TV Stations Shy About 2012 Windfall Others Predict From ‘Citizens United’
A windfall awaits TV stations in presidential battleground states and those whose communities have contested congressional races because of the Supreme Court’s Citizens United ruling and related developments, say political operatives and researchers. Last year’s decision struck down restrictions on donations by corporations, including nonprofits not required to report their funding sources. It has “opened up the floodgates” of independent spending in campaigns, said President Bill Hillsman of North Woods Advertising, an ad agency and political communications firm that works for independent and liberal candidates. An executive of a political TV ad agency said ripples from the opinion will have “a major effect” in the 2012 campaign. “It’s pretty much entirely new money,” he said. But a broadcaster disputed that.
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The money flows largely to close races and still ends up mainly in broadcast TV, researchers and strategists said, because stations retain the largest audiences despite the large inroads of newer media. Borrell Associates estimated last year that broadcast TV still gets almost two-thirds of political ad dollars, with cable, radio and newspapers next, down in the single-digit percentages each. “Candidates realize that if they want to move the needle, they have to put their money where the audiences are, which is broadcast radio and TV,” said an NAB spokesman. Ratings for local news programs are important in the distribution of dollars within a market because their audiences vote heavily, an agency executive said. No one’s sure of Citizens United’s exact effect on stations’ finances, said Vice President Jack Poor of TVB, an association representing TV stations. He estimated that it meant a bump of 5-10 percent in political ad revenue in the previous election cycle and said “you nowhere near felt the full impact” that’s coming.
In 2010, conservatives and Republicans, led by consultant Karl Rove, got off to a flying start taking advantage of the January ruling, experts said. They said liberals and Democrats did much less. Now early worries about a backlash against the beneficiaries of the spending have faded, said Michael Franz, an associate professor of government at Bowdoin College who takes part in the Wesleyan Media Project. With a presidential election, 2012 is a bigger campaign year; the lessons of the previous cycle have been absorbed; and liberals and Democrats have geared up, analysts said. “I've advised candidates that all bets are off -- all strings are loose” on donations, Hillsman said.
Few if any broadcasters are crowing. A senior executive of a station group owner said the effect of the decision has been to shift political ad funding around rather than increase it. “From a spending perspective, the money was always” in the system, he said. Any rise from Citizens United is “not going to a hockey-stick” graph for the 2012 campaign, the executive said. Hillsman replied, “That’s sublimely ludicrous for someone to say.” Broadcasters “don’t like to talk about how big a windfall this is,” he said, but “it’s totally incremental money.” Poor said “the $64,000 question” is how much of the spending covered by the decision is new to political advertising. “Clearly some of it is redirected and some of it is incremental.” Ten of the largest owners of U.S. station groups declined to comment or didn’t get back to us.
Raw ad-dollar increases won’t reflect the full benefit to stations, analysts said. Broadcasters aren’t required to offer the purchasers of ads besides campaigns what are called the lowest unit rates, at discounts of as much as 30 percent, so they can charge independent spenders more, they said. Political spots are “becoming more important” financially to broadcasters “because the other categories” of advertising are down, an agency executive said.
Cause groups tend to spread their spending throughout the year, analysts said. They said that compounds the effect of early voting and other developments in stretching out campaigns and adding political revenue outside the few weeks before an election, when exhaustion of ad inventory can cap sales and squeeze out and upset business advertisers. Many nonprofits are required to do heavy spending on political issues outside the high season so they don’t violate tax rules against being mainly campaign organizations, Franz said.