Could Media Stocks Suffer From Political Letdown?


Too many hopes on a political advertising windfall may end up hurting the bottom line — and stock value — of media companies in the coming months.

In a report distributed late Tuesday, Pivotal Research Group Senior Research Analyst-Advertising Brian Wieser reveals that political advertising growth “continued the deceleration” observed in September, falling by 5% for the 17 largest station groups in October 2016, compared to October 2014.

Considering 2014 was not a presidential election year, the findings could have a major impact on revenue.

Pivotal reviewed updated political advertising spending trends at local TV station groups based on data covering the period through October 31 from Advertising Analytics, which aggregates and tracks political ad bookings in real time.

Wieser notes, “October is the make-or-break month for this category of spending, with approximately half of the year’s total. The data we have reviewed indicates the year will end well below levels that most expected at the beginning of this election cycle.”

Political advertising “is one of the most significant factors impacting advertising growth across the U.S. every second year,” Wieser notes, adding that local TV “disproportionately benefits as it allows for an optimal balance of geographical targeting and a capacity to impact persuadable voters’ perceptions of issues.”

How bad is it for local TV?

“For a sense of scale, during the last presidential election year of 2012 local TV stations and local cable generated $2.6 billion from political advertising, per Magna Global,” Wieser says. “During the most recent non-presidential election year of 2014, this spending amounted to $2.3 billion. Both figures were approximately double the amounts generated by these media owners only a decade earlier and represented approximately 15% of all local TV spending. This revenue source appears more significant when considering that well over half of all political revenue to local TV is generated in the month of October alone, and that it tends to be concentrated geographically, too.”

Across 17 of the largest station groups (including ABC, CBS, Cox, EW Scripps, Fox, Graham Media Group, Gray, Hearst, Media General, Meredith, NBC, Nexstar, Raycom, Sinclair, Sunbeam, Tegna and Tribune) and on a like-for-like basis (with the same stations owned by each company in each of 2016 and 2014), Pivotal sees median network group spend up by 2%.

Total year-to-date bookings are up by +12% over the same period in 2014, but the gains were mostly generated in the earlier part of this year.

“As spending through October accounted for 93% of all political spending during 2014, we can safely say that total spending for the year will likely end up only around 10% for the full year vs. 2014,” Wieser concludes.


Advertising Analytics’ data indicate that political ad bookings for October spending was varied by O&Os.

At ABC, spending grew 22%, compared to just 4% at stations owned by CBS. Yet spending was up a whopping 90% at NBC stations.

Fox O&Os saw spending dip by 21%.

Among some of the major independents, Sinclair was up by 19%,  but Tegna was down by 33%.

Meredith was down 9%, and Media General was off a sharp 34%.

“As October represents the bulk of the quarter’s spending, these spending levels are likely to reflect full fourth quarter trends for each of these groups,” Wieser said.

Despite the weak levels of political advertising spending, Wieser warns investors to “be mindful that spending will likely return to higher levels in 2020. Of course, this presumes a resumption of ‘normalcy’ in the political landscape, which may yet turn out to be an optimistic expectation.”