Here’s the good news for station owners and networks in an analysis of this year’s political media spending out today from ad forecasting firm Borrell Associates: Cash will continue to flood most markets, with broadcasters seeing $4.6B, an 11.5% increase over 2010, the previous midterm election year. The problem? Broadcast TV’s take represents 55.4% of the $8.3B to be spent for ads in all races and ballot issues — down from its 57.5% share of the $7.2B spent in 2010. Cable and online are “the only media choices projected to gain share” this year, the report says. Cable, with $719.3M, will account for 8.7%, up from 6.9% four years ago. And online’s $271.2M is up 1,825.2% vs its $14.1M in 2010. Although online will just account for three cents of every ad dollar spent on all of this year’s contests, “current forecasts call for explosive growth to continue, nearing the billion-dollar level by 2016′s Presidential election.”
Two years ago TV broadcasters kicked up a fuss when the FCC made a simple decision: It ordered them to put online info about the political ads that they air — info they already were required to make available on paper to anyone who visits the station. Broadcasters lost that fight. But it seems that many, possibly most, simply refused to comply with the rules according to complaints against 11 stations filed at the FCC today by two public interest groups: The Campaign Legal Center and the Sunlight Foundation. They say that broadcasters they checked failed to identify on an FCC site what candidate was being referred to in political ads, the issue the ads addressed, and who sponsored the ads. The lapses mean “the public does not have the information it needs to understand who is speaking on the public airwaves and attempting to influence their views on political issues,” says Campaign Legal Center Policy Director Meredith McGehee. Sunlight Foundation Managing Editor Kathy Kiely says the public filings “are often the only way we can track political activities and spending by dark money groups that aren’t required to disclose those activities with the Federal Election Commission.” They filed complaints against WDIV (NBC/Detroit), KNXV (ABC/Phoenix), WTVJ (NBC/Miami), WMUR (ABC/Manchester-Boston), WFLA (NBC/Tampa), WTVT (Fox/Tampa), WWJ (CBS/Detroit), KMGH (ABC/Denver), WCNC (NBC/Charlotte), KMSP (Fox/Minneapolis), and WTVD (ABC/Durham). The FCC’s order initially applied to large stations, but all …
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). But 2014 will change the recent trajectory, with the total for local market U.S. TV broadcasters probably topping out at $2.6B, down 10% from the record $2.9B set in 2012, Moody’s Investors Service says this morning. There’s no presidential campaign this year; that accounted for about 31% of the spending in 2012. And, unlike in recent off-years, issue ads, and local and state races, won’t make up the difference. “We will see fewer heated political races in 2014 than in 2012,” the report says. That could be a problem for broadcasters because political ads offer them “premium pricing, especially as election day approaches and inventory grows scarce,” the debt rating firm says. The decline “will cut into the odd-year/even-year average EBITDA [cash flow] levels, which we use to assess credit metrics.” Station groups most affected could include E.W. Scripps (where 22% of TV revenues came from political ads in 2012) and Gray TV (with 21%). They “will experience a notable decrease in political advertising revenue in 2014 on a same-station basis, having led the industry in revenue percentages in 2012.” Allbritton Communications and Media General also could take a hit. …
TV networks should be encouraged by the ad forecasts presented this morning at the UBS Global Media and Communications Conference. Global spending on the medium will grow 7.7% in 2014, up from +1.8% this year, Magna Global EVP Vincent Letang says, In the U.S., broadcast TV will benefit most from the mid-term elections and Winter Olympics. Spending will increase 9.3%, in contrast to this year’s 5.7% drop. Cable will be +7.8% vs. +4.4% in 2013. Much of the growth will come from technology and telecom companies as they introduce game consoles and gadgets — but auto and pharmaceutical spending will rise. Entertainment, however, will be down in 2014, due in part to efforts by studios to trim their release slates. Political spending likely will be about a third higher than it was in 2010 at $3B, Letang says. He also expects about $600M in spending around the Winter Olympics. Generally speaking “television and digital media are sharing the eyeballs and dollars that print and radio are losing,” Letang says.
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%).
