A Candidate for Growth

With a Wall Street Journal/NBC poll showing that nearly 50 % of U.S. voters are considering choosing someone other than President Bush and with both political parties bent on capturing more House and Senate seats, next year's elections could feature some hotly contested races. That means the potential for another windfall of political cash for local TV outlets.

Election-law changes and a pending Supreme Court decision have thrown some uncertainty into how much election year spending could grow next year. The court is expected to rule as early as next month on the constitutionality of the Campaign Finance Reform Act, which bans issue advertising, a large source of TV revenue, during part of the general-election season.

While issue advertising could be trimmed, candidate spending could reach a new high, thanks to decisions by former Vermont Gov. Howard Dean and Sen. John Kerry to join President Bush in opting out of federal funding for the primaries. Federal funding limits each candidate to $45 million in primary season spending. Bush aims to raise between $170 million and $200 million to try to influence voter opinion during the primary season, even though he is running unopposed for the Republican nomination. Dean's campaign has floated the idea that it could match the Bush war chest if 1 million supporters donate as little as $200 to Dean.

Local broadcasters, who bring home the lion's share of political-advertising revenue, expect revenues as high as two years ago. In 2002, candidates spent $6.98 million, according to the Television Bureau of Advertising, although some financial analysts and industry sources put the total at more than $1 billion.

Also keeping their eyes on the prize are cable operators, determined to ring up a bigger share of the action this time around. "We're making it a very high priority for 2004," said Larry Fischer, president of Time Warner Cable Advertising Sales.

Last year, political advertising amounted to about 6% of cable's total national spot revenues. Operators hope to double that percentage next year.

Time Warner and other MSOs are putting their money where there mouths are. National Cable Communications, the rep firm owned by Comcast, Time Warner and Cox, hired a consultant this year to open doors at political ad agencies. NCC has also assembled a Washington-based political sales team, and has been running ads in political magazines and making presentations to the campaigns.

Along with these efforts, operators have been standardizing the way they package time for political advertisers, making it easier for agencies to do business across multiple markets. "We created a political manual outlining standards and best practices we can put into effect at our systems," said Hank Oster, senior vice president of Comcast Advertising Sales. "Prior to this, the industry was all over the place, with different rate cards, deadlines, requirements, terminology, forms, etc. If you're a political advertiser and you have 35-50 different things coming at you from different markets, it doesn't make it easy to buy."

Comcast will make the manual available to other cable operators, Oster said, in an effort to further spread the standardization.

The effort that operators are putting into developing more political business is aimed at helping the industry catch up in an area where it has lagged behind, notes Kevin Barry, vice president of local sales at the Cabletelevision Advertising Bureau. "Political is a sore point for cable operators, who feel they should be getting a much bigger percentage of the business. Cable gets 50% of the audience in prime time but only 5% of national spot business, and the ratio is even worse when it comes to political advertising."