Obama's Record Fundraising Fails to Benefit TV Station Owners
By Tim Mullaney
Oct. 28 (Bloomberg) -- Television stations are finding as political campaigns end that Democrat Barack Obama's record $600 million fundraising isn't turning into an advertising bonanza.
A lack of competitive big-state Senate races, falling interest-group outlays and Republican John McCain's decision to accept campaign spending limits have led to a shortfall.
``We were very surprised at the lack of growth,'' said Kip Cassino, research director at Borrell Associates, an advertising consultant in Norfolk, Virginia. ``It puts the stations in a much worse spot than they thought they'd be in.''
Political ads were supposed to be the bright spot for station owners E.W. Scripps Co., Belo Corp. and Sinclair Broadcast Group Inc. in a year marred by less spending by auto dealers. Instead, campaign spending on local TV will fall to $984.3 million from 2004's $1.05 billion, Cassino said. Total ad sales for local TV will fall 8 percent this year, he said.
Election spending at Scripps's 10 TV stations will end up no better than 2006's $43 million and may fall from 2004, Bill Peterson, head of the Cincinnati company's broadcast unit, said in an interview earlier this month.
``We may make that, we may not'' said Peterson, whose ABC and NBC outlets include four stations in the battlegrounds of Florida and Ohio. ``We've seen less than we anticipated.''
Senate Races
Scripps, which gets about 30 percent of revenue from TV, reports third-quarter results on Nov. 7. Analysts project an operating profit of $8.2 million on sales of $241.2 million, the average of Bloomberg estimates. Comparisons aren't available because the company split off its cable and Web units in July.
The most expensive Senate race, between Republican incumbent Norm Coleman of Minnesota and Democrat Al Franken, had generated $21.2 million in ads as of Oct. 22, according to researcher TNS Media Intelligence. In Virginia, Republican senatorial candidate Jim Gilmore, who trails in polls, has an ad budget of $1 million.
``We hoped for some late money, but it looks like $1 million is going to be about it,'' said campaign manager Dick Leggitt.
Two years ago, spending in Connecticut, New Jersey, New York and Pennsylvania totaled more than $150 million.
``There's no competitive race in a top 10 media market,'' said Ken Goldstein, director of the Wisconsin Advertising Project, which studies political campaigns at the University of Wisconsin at Madison.
At the same time, McCain's decision to take public financing limited his general election spending to $84 million, up from $74.6 million in 2004.
527 Ads
While local TV is losing funds to field operations, cable and the Internet, overall ad spending is also falling short of estimates. Cassino cut his forecast for total political-ad outlays to $2.16 billion from $2.62 billion on Oct. 13.
Obama and McCain have discouraged interest groups known as 527s from advertising on their behalf. Those outlays have fallen to $198.8 million as of Sept. 30 from $442.5 million in 2004, according to the non-profit Center for Responsive Politics.
``527s are the dog that didn't bark,'' Goldstein said.
Politicians are also stretching their budgets, said Ed Rollins, a veteran strategist and chairman of Arkansas Governor Mike Huckabee's run for the Republican presidential nomination.
Huckabee held a press conference explaining his decision not to run an ad attacking rival Mitt Romney and played the ad for reporters, Rollins said. It's still on YouTube.
``It looks like a lot is being done, but not a lot is being done,'' Rollins said. ``You produce an ad and put it on Facebook, or you get CNN to run it. There are a lot of games going on.''
Gannett
Gannett Co.'s second-half political ads will beat 2004's total and ``may achieve what we were able to do in 2006,'' Gracia Martore, chief financial officer of the McLean, Virginia- based broadcaster and publisher, said on an Oct. 24 conference call.
This month, Leland Westerfield, an analyst with BMO Capital Markets in New York, cut his profit estimate for Dallas-based Belo Corp. by 5 cents to 91 cents a share, saying Obama wasn't contesting Arizona and Texas, home to nine of the company's 21 stations. In the Texas Senate race, incumbent Republican John Cornyn leads Democrat Rick Noriega by 15 points, according to an Oct. 21 Rasmussen Reports poll.
Belo's political ads sales will likely to fall to $50.7 million from $52.8 million in 2004, Westerfield estimates. Like Scripps, Belo split in two this year. Belo spokesman Paul Fry said in an interview the company has consistently had political revenue of around $50 million every election year since 2000.
Late Spurt
Sinclair, based in Hunt Valley, Maryland, said on Oct. 27 that a spurt in political ads during the past two weeks will soften a projected drop in fourth-quarter sales.
The owner of 58 Fox, ABC, CBS affiliates and other stations now expects revenue to decline by a mid-to-low single-digit percentage. Political ads through nine months totaled $15.5 million, down from $17.7 million four years ago.
This year's campaigns may also signal a lasting change, with Obama diverting millions to technology and field operations. His $39 million effort to win Florida is split between TV and efforts to turn out 1.4 million black and young voters who stayed home in 2004, campaign manager David Plouffe said in a Sept. 17 video.
``That's how he won the primaries and that's what he believes in,'' said Eileen Kotecki, finance director for Al Gore's 2000 campaign.
To contact the reporter on this story: Tim Mullaney in New York at tmullaney1@bloomberg.net
Last Updated: October 29, 2008 00:01 EDT |
