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Awaiting the '04 Windfall

New Wolzien study predicts $1.6 billion in campaign spending next year 12/07/2003 07:00:00 PM Eastern

New Hampshire broadcaster Jeff Bartlett sees the 2004 presidential election shaping up to be another boon for his station, thanks to a crowded Democratic field, a president with slipping approval ratings, and the unceasing creativity of campaign financiers.

But it's not only Bartlett's WMUR-TV Manchester and other bellwether stations in New Hampshire and Iowa that are expecting a windfall of political advertising. A new study by securities analyst Tom Wolzien, of Sanford C. Bernstein & Co., pegs TV stations' take from the 2004 election cycle—presidential, congressional and gubernatorial races—at $1.6 billion.

Where broadcasters once fretted that a new campaign-finance-reform law would cut political revenue, the study says they can now look forward to a year that is 60% bigger than 2000 and 33% bigger than 2002.

"There's more advertising than we expected," Bartlett says. "We've been a little surprised." His ABC affiliate has been a prime target of spending on the state's Jan. 27 primary, but he won't disclose the amount taken in so far.

According to Bartlett, ad buys in New Hampshire have surged thanks to Howard Dean's success with Internet fundraising and his surprising lead in the polls, which is forcing John Kerry to spend big bucks early.

Decisions by Joe Lieberman and Wesley Clark to ignore Iowa's Jan. 19 caucus in order to make a splash in New Hampshire also is swelling WMUR-TV's coffers.

But there's more to the strong showing than the idiosyncrasies of the New Hampshire primary. "The country is increasingly polarized," says Wolzien, "and campaigns are finding ways to offset restrictions set by the campaign-finance-reform law."

Other research released last week underscores Wolzien's. The University of Wisconsin Advertising Project, which tracks the volume of political ads, says Democratic presidential candidates have already spent $3.8 million to air 10,800 spots. In Des Moines alone, candidates from both parties have aired 4,500 ads, compared with 850 in the comparable period of 1999. In New Hampshire, the Democrats have spent $1.8 million on 3,500 spots. Overall, the study says, candidates have bought 12,700 ads in 2003 in the top 75 markets vs. 4,834 in 1999.

According to Wolzien, advertising during the upcoming presidential-campaign year will push national spot advertising up 17% over 2003. National spot buys allow campaign strategists to target tight races and swing states rather than wasting money on markets that party candidates have locked up or are locked out of.

Wolzien predicts television advertising overall will climb 9.1% after estimated 4% growth in 2003. Without campaign spending, TV revenue would be up just 6.4%.

The best in position to benefit, Wolzien says, are network O&Os and large affiliate groups with big local news operations that attract the older-skewing audiences more likely to vote.

So far, the big take is from Democrats, with a field of nine candidates. Six of those are spending big: Dean, Kerry, Lieberman, Clark, Richard Gephardt and John Edwards.

In Iowa, all but Lieberman and Clark have spent large amounts at WHO-TV Des Moines, according to James Boyer, general manager of the New York Times Co.-owned NBC affiliate.

He won't reveal how much they spent but said it was far above what was bought by the GOP for a brief but controversial flurry attacking the Democrats' stand on fighting terrorism. The Republican ad, aired on the eve of the Nov. 24 Democratic Iowa debate, "was not a saturation campaign," he says.

Continued heavy spending isn't guaranteed, Wolzien says. "If the Democratic nomination is wrapped up by April or they end up with a weak candidate, a lot of this spending won't happen."

What's clear, though, is that campaign-finance reform won't be the big drag once predicted. The law went into effect after the 2002 congressional elections and is now being reviewed by the Supreme Court. It bans unrestricted "soft-money" donations to political parties and ads close to a primary or election by corporations, unions, or non-profit organizations if they mention candidates' names.

Some of the candidates are refusing federal matching funds, allowing them to reap more from individuals. Also, non-profit organizations are raising more for issue ads; a big plus for contributors is that they don't have to reveal donors' names if the ads don't mention candidate names. "Political ad money should flow to television stations without interruption," Wolzien says.

