BUSH-KERRY BATTLE GOOD NEWS FOR SOME BROADCASTERS, ANALYSTS SAY
Local TV broadcasters should reap the benefits of increased political ad spending in 2004, particularly in 17 swing states where spending is already on the rise, according to Legg Mason analysts. Analysts Blair Levin and Sean Butson said the Bush-Kerry battle was playing out to broadcasters’ benefit: (1) Because Kerrey secured his primary win early, this is expected to be the longest general election campaign ever. (2) Bush and Kerrey opted out of govt. campaign spending limits during the primary season. “That’s good news for broadcasters,” Levin said. The analysts raised their predictions for political ad spending to about $1 billion from $920 million.
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Levin and Butson said broadcasters in 17 swing states would get much of the spending, and 4 “sweet states” -- Fla., Mich., Ohio and Pa. -- were receiving almost 1/2 of the Presidential spend thus far. The rest of the 17 are Ark., Ariz., Iowa, Me., Minn., Mo., Nev., N.H., N.M., Ore., Wash., Wis., and W. Va. Among broadcasters expected to do well are Hearst-Argyle, Gray TV and Sinclair, they said. They noted Hearst-Argyle had stations in 9 of the 17 states and 3 of its strongest stations were in the 4 sweet states. “This is the best position of any company we follow,” Butson said.
Gray is in 7 of the 17, including 3 of the top 4 highest spending states, they said. While political ad spending represents a relatively small share of Sinclair revenue, they said, Sinclair has stations in 11 of the 17 swing states. Some stations will also benefit from competitive Senate races, Levin and Butson said. Although Disney and other larger companies are also expected to benefit from political ad spending, Levin and Butson said most spending would be local, not network.
Despite passage of the Bipartisan Campaign Reform Act (BCRA) banning soft dollars to national parties, the parties have raised more in 2003 in hard dollars ($278 million) than in 1999 hard and soft dollar combined ($265 million), Levin and Butson said. Presidential, congressional and “Sec. 527” fund-raising involving interest groups is also up sharply from 4 years ago, they said. Prospects for more spending on Senate races has improved with a newly open seat in Colo., raising Democrats’ hopes for a Senate takeover, they said. That has spill-over effects on other races as the parties fight for the Senate, they said. Levin and Butson said they believed most previous soft money contributions have been diverted to Sec. 527 organizations such as MoveOn.org. The analysts saw no major changes in House or governors race spending.
The only “cloud” is a decision from the FEC due in May that could rein in spending by the “527” groups, but such a decision could be appealed and might not take effect this election cycle, the analysts said. The FEC could limit the type of contributions and therefore the amount of spending, they wrote.
Asked about BCRA provisions barring corporations and unions from directly funding ads mentioning federal candidates 60 days before a general election and 30 days before a primary election, Levin said the effects remain unclear but could be limited. The ads could be front-loaded to earlier periods, he said, or there could be a shift in the character of the ads, because by that time, campaign themes will be firmly established. After the party conventions are over, each candidate will get $75 million, much of which also could fall into broadcasters’ hands from advertising, he said.