Surge in Midterm Election Campaign Spending a Boon for TV Broadcasters

A year ago, KKTV, the CBS television affiliate in Colorado Springs, Colo., was expecting a sleepy season for midterm election political advertising.

But races for a U.S. Senate seat and the governor turned out to be dogfights. Ballot questions on food labeling and racetrack gambling started attracting attention. Outside money from political action committees and others began flooding into the state.

Now, with Election Day fast approaching and buyers still clamoring for spots, the station?s sales staff is increasingly frazzled as it tries to squeeze still more political commercials into an already saturated schedule.

?As I keep telling my sales manager, it?s just 14 more days,? Nick Matesi, KKTV?s general manager, said recently about the airtime crunch. ?I don?t want to cry about it, but it does present some challenges. It?s just very, very tight.?

The 2014 midterms, with control of the U.S. Senate up for grabs, are turning out to be another bonanza for the owners of local television stations in closely divided states.

Driven in part by unprecedented advertising by super PACs and other groups that aren?t allowed to coordinate with candidates, total spending in the midterm races is now projected to top $4 billion nationwide, making it the most expensive midterm election in history.

The surge in political spending is cyclical and can be fickle, but it has become an important part of the revenue stream for broadcast companies ? as much as a 30 percent increase in election years ? and it?s affecting how they operate. Even though more political advertising is landing on cable channels and online sites, well more than half of the spending is still flowing to local stations, analysts said.

?All the digital guys say TV is a dinosaur. Well, dinosaurs roamed the earth for millions of years,? said Meredith McGehee, policy director at the Campaign Legal Center, a group that has pushed advertisers for more disclosure.

TV stations are counting on the revenue continuing for some time. When Tribune Media Co., Sinclair Broadcast Group Inc. and other companies went on station-buying sprees last year, they snapped up political cash cows in battleground states such as Colorado and Iowa.

In Des Moines, Tribune?s WHO-HD this year added an hour of local news at 4 p.m., in part to create more space for political spots. Tribune is the former parent company of the Los Angeles Times and the Chicago Tribune.

?We changed our business model a little bit to accommodate the political demand,? said station manager Dale R. Woods. About 70 percent of all commercials are now political, he said ? and 70 percent of the station?s political ads are purchased by outside groups.

Gannett Co.?s broadcasting arm is watching trends and anticipating more political advertising in future races in places like Texas, assuming a growth in Democratic voters makes the state more competitive, company President David Lougee said.

Last week, Gannett reported that its political revenue was up 31 percent from the last midterm election, helping to drive a substantial increase in the company?s profit. The company owns or operates 46 stations.

Digital advertising is expected to attract about $271 million this year, up from $159 million in 2012, according to a report by Borrell Associates, a consulting firm. In 2016, the company is predicting political advertisers will spend nearly $1 billion online.

?If you?re a broadcast guy, you sure do feel good. They?re feeling on top of the world,? said Corey Elliott, Borrell?s director of research. ?But better watch your backs, boys.?

Others said incessant television attack ads won?t end any time soon.

Nearly 70 percent of voters in the 2010 midterm elections were over 45, and they watch television a lot more than streaming video, analysts said. Digital works well for snaring contributions, but television works better for driving people to the polls, said analyst Brian Wieser, who studies advertising at private equity firm Pivotal Group in Phoenix.

Even when the market is saturated, candidates or groups believe they have to keep spending when their opponents are, he said: ?There?s a method to the madness.?

During a panel last month sponsored by broadcaster trade group TVB, Republican and Democratic political consultants said digital and cable are part of their strategies, but agreed that they still put their faith ? and most of their clients? money ? in broadcast ads.

?It is, by and large, a TV world still,? said Brad Perseke, a partner at GMMB Inc., which created and purchased advertising for President Obama?s 2012 campaign.

Using data helps to better target the ads, he said, ?but it?s still television. If you want to win, it?s television.?

Source: MCT Information Services