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Senate Committee Considers Cutting Campaign Ad Prices - Broadcasting & Cable

Senate Committee Considers Cutting Campaign Ad Prices

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Broadcasters got an earful on Wednesday at a Senate Rules Committee hearing on a campaign finance reform bill.

The bill would cut into the hundreds of millions broadcasters election-related advertising coffers and--according to broadcasters-- cut down on their investment in public service and unfairly favor one type of political speech over another.

The Fair Elections Now Act--co-sponsored by Dick Durbin (D-Ill.) and Arlen Specter (R-Pa.) and supported by Barack Obama (D-Ill.)-- is part of a push for publicly-funded elections and would help candidates who agreed to take only small public contributions to afford the TV ads they will need to get elected.

Candidates are currently charged the lowest unit rate for TV ads, but the bill would give them a extra 20% discount in the run-up to election day. The bill would also extend the lowest unit rate and discount beyond candidates to ads from political parties.

The legislation would also prevent broadcasters from preempting those ads. Nonpreemptible ads command a higher price than the lowest unit rate price the politicians are getting so broadcasters would be getting nonpreemptible spots at preemptible rates--plus the 20% discount near election day.

In addition to providing lower rates to candidates than they do to others, broadcasters would be taxed 2% of their gross advertising  revenues to underwrite a political advertising voucher system that would help underwrite ad spending by federal candidates and parties.

Saying legislators simply could not raise money fast enough to keep up with the cost of campaigns, Durbin conceded it was a financing system incumbents had created,  but that it was time to change the rules

He agreed with Committee Chair Dianne Feinstein that getting control of TV advertising costs was key. He said that the gold standard for political ads used to be a 30-second spot in the local news or a Thursday night ad in a must-see show. Since then, Durbin said,  broadcast TV ratings had gone down and the price of ads had gone up. According to Durbin, the current system is essentially "creating a trust fund for TV stations" which will receive millions he has collected from "generous contributors."

Durbin continued to say that the airwaves belonged to the public, and he didn't think it was too much to ask that those airwaves be used to help fix the campaign financing system.

There were no broadcaster witnesses, but National Association of Broadcasters President David Rehr sent a letter  to Feinstein Wednesday making the case against the bill.

At the hearing on the bill in the rules committee Wednesday, Specter called it a first step in reducing the impact of money on elections. But in his letter, Rehr called it "favoritism" towards some political speech and speakers that "contradicts settled First Amendment principles."

Durbin called it a "historic bill," saying that the current system of financing campaigns is indefensible and unsustainable. He also said good hardworking members of Congress had to spend too much time with rich people and special interest groups-- which gives them an unrealistic sense of the world.

Rehr suggested that the bill would cut into the money broadcasters could invest in public service. ""We raise billions of dollars annually to the benefit of our local communities and charitable organizations that serve them."

Durbin pointed out that in 2002, the average cost of the 10 most competitive Senate races was $17 million. Four years later, that cost was double that, to $34 million.  Durbin said that before TV stations start arguing that TV stations need the money to stay in business, he pointed out that the average profit margin of stations in the top 10 markets was 46%.

In his letter to Committee Chair Dianne Feinstein, Rehr said that it was "unfair for government to single out broadcasters to shoulder these burdens."

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