What will last week’s US Supreme Court decision striking down key parts of the McCain-Feingold Campaign Finance Act mean for broadcasters? Wells Fargo Securities analyst Marci Ryvicker figures about a half billion bucks in additional political ad revenues this year.
“In our opinion, the recent Supreme Court ruling combined with Republican Scott Brown’s ‘upset’ win in Massachusetts should provide substantial upside to our initial 2010 political advertising estimate of $3.3B in total (with $2.1B allocated to broadcast television and $250M allocated to radio). In discussions with political experts, there is likely to be between $250M (8% upside to our original estimate) and $500M (15% upside to our original estimate) incremental spending – the majority of which will go to the broadcasters,” Ryvicker said in a note to clients.
The Supreme Court’s decision struck down a provision of the McCain-Feingold Act that prevented corporations-for-profit and not-for-profit-and unions from spending freely from their own treasuries for campaign advertising. The ruling also removed the restriction on corporate advertisements leading up to an election, the analyst noted. While the case dealt only with the federal campaign law, Ryvicker added “we believe that this ruling could have a bearing on the constitutionality of state corporate political ad bans – possibly leading to the removal of such legislation.” That, of course, could open up more political ad spending in state and local races.
Who stands to benefit the most? Ryvicker referred back to the report that she and John Janedis co-authored in October, spelling out which broadcasting companies have the most to gain from the 2010 elections.
”Companies with the most exposure to the hottest races are likely to see the most upside to political expectations,” Ryvicker reiterated. Those companies are Gray, Belo and Nexstar in television; Beasley, Regent, Entercom and Emmis in radio; and CBS in diversified entertainment, she said again in Monday’s note.
RBR-TVBR observation: After the Senate election result in Massachusetts, more and more supposedly “safe” House and Senate seats are going to be actively contested this year. As aggressive as political ad spending forecasts for 2010 have been to this point, they are likely still understating the tally that broadcasters will enjoy this year.