No matter who the victor is on Election Day, the biggest winners are likely to be owners of broadcast TV stations, particularly those in battleground states. According to Moody’s Investor Service, political advertising historically has made up 6% to 7% of broadcasters’ ad revs over the course of a two-year political cycle. In this cycle, it will be about 9%.
Overall, Moody’s expects local TV broadcasters and cablers to book $2.8 billion in ad revenue out of an estimated $5 billion likely to be spent on political ads in all media this year. Even though broadcast advertising is more expensive, over-the-air TV is likely to account for the lion’s share of total political advertising spending. If history is a guide, cable, newspapers, radio and telemarketing will each take in less than 10% of the total.
The advent of superPACs will also aid TV broadcasters. Although TV stations must offer their best rates to candidates in the 60 days before an election, no such discount is mandated for other political players.
Moody’s thinks that most broadcasters whose bonds it rates will use the election windfall to reduce their debt. Now is the time to do that. Most political advertising will vanish after Nov. 6, and the next big political spending spree won’t occur until midterm elections in 2014.