The close race for the White House is expected to generate record spending from the candidates and their surrogates. Moody’s Investors Service says the take for the television industry could easily hit $2.8B.
And that’s just for local television – when national spot and network spending are added in, Moody’s expects the total will top $3B.
“Pure-play US television broadcasters expect to earn up to 25% more in revenues from political advertising in 2012 than in 2010. The expected increase of more than $500 million will mark the largest dollar increase ever measured over a two-year election cycle,” said Carl Salas, a Moody’s Vice-President — Senior Analyst. “Political advertising will account for up to 9% of the US broadcast industry’s average annual revenue, well above the historical 6% to 7% norm.”
Television groups with substantial holding in swing states are of course expected to lead the pack when it comes to earnings. Moody’s says that the groups well poised to catch the windfall include Fox, Gray, LIN, Media General, Newport (sale pending), Nexstar and Sinclair.
Moody’s expects that many of the cash beneficiaries will pay down debt and/or build a financial cushion for the odd-year decreases coming in 2013. At least three are said to have acquisitions in mind – LIN, Nexstar and Sinclair – and Fox is expected to offer dividends.
Still, Moody’s says that non-political categories account for 70% of total TV income, and says that the windfall will not substantially improve the industry’s overall outlook, which the analyst firm describes as stable.