Moody's Predicts Record Political Ad Spending for TV Station Groups in 2012
The company says political ad revenue for pure-play broadcasters will grow 9 percent to 18 percent over 2010 levels.
NEW YORK - Moody's Investors Service in a new report predicts that political advertising tied to presidential, Congressional and governor elections next year are "all but certain" to break records, providing a windfall for TV station groups.
The report from the credit ratings agency, entitled "U.S. Broadcasters Get Ready for Record-Breaking Political Ad Spending in 2012," sees political ad revenue grow 9 percent to 18 percent in 2012 over 2010 levels in a base case scenario for pure-play broadcast firms. 2010 had set a record of an estimated $2.3 billion in political broadcast TV ad spending.
Broadcasters benefited from a Jan. 2010 Supreme Court decision that effectively ended spending caps for political ads, so, unlike in 2004 and 2008, the presidential election in next year will happen without limits on campaign spending by corporations or unions. Next year is once again expected to feature several competitive local races in addition to President Barack Obama's attempt to win a second term.
Moody's mentioned Barrington Broadcasting Group, Gray Television, Local TV, Nexstar Broadcasting and NVT Networks/New Vision as key elections beneficiaries. Moody's eyes lower percentage increases in total political revenue for such broadcasters as Belo Corp. and Sinclair Broadcast Group, which have large footprints and relatively diversified revenue streams, which makes them less reliant on political ads.
"The boost in revenues in 2012 will not, by itself, shift our stable. outlook for the pure play U.S. broadcast television sector, as political
advertising will account for less than 7 percent of all television broadcast advertising revenues for these operators over the course of the two-year political cycle," said Moody's vp-senior analyst Carl Salas, who wrote the report. But broadcasters that use the
2012 cash windfalls to reduce debt will improve their credit quality, he emphasized.