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Reform may not hurt much

Torricelli cut-rate-ad amendment tanks; soft money safe for this year 2/17/2002 07:00:00 PM Eastern

Local TV stations can count on $750 million to $1 billion in political advertising to flow into their coffers in 2002, analysts say, after the House last week passed a surprisingly broadcaster-friendly campaign-finance-reform bill.

And even better news, the money will probably continue to flow in 2004.

Last Wednesday, broadcasters once again proved their power on Capitol Hill when the House voted 327-101 to strip language that would have required local TV stations to sell ad time to federal candidates at bargain-basement prices. The discount-ad language was sponsored by Sen. Robert Torricelli (D-N.J.) and added by the Senate last summer to the overall campaign-finance-reform package. That bill is authored in the House by Reps. Christopher Shays (R-Conn.) and Martin Meehan (D-Mass.).

Broadcasters already give politicians their lowest rate on campaign ads within certain classes of time: If politicians want to buy a non-preemptible spot during the 6 o'clock news, they pay the lowest rate available for that slot. Torricelli wants to change the rule so that broadcasters have to give politicians the lowest rate any advertiser has paid for the slot in the past six months, preemptible or no, meaning that broadcasters would have to sell politicians expensive October airtime for cheap July prices.

Although getting rid of the measure in the House was a huge victory for the National Association of Broadcasters (NAB) and its members, Torricelli is vowing to offer his amendment again.

Campaign-finance reform still could end up in a House-Senate committee, where the two bodies will reconcile their versions. There, Torricelli could fight to get his amendment in a final package that will have to be approved by both House and Senate before it is sent to the President for his signature. Reformers, including Senate Majority Leader Tom Daschle (D-S.D.), want to avoid that conference. If they are successful, the bill is unlikely to change substantially before getting to the president.

But broadcast lobbyists always thought their best chance of excising Torricelli's measure was before the House passed an overall bill. With such a decisive vote against the rate discount, it will be hard for the Senate to revive it.

Stripping the measure wasn't broadcasters' only win. The House also agreed to delay the bill's implementation until Nov. 6, so parties this year can spend all their "soft money"—the unlimited contributions that corporations and unions make to political parties. Last election, the national parties spent nearly $500 million in soft money, much of that on TV ads. Companies, unions and advocacy groups also can run all the "issue ads" they can afford.

"The soft-money ban is probably alive and well, and that is going to have an impact on broadcasters' businesses. But 2002 is okay, and, by 2004, the system will adapt itself," says Victor Miller, broadcasting analyst for Bear Stearns. "I think that, compared to the full 3% to 4% impact [on total local TV stations' revenue] we could have seen, we're probably talking about a 1% impact on the business. It's gone from a very serious issue to one that the industry can manage."

Two weeks ago, Miller estimated broadcasters would see $750 million in political ads this year. James Marsh, broadcasting analyst at Robertson Stephens, estimates it could be $1 billion, most coming in October.

But broadcasters may ultimately feel an impact from the overall soft-money ban—including a ban on using soft money to fund issue ads attacking candidates.

An increase in the individual-contribution limit from $1,000 to $2,000 and the fundraising prowess of President George W. Bush should help make up the difference in 2004, says Jan Baran, head of the election-law group for Washington law firm Wiley, Rein & Fielding.

"Bush is the all-time heavyweight champion of fundraising," Baran says. "The soft-money ban could eliminate $300 million in television advertising, but George Bush could single-handedly replace much of that."

On Feb. 12, though, Shays and Meehan said they'd allow three amendments to their bill, including one sponsored by Reps. Gene Green (D-Texas) and Richard Burr (R-N.C.) in effect allowing members to vote yes or no on Torricelli. That's all broadcasters wanted.

It improved the situation dramatically, but, only a few hours before the vote, the outcome was still unclear. In a speech Feb. 13, Rep. Fred Upton (R-Mich.) told broadcasters to call their members of Congress one last time because the vote would be close. But it wasn't. Even during the House debate on the floor, the ayes appeared to have it.

"This amendment says that, somehow, federal candidates are entitled to special privileges, special rates, special time on the broadcast waves of America, while other citizens are treated differently. Other people who want to speak in this country politically don't get those breaks. Just federal candidates? Come on," said House Energy and Commerce Committee Chairman Billy Tauzin (R-La.).

Rep. Neil Abercrombie (D-Hawaii) said that, if candidates paid less, local advertisers would wind up paying more: "What's going to happen is the local advertisers aside from me or aside from you are going to have to make up the difference. And I'm not going back into my district and telling people that are trying to make a living, especially after Sept. 11, that they've got to pay more so that people can listen to me."

"We're deeply appreciative," said NAB President Eddie Fritts, who added that retaining the Torricelli amendment "would have done serious damage to local broadcasters."

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