NEW YORK — Hearst-Argyle is turning out to be the dark horse candidate among those standing to profit the most from the fiercely competitive 2004 national election, which has already seen political ad spending reach historic highs, according to investment bank Legg Mason.
As luck would have it, Hearst operates TV stations in 11 of the 17 swing states where President Bush and presumptive Democratic nominee John Kerry opposition are flooding the airwaves with ads in the race to capture the White House. Even better, Hearst has stations in three of the four states considered most crucial of all — Florida, Ohio, Michigan and Pennsylvania.
During a conference call Wednesday dissecting political ad spending in the first quarter, Legg Mason media and broadcast analyst Sean Butson said the other three TV station groups standing to profit the most are Gray Television, Lin TV Corp. and Sinclair Broadcast Group. Sinclair and Gray both have stations in numerous swing states; Lin has stations in Puerto Rico, where there is a heated governor’s contest.
Legg Mason is so confident of the political windfall that it has upgraded the ratings of all four station groups, saying they will virtually be “printing money” through the November election. In addition to the White House contest, there also are heated U.S. Senate races in several states.
No one is predicting exactly how much will be spent on media buys in the presidential and congressional races, but it’s expected to well exceed $1 billion. From March 3-22 alone, Bush and his Democratic opposition spent $26 million on media buys, according to figures compiled by the Wisconsin Advertising Project at the U. of Wisconsin-Madison.
In 2000, George W. Bush and Al Gore didn’t even start airing political ads until June, when they only spent $10 million, according to the ad project.
‘Sweet 17’ states
The vast majority of the $26 million spent in March went to media buys in what Legg Mason likes to call the “sweet 17” states. Half of the $26 million was spent in the “final four” states alone.
“The sky’s the limit,” Legg Mason media and telecom analyst Blair Levin said. “It’s great to be in the final four, but being in the sweet 17 ain’t bad either.”
Butson said ABC, CBS, Fox and NBC owned-and-operated stations will certainly profit from political ad revenues but that these revenues won’t impact the bottom line to the same degree that it does smaller stations groups since they are owned by such sprawling media congloms.
Political ad will probably account for at least 10% of Hearst’s revenue pie for this year, Butson said. Hearst has TV stations in 24 states; 17 of those are the political swing states.
“They are the best-positioned company anywhere in the media universe in terms of the percentage impact on the bottom line,” Butson said.
The one cloud on the horizon for broadcasters is the attempt to shut down a new generation of political fund-raising groups such as MoveOn.Org and the Media Fund, both of which have raised millions for the Democratic Party. The Republican Party, which is threatening to file a formal complaint with the Federal Election Commission as early as today, // says these groups violate new campaign finance reform laws.
In the meantime, broadcasters will continue to enjoy what is turning out to be the lengthiest presidential campaign in memory thanks to the early start by the Democratic opposition, leaving Bush no choice but to respond.
“This election will not only have the longest general election campaign in history, it will also feature the first campaign in history where both major party candidates opted out of the public funding restraints,” Legg Mason said.
Also Wednesday, Legg Mason said local advertising was on the uptick in the first quarter.