August 7, 2012

Political Advertisements Advance The Media’s Profits

Political Advertisements Advance The Media's Profits
Super PAC ads aren't just annoying...they make a lot of money for stations.

Industry analysts are predicting that upwards of $3 billion will be spent on political advertisements in the 2012 election. This is an increase of more than $500 million from 2008. But who will benefit the most from this cash infusion? Not President Obama. Not even Mitt Romney. Rather, the National Association of Broadcasters, a lobbying group that proclaims itself “the voice for the nation’s radio and television broadcasters.”

A new FCC rule could provide the public with real-time data about who is profiting from the vast Super PAC spending. The commission ruled in April that affiliates of CBS, NBC, ABC, and Fox in the nation’s biggest markets must post their revenue from political ads online for the public to see. While such records are currently made public, they are kept in paper form at each station, essentially making them inaccessible.

Although TV stations are required by law to offer discounted rates to candidates seeking airtime to run their advertisements, they are not required to offer discounted rates to the groups that are doing most of the spending, super PACs. As a free-market society would have it, competition breeds profit. With limited airtime available for campaign ads in an election year, many groups are vying for the position of having their ads reach the largest media markets in highly contested political races. Thus, as competition increases, the cost of advertising also increases, and it is no surprise that NAB supported this style of political campaigning. As Rolling Stone illustrates:

The more cash that chases limited airtime, the more the ads will cost, and the more politicians must lean on deep-pocketed patrons. In short, the dirtier the system, the better for the bottom-line at TV stations and cable systems. According to an analysis by Moody’s, political ads are expected to account for as much as seven cents of every dollar broadcasters earn over the full two-year election cycle for 2012.

The new FCC rule is scheduled to go into effect later this month. However, the NAB and their GOP allies may be able to delay the implementation of it until after the 2012 election. Bill Allison of the Sunlight Foundation, an organization focused on transparency in political spending, characterizes the election ad spending as “Black Friday for broadcasters,” adding, “It’s just a huge bonanza.”