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Elections May Boost Ad Firms

With both the U.S. House and Senate up for grabs in November's midterm elections, the sagging advertising sector is on the verge of getting a crucial injection of political cash.

Razor-thin partisan majorities in Congress, plus contested gubernatorial races in major media markets like California and New York will likely bring record-setting levels of political advertising this year, according to industry experts.

``The stakes are probably higher in these midterm elections than we've seen in the last three or four,'' said Evan Tracey, president of the Campaign Media Analysis Group, which tracks campaign spending. ``I would suspect we'll see a record for the midterm cycle -- it could be passed by the end of the summer.''

Those stakes climbed a bit higher last Wednesday when Congress approved a sweeping campaign finance reform bill that would ban ``soft money'' contributions.

In 1998, the last midterm -- or nonpresidential -- campaign year, political advertising on television totaled $498.9 million, according to ad tracking firm CMR and the Television Bureau of Advertising.

A record infusion of ad dollars for the midterm election would be welcome relief for the advertising sector. Stung by the dot-com crash, the economic downturn and the Sept. 11 attacks, the industry is suffering through the worst downturn since at least World War Two.


Now that Democrats have a one-vote majority in the Senate, and Republicans have an 11-vote majority in the House, both parties are likely to go all-out to gain control of Congress, according to Kathleen Hall Jamieson, dean of the Annenberg School of Communications at the University of Pennsylvania.

``Because of the prospect that both the House and Senate could shift, (we're looking at) high-dollar-level increases,'' she said. ``You have the equation set to drive up what would be the ordinary spending level.''

Wednesday's passage of the campaign finance reform bill, which President Bush said he would sign, will only intensify the ad climate. The bill would ban unlimited contributions to national political parties -- otherwise known as ``soft money'' -- and restrict broadcast ads by outside groups in the weeks leading up to elections.

Although the bill would not take effect until after the November elections, ``you'll see parties spending their soft money because they have to clear it out,'' said Kenneth Goldstein, a professor at the University of Wisconsin who studies political advertising.


Media firms, especially those that own television stations, count on political advertising to bolster their bottom lines every other year.

This time around, with the industry still mired in a drastic year-long slump, the injection of campaign cash will be more critical than ever.

Advertising in the primaries has already begun ``tightening up'' the television advertising market, according to Deutsche Banc Alex Brown analysts Douglas Mitchelson and Andrew Marcus, paying dividends at stations owned by Walt Disney Co., Fox Entertainment and Viacom, they said in a research note.

Smaller firms that could get a big hit from campaign ads include Hearst-Argyle Television, Young Broadcasting, Belo and E.W. Scripps.

Gannett, which in addition to owning USA Today and a host of other papers and has significant television holdings, said on Wednesday in a meeting with analysts that it expects a strong boost from political spending. Prudential Securities analyst Steven Barlow expects the company to pull in about $50 million this election cycle.


Adam Pasick, The Charlotte Observer. March 24, 2002

Copyright © 2001 observer and wire service sources. All rights reserved.