Local TV Stations in Line for Record Haul from Elections (Report)
Thanks to a tight presidential race and unlimited political ad spending by corporations for the first time, political advertising on local television stations will grow by more than $500 million compared to 2010 to a total of $2.8 billion -- marking the largest dollar increase in history -- according to a report by Moody’s Investor Service released Thursday.
That will translate into a 25 percent increase over political ad spending two years ago for U.S. broadcasters. When you add in network and national spot political advertising, the total is expected to reach more than $3 billion.
That means political advertising in 2012 will represent about 9 percent of all local TV revenues, well above the normal growth of six or seven percent.
Among the broadcasters who will benefit most are FoxCo., Gray Television, LIN, Media General, Newport Television, Nexstar and Sinclair Broadcasting.
The rapid rise in political spending is fueled by the entry of corporations through Super PAC’s and other vehicles since the Supreme Court’s Citizen’s United ruling in 2010, which ruled that corporations have the same right to contribute as individuals. Over $158 million has been shelled out by Super PACs and other independent groups this year, according to the Center for Responsive Politics,
For broadcasters, the political ad bonanza is a god-send that off-sets slow growth in ad spending by auto companies, consumer goods companies and others who traditionally make up the bulk of their time buyers. It is especially good news for broadcast TV, which has seen a large part of its audience and advertisers shift to cable TV and more recently online in recent years. According to Moody’s, broadcasters still capture half of all political ad spending on TV. Overall ad spending has increased for cable, but the bulk still goes to broadcast outlets. About half of the money will be spent this year on broadcast, with about 8 percent going to radio.
Much of the money is being used by the broadcasters to reduce their debt, according to Moody’s.
While in past years most political ads were about candidates, this year a lot of the spending has been by the political parties and groups pushing a cause, often one for or against a certain candidate.
Individual candidates are entitled to by broadcast ads at the lowest rates available during the 60 days before the election. However, spending by Super PACs, trade unions and issue-oriented groups is not guaranteed a low rate, and with time at a premium, often is paying at or near the highest rate levels.
The heaviest spending will come in October and early November, and mostly in the so-called swing states -- those that are considered capable of going for either candidate depending on the mood of independently minded voters.
In Wisconsin, it is estimated spending on the presidential race and a tight Senate race and issue campaigning will hit record levels. That is on top of about $63 million that was spent earlier in 2012 on a high profile recall election, which the Republican governor survived in June.
The fastest growing population segment is the group that also speaks Spanish. As a result, much more money than in past years will be spent on Spanish language broadcast outlets.