Media Companies Giddy Over Election Spending

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Analysts say political ad spending this mid-term election year could hit a record $3 billion. That's a hefty sum going into the coffers of media outlets, creating a boost in revenues and a momentary reprieve from the ongoing decline in advertising that's plagued the industry.


And let's go from struggling homeowners to struggling media companies. Many of those companies, especially those in television, are getting a boost this election season. All sorts of records are being broken when it comes to spending on campaign ads. NPR's Sarah Gonzalez reports.

SARAH GONZALEZ: One of the nation's biggest media companies, Gannett, recently reported a 26 percent increase in TV ad revenues. About 20 percent of the earnings came from political advertisements.

Evan Tracey is president of Campaign Media Analysis Group. He says Gannett's earnings are not surprising.

EVAN TRACEY: They have a lot of stations in a number of these really hot states right now. So that's going to obviously impact the bottom line of a number of broadcasters.

GONZALEZ: California is expected to see the most political ad spending, but Tracey says many states will be touched by political dollars this year.

The elections are expected to generate about $3 billion in political and issue advertising. That's 300 million more than the last midterm election season, and more than in the 2008 presidential election year. Thirty-seven governor's races and hundreds of seats in the House and Senate are up for grabs. Tracey says high-profile campaigns are part of what's driving ad revenue.

TRACEY: The largest factor right now is just the sheer amount of competitiveness going on in the various races around the country this year. You have a lot of incumbents that are running scared, and when you have that environment, they tend to spend more and spend earlier.

GONZALEZ: Tracey says a lot of states have also adopted early voting and vote- by-mail, which means candidates are advertising over a longer period of time. But the biggest impact may be the recent Supreme Court decision that struck down laws restricting corporate and labor contributions to campaigns.

That decision will effect political ad revenues long-term, says media analyst Laura Martin. She's with the investment banking firm Needham and Company.

LAURA MARTIN: The reason that the spending is up so much in this midterm election is because of these structural changes. We would expect this to reset the bar forever at a higher level compared to historical spending.

GONZALEZ: Media companies will get a sense of what that bar will be when the fourth quarter earnings come out after the election. One company, CBS, is already anticipating a 30 percent increase in political ad revenue compared to the last midterm election season. It would be a CBS record.

Martin says the majority of political advertising dollars goes into television, but she says even companies that aren't running political ads will get a boost.

MARTIN: It becomes very expensive to compete with the political advertising. So those advertisers that are normally in the market that aren't political look around and they say I'm going to go and advertise on radio. That then benefits the other media in the local market.

GONZALEZ: And with all the high-profile races, the media companies might be the biggest winners this election season.

Sarah Gonzalez, NPR News.


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