Networks oppose pharm deduction deletion

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House Ways and Means Chair Charles Rangel sees funding for health care in a plan to eliminate the business tax deduction for advertising specifically for pharmaceutical companies. The big four networks are urging him to look elsewhere.


According to the Wall Street Journal, ABC, CBS, Fox and NBC all signed a letter to Rangel, telling him that loss of the business deduction amounts to an advertising tax, and beyond harming the pharmaceutical companies, it would also harm the 21M citizens nationwide who owe their paycheck in one way or another to the advertising business.

The problem is particularly acute at the moment, they pointed out, when advertising clients are hard to come by. An industry already reeling from circumstances beyond its control is not in need of an extra challenge.

The Advertising Coalition, a consortium of media associations, sent a similar message to President Barack Obama.

Rangel is hoping to raise $37B over 10 years by eliminating the deduction.

WSJ says analysts find Rangels estimate is exceedingly optimistic. They say a 35% tax on pharma’s annual advertising budget, which was about $4.2B in 2008, would yield about $15B over ten years.

RBR/TVBR observation: We stand by our earlier prediction, that Rangel will fail to generate the cash he wants because the pharmaceuticals will simply pull their money out of broadcast and spend it somewhere else where the ROI is not damaged by government interference.