The projection today from ad firm Magna Global is a little conservative compared to some other forecasts. For example, Wells Fargo Securities’ Marci Ryvicker projected yesterday that political campaigns and groups will spend $3B+ this year on spot TV (up from $2.1B in 2008) with an additional $550M going to local cable (up from $333M). Even so, the Magna Global numbers confirm that the election will turn 2012 into an extraordinary year for station owners. With the political dollars, local TV ad sales will be up 14% in 2012 — and without them, the total would have been up just 2%. “Despite the rise of digital media, local TV remains essential in political marketing because only a ‘lean-back’ medium can effectively reach the low-interest, undecided voters who, by definition, are less likely to seek information from ‘lean-forward’ digital media or engage with digital campaigns,” the firm says. But industry execs and investors had better enjoy the good times while they can. Next year ad sales for all of television will fall 1.4% to $63B after rising 9% this year, Magna Global forecasts.
TV stations and their investors are already the big winners from this year’s elections. Political campaigns and groups will funnel a record $2.8B to local broadcasters, according to a report today by Moody’s Investors Service. And most recipients will use the bonanza “to position themselves to operate more comfortably in 2013, when political advertising virtually disappears,” the debt rating firm says. FoxCo is using some of its political cash to launch a a $175M financing to fund its first dividend for its backers. In addition, Moody’s says that LIN Television, Nexstar, and Sinclair “have all earmarked cash from the political windfall to acquire more stations in 2012, and we believe more M&A activity will follow.” Moody’s Senior Analyst Carl Salas says that ”pure-play U.S. television broadcasters expect to earn up to 25% more in revenues from political advertising in 2012 than in 2010. The expected increase of more than $500 million will mark the largest dollar increase ever measured over a two-year election cycle.” To put that into perspective, he says that political ads “will account for up to 9% of the U.S. broadcast industry’s average annual revenue, well above the historical 6% to 7% norm.” But don’t expect Moody’s to raise everyone’s credit rating. Traditional ad sales still account for the bulk of their revenues, and they are growing slowly.
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 Appeals in D.C. rejected a request by the National Association of Broadcasters to stay rules that the FCC adopted in April requiring the top four stations in the 50 largest markets to send their political ad data to the regulators for online posting. The rules are on track to take effect August 2. (The FCC wants all other stations to comply starting July 2014.) The NAB appealed the decision this month saying that TV stations will be “at a distinct disadvantage to their non-broadcast competitors” if they have to post the ad rates online after a sale. The damage to stations’ sales efforts would be so great that it “outweighs the benefits” to people who want to know who’s spending how much on TV to influence their opinions in an election. But the court said, without explanation, that the NAB ”has not satisfied the stringent requirements for a stay pending court review.” That pleased Free Press, an activist group that’s an intervenor in the case. “This first round victory goes to transparency and the public, and we’ll continue to advocate for better access to this already public information,” Senior Policy Counsel Corie Wright says. NAB spokesman Dennis Wharton says that while …
President Obama and presumptive GOP nominee Mitt Romney — as well as their leading Super PAC supporters — have temporarily yanked their ads in the state, according to multiple press reports. Nobody’s saying how long the black out will last. Colorado is considered a battleground state, so cash has been pouring in to influence voters. Bill Burton of Priorities USA Action, a Super PAC that supports Obama, says that “Our prayers are with the victims of this horrible tragedy.” And Steven Law of American Crossroads, a similar organization that favors Romney, says: “We pause to honor and pray for those whose lives have been tragically cut short, as well as those who must bear this terrible loss.”
The top four TV stations in the top 50 markets will have to send their political ad data to the Federal Communications Commission for online posting beginning the first week of August, according to Multichannel News. The approval of the paperwork collection requirements of the rules were published today in the Federal Register. The rules take effect in 30 days. In June, the House Appropriations Committee voted unanimously to allow the FCC’s rule on putting political ad data online to stand.
