10.21.2009 03:00 PM
$3.3 Billion in Political Ad Spending Predicted
NEW YORK: Political
ad spending could buck a trend this year and rise 11 percent on the power of
hot-button issues. Most TV stations have expected fourth-quarter political ad
spending to be down from last year’s traditional windfall from a presidential
election. Wells Fargo analysts say spending in the segment could $3.3 billion
this year, up 11 percent from last year when many media outlets benefited from
Barack Obama’s presidential race with John McCain. Broadcasters are expected to
reap $2.1 billion of the total.
“In 2010, a non-presidential year, we will see the election of 37 governors, 38
senators, and every member of the House of Representatives, as well as
substantial debate on hot-topic issues such as health care and taxes. Although
2010 political advertising expenditures are not predicted to reach the record
level of 2006--$3.4 billion--we still expect it to be significant,” Wells Fargo
researchers wrote in an update on political ad spending.
Issue advertising alone could approach $1 billion, given the fight over health
care, immigration and tax reform. State ballot measures are also expected to
play a key role, particularly in California. Television broadcasters with the
largest exposure to California political ad spending include CBS, ABC and
Local stations are expected to take $2 billion, or 61 percent of the total;
networks, $50 million, or 2 percent. Cable TV will take $150 million--around 5
percent, for a total of 67 percent across all of TV.
Gray Television is said to have the most consolidated revenue exposure to all
hotly contested races, at 37 percent.
Disney’s ABC stations have the most TV- and radio-specific exposure, at 63
“However, given that these two segments comprise only 3 percent of Disney’s consolidated
revenue, political is unlikely to have a significant impact on total company
results or estimates,” the Wells Fargo team said.
Other TV companies with significant consolidated revenue exposure to the hottest
political races of 2010 include Nexstar at 32 percent and Belo at 22 percent.
“Of the diversified media groups, CBS has the most consolidated revenue
exposure to the co1ntentious political races,” the analysts said.
Diversified media companies have significant segment-specific revenue exposure
to the most hotly contested political races--with Disney at 63 percent; News
Corp. at 47 percent of TV-segment revenue and CBS at 46 percent of TV-segment
and 58 percent of radio-segment revenue. But political doesn’t typically affect
those company’s bottom lines.
“That being said, CBS has the most consolidated revenue exposure of the groups
at 10 percent, likely due to its portfolio of assets,” the analysts said. “CBS
generated $160 million of political revenue in 2006 and $140 million of
political revenue in 2008, and we are currently forecasting political revenue
of $170 million in 2010.”
(Image by Jeremy Rock)