As public interest groups were quick to decry the Supreme Court’s decision on Wednesday that removes the aggregate limits on an individual’s total contributions to candidates, there is a possible beneficiary to the loosening of the restrictions: Local TV and radio stations and cable outlets.
The court, in a 5-4 decision, invalidated the $48,600 cap that an individual can give to all candidates in an election cycle, as well as the $74,600 limit on contributions to political parties. Donors will still be limited to a $5,200 contribution to any one candidate during a cycle.
But the net effect, campaign reform advocates say, will be more money flowing into the system.
Miles Rapoport, president of Common Cause, called the decision “Citizens United round two, further opening the floodgates for the nation’s wealthiest few to drown out the voices of the rest of us.”
The Supreme Court’s Citizens United decision in 2010 removed restrictions on individual and corporate contributions to independent committees that advocate for or against a candidate as Election Day nears. That decision left in place caps on direct contributions from individuals to candidates. It is often credited with indirectly giving rise to SuperPACs, which dominated in the last presidential election cycle. Donors such as Sheldon Adelson made huge outlays of tens of millions of dollars to SuperPACs closely affiliated with Republican candidates, while Jeffrey Katzenberg helped lead an effort to maximize contributions to Priorities USA, a SuperPAC closely associated with President Obama’s reelection campaign.
Political advertising has accounted for an increasingly more dependable share of broadcasters’ bottom lines. Total political spending on local stations has grown at a rapid pace. According to TVB, a trade association for commercial broadcasters, campaigns spent $2.9 billion on advertising on local stations in 2012, up 38% from $2.1 billion in 2010.
“This news clearly will have an impact, particularly in markets where we have tossup races,” said Stacey Lynn Schulman, chief research officer for TVB. The org has projected $2.5 billion in political spending on local TV in this year’s midterms, and that figure could rise if the Supreme Court’s decision means that more donors are able to “spread the wealth around,” she said.
“There are enough high net worth individuals who can do that,” she said. With the possibility of winning control of the Senate, more Republican donors could be lured to donate to tossup races, she said, which TVB identifies in Arkansas, Alaska, Georgia, Kentucky, Louisiana, Michigan and North Carolina.
Ken Goldstein, professor of politics at the University of San Francisco, said, “Obviously, ad spending is a function of what is raised. If more is raised, then that increases a campaign’s ability to spend on television.”
But he cautioned that “a lot of times, a campaign finance decision comes out and everyone thinks it completely changes the world,” when the reality is not so quite earth shattering.
“The world will change, but there has been an inexorable rise in campaign spending, forever,” he said.
Stations are required to charge candidates the lowest unit rate for their inventory, but they are not bound by such rules when it comes to independent groups, he noted. It doesn’t necessarily mean that stations will see less revenue because more candidates will demand such ad time. Rather, it could mean that there will be a premium on ad inventory for other categories, like car dealerships or professional services. “As inventory becomes more dear in some of these targeted markets, where the prices can rise, they will rise,” he said.
On Wednesday, stock prices for broadcast groups, such as Gannett Co., Media General and Sinclair Broadcast Group, that stand to benefit from the increased flow of ad dollars were rising amid a general upswing in the market.
The recent spree of mergers and acquisitions involving TV stations has been driven in part by the desire to create super-clusters of stations in battleground states to benefit from the periodic gushers of political ad buys.
The court’s ruling in McCutcheon vs. FEC means that individual donors can now give directly to as many candidates as they want, although they will still be subject to the $5,200 limit to any one contender.
Interest groups said that will put further importance on wealthy donors.
“Congressional and presidential candidates spend untold hours wooing prospective donors and listening to their concerns,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, said in a statement. She pointed to GOP presidential hopefuls who last week met with Adelson “in an attempt to win the casino magnate’s financial backing” at the same time he is pushing for a ban on online gambling.
“Does the Court really believe the possibility of winning Mr. Adelson’s largesse will have no influence over candidates’ position on this issue?” Sloan asked.