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'Perfect storm' fuels record political ad spending for TV stations


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'Perfect storm' fuels record political ad spending for TV stations

Political ad spending on TV stations has soared to new heights during the 2020 election cycle. Now the runoff elections in Georgia, which could determine the balance of power in the U.S. Senate, are going to push that total even higher.

Media measurement and analytics firm Kantar Media Intelligences Inc. estimates that some $8.5 billion was spent on national elections, as well as state races and down-ticket contests. Steve Passwaiter, vice president and general manager at Kantar, said stations remained the primary beneficiaries of those record outlays, tallying about $4.5 billion through election day on Nov 3. That represented a significant increase from $3.0 billion during the 2018 midterm elections and $2.85 billion in 2016.

"Unreal amounts of money were spent both up- and down-ballot," he said.

Peter Leitzinger, an analyst at Kagan, a media research group within S&P Global Market Intelligence's TMT offering, said there was "a perfect storm" that drove up the numbers.

SNL ImageU.S. President-elect Joe Biden and Vice President-elect
Kamala Harris take the stage.

Source: Lawrence Jackson

Spending on presidential elections continues to start earlier each cycle, he said, with money starting to flow in this time around September and October 2019. Outlays by billionaire presidential candidates Michael Bloomberg and Tom Steyer also boosted station groups' political ad coffers.

Then, COVID-19 hit. While things slowed with delays in primaries after Super Tuesday, the pandemic constrained the number of in-person events and rallies until the final few weeks of the race. Leitzinger said funds earmarked for those efforts ended up on stations. There was also spending around topics such as the Black Lives Matter movement and the government's handling of the pandemic.

Kagan, which initially projected TV stations' political ad spending take at some $3.10 billion in 2020, is finalizing its estimates for the recent races.

The heightened political climate and increased number of battleground states also diminished available inventory at some stations. Passwaiter underlined the crowd-out factor in Michigan, where he said Republican candidate John James and Democrat incumbent Sen. Gary Peters each purchased ads on FOX (US)'s national feed of the University of Michigan-Michigan State college football game on Oct. 31 because it was less expensive than securing spots on different stations at that juncture.

Meanwhile, money continues to flow to stations and other outlets ahead of the runoff elections in Georgia between Republican Sen. David Perdue and Democrat Jon Ossoff and between Republican Sen. Kelly Loeffler and Democrat challenger Raphael Warnock, scheduled for Jan. 5, 2021.

If the Democrats unseat both incumbents, the Senate could be split 50-50 among both parties, which would put Vice President-elect Kamala Harris in a position to cast tie-breaking votes.

During the general-election cycle, some $150 million was spent on the U.S. Senate contests in Georgia. Earlier forecasts of $200 million in runoff expenditures have already been eclipsed. Passwaiter said $200 million had been committed by Nov. 20, with another $50 million allocated over the weekend to reach some $250 million by mid-morning on Nov 23.

Passwaiter said those totals were attained with the political action committees still not fully engaged. Political ad bans also remain in effect for Facebook Inc. and Google LLC at least through early December. As such, he suspects that a significant amount of money is getting pushed toward "the usual sources," including TV stations.

Kagan’s Leitzinger said in addition to spending in Georgia, TV stations in the neighboring states of Florida, South Carolina, Tennessee, Alabama and North Carolina stand to register runoff revenue. He pointed to Gray Television Inc.'s WCTV that serves Tallahassee, Fla., and Thomasville in southwest Georgia as one example.

"They’re not going to miss any potential voters," he said.

At this point, current runoff estimates are now pushing toward at least $500 million. If stations were to tally 50% to 60% of that amount, their total take for the 2020 cycle could wind up in the $4.75 billion to $4.80 billion range, according to Passwaiter.

Regardless of the outcome of the Loeffler-Warnock race, the seat will be up for a challenge in 2022, as Loeffler was appointed in December 2019 after Sen. Johnny Isakson resigned for health reasons.

Although there will not be presidential spending in 2022, Passwaiter predicts that if Congress remains divided, any push toward campaign finance reform legislation is unlikely to pass. That, combined with the fact that one-third of the Senate, numerous House seats, and 36 gubernatorial races are in play, leads Kantar to expect stations to exceed the $3.0 billion they garnered in the 2018 midterm cycle.