have the most contentious races. She says it’s more revealing to look at political spending relative to the total ad sales in the market.
A minor victory this afternoon for those who’d like to see television stations disclose on the Web the same information about political ad sales that they already have to make public on paper. The U.S. Court of …
The Columbia Journalism Review provides a useful look at the economics of political TV ads here as it tries to answer an important, and deceptively complicated, question: Will much of the record $3B+ in estimated campaign spending this election cycle represent new money for TV stations? CJR grapples with a school of thought that says the impact is frequently exaggerated. The political buy, the thinking goes, just knocks out other advertisers, including ones who might have paid a higher price for the slot. Stations have to make time available to campaigns at what’s known as the “lowest unit rate” — the price offered to the station’s best customers for the time period. Still, CJR finds that “campaign ad dollars are mostly gravy.” Stations frequently increase their advertising inventory in the weeks leading up to an election. Other commercials usually aren’t bumped; most can be moved to air on days and times that are harder to sell. “That allows broadcasters a fair amount of
Broadcasters are not happy with today’s FCC passage of a rule that will force stations to put their political advertising information — like who is buying what time and for how much — online. Stations already …