• by John Gaffney , November 12, 2002

Last week’s Republican sweep of the House and Senate will have a bipolar affect on the media business, according to Adonis Hoffman, EVP and senior counsel of the American Association of Advertising Agencies.

On the plus side, legislation that could tie up ad spending on pharmaceutical products could be less likely to happen. On the negative side, the swagger that comes with control of the executive and legislative branch will add to the momentum the FCC is bringing to deregulating media ownership rules. Hoffman sees the FCC changes as the most problematic.

“We hope to insert some real practical perspective in this debate,” Hoffman said. “We have had some initial conversations with the FCC. We’ve laid out some issues for them to seriously consider. We are concerned that the FCC does not truly understand how the advertising marketplace really works.”

The AAAA Media Policy Committee is in the process of filing responses to the 12 reports on media ownership the FCC issued last month. That response will include in-depth economic analysis of the effect deregulation will have on consumers and on the ad market. Fewer media companies mean less room to negotiate “fair prices for agency clients,” Hoffman said.

Pharmaceutical marketing restrictions was a Democratic cause in the last Congressional session. Controls on prescription drug costs for the elderly will show up early on the legislative agenda, but Hoffman says the key will be in the focus of the debate. If the debate stays centered on drug costs for the elderly, the media business should be safe from drug cost marketing controls. Last year, the debate strayed toward restricting marketing costs in the belief that drug companies would apply those costs to lower prices. Hoffman says that belief is misguided. He expects the debate will be more centered this time.

Finally, a general atmosphere of business deregulation, Hoffman says, will help agencies conduct business with less interference from agencies like the FTC and FDA.

“You will see a decidedly less regulatory focus and less likelihood of Congress to challenge the FDA or FTC,” Hoffman said. “The FTC will focus on enforcement truth and fairness in advertising. I don’t see them being more ambitious than that.”