In key states, money will outstrip ad time

Last week’s headlines that trumpeted a tightening race between Barack Obama and John McCain in the battle for the White House came as welcome news to many TV station owners.

Political spending on TV spots has flowed freely in this election season, but not widely as in election years past. But things may heat up.

The Obama and McCain campaigns have funneled the vast majority of the tens of millions of dollars they devote to TV blurbs into the 12 to18 swing states that are expected to decide the race. Owners of Big Three O&Os and affiliates in Ohio, Michigan, Pennsylvania, Wisconsin, Florida, Missouri, Nevada, Virginia and Colorado, among other states, are bracing for a post-convention flood of money. More political money will flow into their markets in the next 75 days than they have time to sell.

But other big markets like New York, Los Angeles and Chicago are counting on contentious local and state races to help turn on the political advertising spigot. With the contest between McCain and Obama expected to remain tight before E-day on Nov. 4, these stations are hoping the campaigns will have to spread the TV ad dollars around to disparate regions.

“I’ll be very busy over the remaining days of the campaign,” Dave Barrett, CEO of Hearst-Argyle Television, told investors earlier this month. Hearst-Argyle is well-positioned to clean up with strong ABC and NBC affils in Pennsylvania, Ohio, Wisconsin and five other hotly contested states.

There’s been so much money chasing a finite amount of spots in highly concentrated regions that the windfall is spilling over to local radio and cable, and to non-Big Three affiliate TV stations that typically don’t do much political biz.

The vast majority of political ads are purchased in local news programming (as well as local time in network news telecasts) on stations with a significant news presence (at least 2-3 hours of local news programming a day) in their markets. Regular viewers of newscasts tend to be regular voters, and stations with sizable news operations tend to be ABC, CBS and NBC affils, rather than Fox, CW or indie outlets.

But the Obama campaign has surprised veterans of the TV political wars by buying spots in non-news programming, such as daytime talkshows, sports telecasts and primetime shows that appeal to younger viewers. Those purchases have helped spread some of the political wealth in key states outside of the Big Three affiliate axis. The McCain camp has dabbled with some buys in non-traditional programs, but not as much as Obama, station execs say.

Obama spokesman Nick Shapiro said the TV ad strategy is part and parcel of Obama’s push to appeal to first-time voters and disaffected voters.

“We’re trying to reach out to voters where they are. People don’t just watch local news and cable,” Shapiro said. “Whether it’s daytime shows or other types of outlets, this is a part of our effort to reach new voters and spread Senator Obama’s message of change.”

Of course, Obama is also spending more because he has more greenbacks to spend. Obama’s funding advantage over McCain has allowed him to maintain a high volume of TV advertising across a wider swath of swing states. McCain, however, has been outspending Obama overall in populous ground-zero states like Ohio, Michigan and Pennsylvania and Wisconsin (see chart), according to Nielsen Monitor-Plus tracking of ad unit purchases for the campaigns between June 4 and Aug. 1.

Between the time McCain locked up the GOP nomination in May through early August, the McCain camp had shelled out about $30 million in TV advertising, with another $4 million in spots purchased by the Republican National Committee, according to Campaign Media Analysis Group, a unit of ad tracking firm TNS.

Obama forked over about $35 million from the time his primary battle with Hillary Clinton ended in mid-June through early August, according to CMAG tracking. (By way of comparison, the John Kerry campaign spent a total of $165 million in TV ads in 2004; President Bush’s reelection effort spent $188 million on TV blurbs.)

McCain’s laser-targeted spending spree in recent weeks has also been fueled by his need to empty out his campaign war chest prior to getting the official nod as the GOP nominee at the Republican National Convention next week (Sept. 1-4). After that, McCain will be accepting public financing, which limits him to spending no more than $84 million on the remainder of his entire campaign.

Obama will face no such limit as he is forgoing public financing. However, McCain will continue to get an assist from spending on his behalf by the Republican National Committee.

The quadrennial bonanza of presidential race greenbacks does come with a big caveat for stations. Federal Communications Commission rules stipulate that candidates for federal office be allowed to buy ad time at cut rates. The “lowest unit rate” rule mandates that federal candidates in the general election contest pay the lowest rate that the station has offered to any advertiser in the time slot within the previous 60 days (the same applies for primary season but the window is 45 days).

FCC rules also stipulate that stations have to give qualified candidates “reasonable access” to ad time — but they don’t have to sell every second of blurb time on their skeds.

Yet with the general downturn in TV advertising during the past year, stations in sweet-spot states are counting on political coin to help shore up the bottom line.

“The political money is going to be a greater contributor to us this time around than in past years,” says Michael Colleran, prexy and G.M. of CBS-owned KYW-TV and WPSG-TV in Philadelphia. “There’s greater interest in this race than any other in recent history, and that makes it a major political advertising event. We’re all anticipating a big finish.”

Station managers note that the McCain and Obama campaigns have been very “reactive” to each other — even more so than in past presidential races — when one camp buys a bunch of spots in a market, the media buyers from the rival camp get busy booking time in that market too. The buys are made sometimes with as little as 12-24 hours lead time, station execs say.

“They’re watching each other very closely,” says a station topper in a swing state.

The flood of campaign advertising also allows stations to charge non-political advertisers higher rates because the avails are so scarce overall. And because of that scarcity, stations command top dollar for spots from third-party advocacy orgs, which generally want their blurbs to run in close proximity to other political advertising on a station.

“There just may be more money out there than there is time to buy,” said Evan Tracey, chief operating officer of Campaign Media Analysis Group.

“It’s really going to all depend on how many states are considered to be in play after the Republican National Convention. I think in this election we’re going to see winners and losers not only at the ballot box but (also) for the bottom lines of stations who are in the sweet spots and those that aren’t.”

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