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Local TV's Best Friend? The Kochs

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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The Koch brothers are planning to spend $889 million on the 2016 political campaign. There are those who see this as a terrible subversion of democracy. There are others, among them Bloomberg View’s Jonathan Bernstein, who see it as a big waste of Charles and David Koch’s money.

Then there are the owners of local television stations, who can be forgiven if they see the partisan zeal of the Kochs and other politically engaged billionaires as a great gift from heaven, or at least from the U.S. Supreme Court. That’s because, despite the rise of new digital organizing techniques and the persistence of old-style phone banks and door-to-door efforts, political spending in this country mainly means one thing -- buying airtime on local TV.

Political ad spending on local TV hit a record $3.1 billion in 2012, according to the trade association TVB, more than double the amount spent in 2008. Spending during the 2014 midterms likely fell well short of that, but still was enough to markedly lift results at big owners of local stations.

At Gannett, which has 46 stations, political TV advertising brought in $92.4 million in the fourth quarter, helping drive a 117 percent gain in broadcast revenue. Sinclair, which has the most local stations of any company -- 167 in 79 different media markets -- reported political ad revenue of $80.3 million for the fourth quarter, or 14 percent of net broadcast revenue. Some of that political spending just crowded out other ads, but Sinclair executives estimated that 75 percent to 80 percent was “accretive” -- meaning, basically, that it’s gravy. Here’s the long view on Sinclair’s political ad revenue (these gains are driven in part by acquisitions, but political ads also represent a bigger share of overall ad revenue than they used to):

Other local-TV powers such as Media General, Tribune Media, Gray Televison and Nexstar Broadcasting will be reporting results in the next few weeks that are sure to show similar boosts from politics. And the 2016 elections, with spending on the presidential race alone estimated to surpass $5 billion, will almost certainly be a bonanza for local TV.

This is happening in a broader ad climate that hasn’t been great for local media:

Newspaper ad revenue has been hit the hardest, of course, and almost nobody buys political ads in newspapers nowadays. Local TV has done better for a variety of reasons, not just because of political ads. In a generally weak advertising environment, though, the spending boom led by the Koch brothers and enabled by a series of court rulings has helped a lot.

When you consider that, in lots of countries, political airtime is something that broadcasters have to provide for free, this really is a remarkable situation. It would be lovely if local TV stations used this money to improve their news operations and do a better job of covering elections, and there are actually some small signs that this is happening. TV news departments saw budget increases in 2014 for the first time since 2007; Sinclair executives said in their earnings conference call this week that they plan to spend $40 million improving news and sports offerings in 2015. But in general, local TV news operations don’t amount to much. The big news-gatherers have always been the newspapers. And while several of the biggest TV-station owners got their start as newspaper companies, they’ve been spinning off print to focus on TV (Media General did this in 2012, Tribune last year, and Gannett will soon).

The money seems to be going instead into acquisitions (the Pew Research Center has been doing interesting work on the link between political spending and TV consolidation) and payouts to shareholders (Sinclair spent $194 million on buybacks and dividends in 2014). Those shareholders, in turn, should be thanking the Koch brothers.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Justin Fox at

To contact the editor on this story:
James Greiff at