Jan Baran, an election-law attorney for Washington firm Wiley, Rein, & Fielding, isn't as sanguine that the money will keep pouring in. He says it remains to be seen whether non-profits will raise the $400 million to $500 million necessary to offset the soft-money ban. Besides, he says, unions, corporations and interest groups are likely to switch to telemarketing or direct-mail campaigns rather than create new issue-only ads to comply with the ban on third-party broadcast ads mentioning candidate names 30 days before a primary and 60 days before a general election. "Once the blackout kicks in, their ads are likely to not stay on the air," Baran warns.

Where the campaign dollars Will Go
Estimated ad spending, in millions
President
State Primary General Senate/House Governor & Other Total
Source: Sanford C. Bernstein & Co. analyst Tom Wolzien
Alabama $2.7 $5.3 $15.5 $1.3 $24.7
Alaska $1.8 $2.6 $0.2 $4.6
Arizona $2.5 $11.9 $14.2 $1.2 $29.8
Arkansas $1.5 $7.2 $8.5 $0.7 $17.9
California $17.8 $32.2 $101.7 $8.3 $159.9
Colorado $10.7 $16.1 $1.3 $28.1
Connecticut $2.4 $4.1 $13.5 $1.1 $21.1
Delaware $0.5 $1.8 $1.6 $2.0 $5.8
Florida $9.7 $32.2 $55.5 $4.5 $102.0
Georgia $4.4 $8.8 $25.0 $2.0 $40.2
Hawaii $2.3 $3.4 $0.3 $6.0
Idaho $1.0 $4.8 $5.6 $0.5 $11.8
Illinois $7.7 $12.3 $44.2 $3.6 $67.8
Indiana $3.8 $6.4 $21.9 $14.1 $46.2
Iowa $8.4 $12.2 $1.0 $21.6
Kansas $3.5 $9.9 $0.8 $14.2
Kentucky $2.5 $4.7 $14.4 $1.2 $22.8
Louisiana $2.9 $10.7 $16.3 $1.3 $31.2
Maine $4.8 $3.1 $0.5 $8.3
Maryland $3.3 $5.9 $18.9 $1.5 $29.6
Massachusetts $4.4 $7.0 $12.7 $2.0 $26.2
Michigan $20.3 $20.1 $3.2 $43.6
Minnesota $11.9 $11.5 $1.8 $25.3
Mississippi $1.6 $3.5 $4.7 $0.8 $10.6
Missouri $3.8 $13.1 $21.9 $14.1 $53.0
Montana $0.7 $1.8 $1.9 $2.4 $6.8
Nebraska $1.1 $2.9 $3.3 $0.5 $7.9
Nevada $6.0 $5.6 $0.5 $12.0
New Hampshire $0.9 $4.8 $5.3 $3.4 $14.4
New Jersey $5.2 $8.8 $15.1 $2.4 $31.5
New Mexico $1.0 $6.0 $2.8 $0.5 $10.2
New York $11.1 $18.2 $63.3 $5.2 $97.7
North Carolina $4.7 $8.8 $27.1 $17.4 $58.0
North Dakota $1.8 $2.6 $1.7 $6.1
Ohio $7.6 $23.9 $43.6 $3.6 $78.7
Oklahoma $2.0 $4.1 $11.4 $0.9 $18.5
Oregon $2.5 $8.4 $14.2 $1.2 $26.2
Pennsylvania $8.0 $25.1 $45.7 $3.7 $82.4
Rhode Island $0.7 $2.3 $1.9 $0.3 $5.3
South Carolina $2.2 $4.7 $12.9 $1.1 $20.8
South Dakota $0.5 $1.8 $2.9 $0.2 $5.4
Tennessee $3.4 $13.1 $9.9 $1.6 $27.9
Texas $10.4 $19.9 $30.4 $4.9 $65.6
Utah $1.2 $2.9 $7.1 $4.6 $15.8
Vermont $0.5 $1.8 $2.7 $1.7 $6.7
Virginia $4.4 $15.5 $13.0 $2.1 $35.0
Washington $4.0 $13.1 $23.1 $14.9 $55.1
West Virginia $1.1 $6.0 $3.1 $3.9 $14.0
Wisconsin $4.2 $11.9 $24.1 $2.0 $42.3
Wyoming $1.8 $1.2 $0.2 $3.2
Washington, D.C. $0.3 $1.8 $1.0 $0.2 $3.2
TOTAL $150.0 $452.0 $849.0 $150.0 $1,601.0
November