Election 2012 Brings Billions To TV Coffers


Despite the uncertain economy, one revenue stream that local TV can count on next year is political money -- and there's likely to be a record amount of it, according to Kenneth Goldstein, president, Kantar Media CMAG.

Speaking at the TVB's Forward Conference in New York Wednesday, Goldstein predicted that stations will reap at least $2.5 billion in political advertising in 2012. And that's at the low end of Goldstein's prediction. If all the stars align properly, local TV spending could reach $3.3 billion. By comparison, the previous record for TV spending was $2.4 billion, set in 2010.

Political spending, Goldstein added, is "a recession-proof business." Thus, even if the worst fears about the near-term economy are realized, the campaign dollars should still hold up well, he said.

Goldstein pointed to several factors boosting fund-raising efforts in the current campaign cycle, including the Citizens United Supreme Court decision that loosened spending restrictions on political action committees.



The ceiling on individual donations to federal candidates has also been raised to $2,500 from the previous $2,400. And when contributions to all sources are factored in, such as political parties and PACs, individuals can contribute up to $1,500 more in 2012 than they could in 2010.

Also, in 2008, Republican Candidate John McCain accepted federal campaign financing in lieu of private donations and was outspent several-fold by the Obama campaign. "It is inconceivable that that will happen again," Goldstein said, adding that it's very likely the Republican candidate this time around will have $200 to $300 million to spend, versus the $80 million that McCain had in the last presidential election.

Meanwhile, next year's political spending will translate to local station sales growth of 10% to 13%, analysts at the TVB conference said. But consumer confidence in the economy, which has been trending downward of late, could be a spoiler.

According to Mike Simonton, managing director, Fitch Ratings, recent research has shown a "close correlation between consumer confidence and retail sales." He added that the direction the economy takes could hinge on the ability of consumers to "adjust to the reality of a weaker economic climate and move forward."

While TV stations have a political spending cushion to rely on next year, another relatively new stream of dollars -- fees from cable operators for the right to retransmit their signals -- may not do much to boost their revenue coffers long-term, said Nomura Securities media analyst Michael Nathanson. That's because the TV networks are pressuring stations to surrender most of those fees to help pay for expensive programming.

Nathanson predicted that "seventy-five cents of every dollar" that stations earn in retrans fees "could end up back at the networks." That may be justified, he said, noting that the network TV business is a "low-digit business" in terms of profit margins. The alternative for stations -- no network programming -- would clearly hurt their viewing levels and financial valuations.

Bob Liodice, president and CEO of the Association of National Broadcasters, told TVB attendees that marketers believe in the long-term future of the TV medium.

"TV is alive and well and flourishing," he said. He also quoted a litany of top marketers praising the platform, particularly when it's used in combination with other channels, like mobile and the Internet. "I believe television is the growth medium of the future," Liodice said.

There are ways to make it grow even faster, Liodice said. Scaled addressability, where households receive different ads depending on product and message relevance, "will drive more dollars," he said. For marketers, addressability is "the holy grail."

While average commercial minute ratings are an improvement over program ratings, Liodice said marketers would rather have a system that provides audience estimates for specific commercials. "That's our goal," he said.

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