It’s disquieting to see how far broadcasters and their allies are willing to go to kill the recent FCC decision to help voters understand how money’s being spent on TV to influence elections. Yesterday, a House Appropriations subcommittee approved by a voice vote legislation that would prevent the FCC from using any funds to implement an order in April that involves large TV stations: The four largest stations in the top 50 markets would have to put online the information about political ad buys that they already must disclose on paper to people who visit the station. The FCC says it’s a common-sense change that would enhance democracy by making the system more transparent. But Subcommittee Chairwoman Jo Ann Emerson (R-Mo.) called the order ”micromanagement by the FCC,” the National Journal reports. She also questioned why the rule just applies to TV stations instead of political ad buyers, or other media including radio, cable TV, newspapers, direct mail, outdoor advertising and the Internet. The bill approved by the subcommittee goes next to the full Appropriations Committee for approval. Meanwhile the National Association of Broadcasters has asked the U.S. Court of Appeals to overturn the FCC rules.
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
The conventional wisdom holds that the 2012 campaign will set records for TV spending. But that’s not how things have gone so far, says Wells Fargo Securities analyst Marci Rivicker — who follows political ads closer than just about anybody on Wall Street. Campaigns have spent $275.5M on TV ads through April 15; nearly 66% went directly to broadcast stations while the rest went to national TV and cable. But spending and fundraising through February was 20% below the average in presidential year campaigns from 2000 through 2008. The large number of GOP presidential debates “dampened the need for advertising,” Ryvicker says, adding that there wasn’t “a clear path to the Republican nomination.” But spending in March was 12% over the average for the month in the previous cycles. That leaves Ryvicker unsure of whether 2012 political TV spending will come in ahead or behind her forecast of $2.7B. Modeled on the last presidential election year in 2008, it would fall short at $2.3B. But based on 2010, the total would hit $2.9B. It’s probably
Who’d have thought that TV broadcasters would be so bent out of shape by a proposal to let Web users see political ad sales information that stations already provide on paper to people who visit a station? But they are, and they’re leaving little to chance as the FCC heads toward an April 27 meeting where commissioners are due to vote on a measure that would require stations to feed their info to an FCC database. NAB chief Gordon Smith met yesterday with FCC Chairman Julius Genachowski saying that stations shouldn’t be required to change. Among his reasons: Broadcasters fear that they’ll lose bargaining leverage with advertisers. If buyers can go online and see how much a station charged for specific political ads, the thinking goes, then they’d know how low a station’s willing to go. Federal law enables candidates to pay the lowest rates a station provides to its most favored commercial advertisers. Smith talked about a possible compromise that would only require stations to feed the FCC info about total charges for political ads — requiring those interested in specific invoices to visit the stations.
Some PBS and NPR stations may be in for an election year bonanza if today’s ruling from the U.S. Court of Appeals in San Francisco stands. Justices overturned part of a statute that bars federally funded public broadcasters from accepting political and issue ads; they upheld the ban on commercials for goods and services from for-profit entities. The law was designed to keep public broadcasters from feeling financial pressures to reach a mass audience, which could result in less public service programming including educational shows for kids. But the court said that “neither logic nor evidence” show that stations would abandon their public service mission in order to score issue and political ads. Lawmakers’ decision to let stations accept ads from non-profits was “fatal” to the case that the FCC made to defend the law. “That is the kind of picking-and-choosing among different types of speech that Congress may not do” under the First Amendment without proof that it’s needed to serve a “substantial interest,” the court said.
You have to hand it to Pro Publica for coming up with a creative work-around to one of the weirdest disputes at the FCC — the debate over whether to make local TV station data about political advertising available online. The public interest journalism group has begun to enlist people to visit local TV stations and copy the info about political ads that they’re already required to make public on paper. Reporters will put the files online for everyone to see. “These paper files contain detailed data on all political ads that run on the channel, such as when they aired, who bought the time and how much they paid,” Pro Publica says. ”It’s a transparency gold mine, allowing the public to see how campaigns and outside groups are influencing elections.” The FCC seems to share that desire to make the info easy for people to find. It’s weighing a proposal that would require stations to put their reports online. Public interest groups love the idea. The deans or directors of 12 major college journalism programs also told the FCC that the files include “vital information about the American political system.”