TV Stations to Win Political Ads Thanks to Supreme CourtSarah Rabil
The owners of local TV stations such as CBS Corp. and Sinclair Broadcast Group Inc. may see more advertising money flowing in during this year’s election season, thanks to a ruling from the nation’s highest court yesterday.
A divided U.S. Supreme Court struck down decades-old limits on the total amount of money that donors can give to federal candidates and parties, dealing a fresh blow to efforts to curb the role of money in American politics. The ruling may end up funneling more dollars into TV commercials plugging candidates.
“The big question is, will this result in incremental spending on political advertising? And I think the answer is yes,” said Paul Sweeney, an analyst for Bloomberg Industries. “Political advertising has become a huge business for local television stations.”
Campaigns spent $2.9 billion on local TV commercials in 2012, more than any other outlet, according to the Television Bureau of Advertising. The biggest beneficiaries will be stations in swing states like Florida, Ohio and Illinois, or where there are contested seats, Sweeney said. Political ad spending has been increasing, and companies like Gannett Co. and Tribune Co., which have purchased local stations, will benefit, he said.
Broadcast TV stations may generate $2.5 billion in political ad revenue this year, which doesn’t involve a U.S. presidential race, according to projections from research firm SNL Kagan.
Voting 5-4 along ideological lines, the court said the caps violated the free speech rights of Shaun McCutcheon, an Alabama Republican official seeking to give candidates, parties and political committees more than the $123,200 maximum. The court stopped short of undercutting a 1976 ruling that allows caps on contributions to individual candidates.
It was the court’s biggest campaign-finance decision since the 2010 Citizens United ruling allowed unlimited corporate spending.
New York-based CBS, the owner of 30 broadcast TV stations and 126 radio stations, rose as much as 1.2 percent yesterday after the decision was announced. The shares ended the day up 0.3 percent to $63.35.
Sinclair, which owns, operates or provides services to 149 TV stations in 71 markets, added 0.6 percent to $27.16 at the close in New York yesterday -- rebounding from a decline earlier in the day. The Hunt Valley, Maryland-based company’s political revenue in 2012, the most recent election year, was almost $97 million, according to a regulatory filing.
Sinclair has been on an acquisition spree over the last year to add to its stations, which bolsters ad sales and helps in negotiations for fees from pay-TV operators.
The company was among station owners impacted this week by the U.S. Federal Communications Commission’s decision to tighten rules on broadcast owners controlling more than one TV station in a city. Sinclair is among companies that must alter existing arrangements to comply.
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