Political Ad Spending Will Fatten Broadcasters This Year

Midterm electionsRemember Sinclair Broadcasting Group (SBGI)? It's the owner of 58 TV stations that refused to air a 2004 Nightline tribute to soldiers killed in the Iraq War. During that same year, it ordered its stations to show a documentary critical of John Kerry, then the Democratic nominee for president. The Hunt Valley, Md., company, which has also raised questions about the authenticity of President Obama's birth certificate, now stands to benefit from the deluge of ads for the midterm elections.

According to SNL Kagan, Sinclair, which focuses on small and midsize markets, has the largest footprint of all independent station owners in areas with contested elections: 24 stations that reach an estimated 11.1 million TV households in 16 states. Earlier this year, Sinclair said it expected to earn in 2010 more than the $31 million it earned from political ads in 2006, the last nonpresidential year. Political revenues were $3.8 million in the second quarter, according to Sinclair's latest earnings press release.

The company expects to generate approximately $9.5 million in political advertising in the third quarter. In the fourth quarter -- when most election spending occurs -- Sinclair would "more than keep pace with the fourth quarter of 2006's $21 million," the report says.

"Treasure Trove for Broadcasters"

The Supreme Court's Citizens United decision in January, which held that restrictions on corporate election spending were unconstitutional is benefiting Sinclair and other broadcasters. Spending by independent groups is likely to have a big impact on November's midterm elections. Ads from these so-called 501c (3) groups are already flooding the airwaves in closely watched races such as Pennsylvania's U.S. Senate contest between Republican Pat Toomey and Democrat Joe Sestak.

"In 2010, we expect that the combination of political unrest, high-profile congressional and gubernatorial races and the Jan. 21 Supreme Court ruling that struck down certain laws restricting corporate and labor contributions to campaigns will lead to a political ad revenue treasure trove for broadcasters," says SNL Kagan Analyst Tony Lenoir in a statement.
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Though Sinclair remains as politically conservative as ever, it has lowered its public profile since 2004 when "it reached the height of corporate irresponsibility," according to Eric Boehlert, senior fellow at the liberal media watchdog Media Matters for America. He didn't expect Sinclair to discriminate between political parties running election ads because it's such a good business.

Money Will Rain on Radio, Too

In total, TV station political revenues may hit $2.5 billion in 2010, a 25% increase above 2006, SNL Kagan says. Stations owned by the networks also will reap the most bounty, especially CBS (CBS) and Univision, the Spanish language broadcaster, which have the biggest footprints in toss-up states.

Radio stations will benefit from political spending as well. Cumulus Media (CMLS), which owns 114 stations in toss-up states, could fare well, SNL Kagan says. CBS Radio is likely to receive one of the "largest windfalls" in political advertising in 2010, the researchers added. It owns 78 stations in 53 markets, including 50 in key battleground states such as California, Florida, Illinois and Ohio.
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