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Right Place, Right Time

Geography brings a spending windfall for select stations in this election year 9/19/2004 08:00:00 PM Eastern

You won't hear Bill Bauman joining the outcry over the nasty tone of the
political campaigns. He's general manager of WESH Orlando, Fla., which is
raking in cash.

The Hearst-Argyle–owned NBC affiliate is in the middle of not just a
presidential swing state but one where Democrat Bob Graham's pending retirement
has spurred big spending to fill his Senate seat. As a bonus, trial lawyers and
doctors are warring over a ballot initiative that would force physicians to
tell patients more details about past accusations of malpractice.

Spending on political ads totaled $20 million in Orlando during the 2000
presidential race, and local stations predict they'll easily beat that number.
"I see it at least 50% higher for the market," Bauman says. "We're going to
have a huge campaign."

Bauman's good fortune is being repeated at stations across the country,
at least those in the 17 states the Bush and Kerry presidential campaigns have
targeted as "swing" states. The candidates, their political parties and
surrogate "527" soft-money groups are concentrating hundreds of millions of ad
dollars into those states, leaving station managers in other states
disappointed at the dearth of ads. A number of hot local and state races, say
analysts, plus ballot initiatives could help drive political spending to $1.6
billion this year, with around 85% of that going to TV stations.

"This has been an extraordinary year," says Fred Reynolds, president of
Viacom's TV-stations group, which includes both CBS and UPN O&Os." In past
years, he says, presidential campaigns have typically booked time a week or so
ahead, preserving their flexibility. "In August, they started buying through
October," he says. "I'd never seen that before."

The political surge is blocking other advertisers who want to get on the
air. Want some weeknight spots in St. Louis this month? Forget it, only daytime
and weekend inventory is available on the major stations, says Initiative Media
Director of Local Broadcast Strategy Janice Finkel Greene. In Milwaukee, she
says, only sports and late fringe are available for September. Other periods
"are not available at any price" and are almost gone for October, too. Colorado
Springs, Colo., is "completely sold out," owing to a U.S. Senate run by Coors
Brewing heir Peter Coors. "Unlimited spending," she says.

Viacom appears to be the single biggest beneficiary of all that
political spending. A study of spending patterns this year concludes that the
Viacom stations will collect more political-ad dollars than any other
broadcasters. Sanford Bernstein media analyst Tom Wolzien examined how large
station groups' portfolios were distributed among 16 states where polls show
the presidential race is close. That includes states like Ohio, Wisconsin,
Colorado, Florida and Arizona. He also looked at which of those stations
attracted the heaviest spending early in the political season.

Wolzien found Viacom's CBS stations blessed with favorable geography,
such as Pennsylvania and Michigan, plus strong newscasts. Viacom was followed
by Hearst- Argyle, NBC and ABC.

Cashing in requires more than being in the swing states, though; a
broadcaster has to run the right kind of stations. The broadcaster with the
strongest presence in swing states is Fox Television. With duopolies in key
markets like Tampa, Fla.; Orlando; and Minneapolis, plus single stations in
other important cities, the Fox station group potentially reaches 18 million
viewers in swing states. That's 80% more than Viacom.

But newscasts on Fox O&Os are typically weak, so the company lags
when politicians are seeking out voters. Fox's prime time audience also skews
younger than most political ads typically target, since older crowds are more
likely to vote.

Sinclair Broadcasting faces a similar problem. Wolzien pegs the
stations' reach at 6.2 million swing-state viewers. That's three times as many
as Belo Corp. But Sinclair stations have weak local newscasts and has been
dropping news in some markets. Also, Sinclair's portfolio is heavy with
young-skewing WB stations.

"It's a matter of being in the right part of the right state with the
right newscast," Wolzien says. "Once you reach the newscast conclusion, the
rest pretty much falls out."

Viacom's Reynolds enjoys riding the election-spending spree, but he's
focusing on his stations' broader business. Says Reynolds, "It's been going all
year long, but on Nov. 2, it's 'The End.'"

Who's spending
Source: Sanford Bernstein;
Presidential candidates $386.1M
Party committees $353.8M
Soft-money committees (527s) $207.0M
PACs $188.8M
House candidates $223.76M
Senate candidates $212.7M
Total $1.6B
Who's receiving
Local TV gets the largest share, by far
2000 2002
Source: Sanford Bernstein analysis of CMR data
Spot TV 83% 85%
Local radio 6% 6%
National spot radio 5% 5%
Newspaper 4% 3%
Outdoor 2% 2%


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