One winner in 2012's political races already has been decided: local television stations.
Spending on TV advertising likely will mount to historic levels as candidates again blanket airwaves with commercials pitching their virtues or bashing their opponents. The hard-fought, and expensive, battles will provide a welcome windfall for TV stations, particularly in the most tightly contested states that will decide if President Barack Obama wins re-election or loses to his yet-to-be-decided Republican opponent.
Forecasters are calling for spending on political advertisements to increase up to 30 percent this year compared with 2008, setting a new record and reflecting, in part, a response to the landmark "Citizens United" 2010 Supreme Court ruling, which ended most restrictions on donations by corporations and unions. This is the first presidential election since the ruling.
The decision fostered the creation of Super PACs, fundraising committees that can spend money to support a candidate but cannot officially coordinate with campaigns. Republican Mitt Romney's Super PAC, Restore Our Future, has raised at least $12.2 million, while Obama's Super PAC, Priorities USA Action, has raised at least $3.2 million, according to OpenSecrets.org, a website associated with the nonpartisan group Center for Responsive Politics.
Around 85 percent of the money that is raised and spent on advertising historically goes toward local broadcast TV. In 2012, that could total between $2.5 billion to $3.0 billion, said Ken Goldstein, president of Kantar Media's Campaign Media Analysis Group.
"Television advertising remains a message weapon of choice to most campaigns," Goldstein said. "Every year is a record."
Spending in 2012 should easily beat the mark of $2.4 billion in the 2010 mid-term elections, the first to include Super Pac money and a cycle that featured no presidential race on the ballot but saw gubernatorial and Senate contests in big, expensive states such as California, Texas and New York. By comparison, about $2.1 billion was spent on local broadcast TV commercials in 2008 -- before the creation of the new rules governing Super Pacs.
That will undoubtedly boost the fortunes of companies that operate and own local TV stations. Those dozen or so companies with stations in the battleground states of the Midwest should benefit most as political money floods in, but among that group the biggest winners are difficult to predict since much will depend on how the campaign unfolds district-by-district.
Among the potential beneficiaries is CBS Corp, which owns stations in Colorado, Florida, Pennsylvania and Michigan. News Corp's Fox controls stations in Michigan, Florida and Pennsylvania, while Gannett Co Inc. has them in Colorado, Florida, Michigan.
But because they are smaller -- without, say, movie studios and book divisions such as News Corp -- the impact of the 2012 election cycle will be felt even more bluntly on a handful of smaller media companies that own ABC, NBC, CBS or Fox affiliated stations in key election states.
It's a prospect that has not been lost on investors, who, anticipating strong political spending and a better advertising market in general, scooped up shares of E.W. Scripps, Belo Corp., Sinclair Broadcast Group, Media General throughout the fall.
Sinclair, for instance, is up 53 percent in the last three months, Belo, Scripps and Media General are all at least 25 percent stronger over the same period. All have outperformed the broader market, and the consensus among analysts is that they have more upside.
"It looks like it could be an incredibly strong spending year, if the Republicans can settle on a candidate fairly soon and get the head-to-head race going," Scripps CEO Rich Boehne said at a recent conference, telling investors the company sold $48 million in political ads in 2010 and $42 million in 2008.
"Any way it goes, it is going to be a strong year, and we have got sensational geography for political," he said.
Indeed, which stations cash in the most will depend partly on how quickly the Republican party settles on a nominee. A long, tightly-contested Republican Primary, for instance, could mean stations in the March 6 "Super Tuesday" states such as Massachusetts, Ohio, Tennessee and Virginia could see heavy activity from Republican spenders.
Even California would get an unexpected shot of campaign spending right before its June 5th vote if the Republican race is still up in the air.
Should Romney keep his momentum coming out of Iowa and clinch the Republican spot early, then the money will be concentrated on the swing states of the general election.
"The ad dollars are still going to get spent. They're just going to get spent on the presidential campaign," said Carl Salas, senior analyst for Moody's Investors Service. "You would see the Democrats needing to step up even sooner in those swing states."
Salas pointed to Gray Television and LIN TV Corp as companies likely to benefit the most from political ads in 2012. The three were among the broadcasters with the highest percentages of political advertising in the 2010 election season, he said.
Gray in particular owns stations in many state capitals and college towns that are politically active markets, Salas said. Key states for Gray in the presidential race include Florida, Indiana and North Carolina.
And while it's stock is up 15 percent in the last three months, the gains are not as dramatic as some of its competitors, which could make it one of the hot media companies of 2012.
Spanish-language broadcasters including Entravision Communications and Univision also stand to reap a growing share of political ads. "The candidates know they need to win a good portion of the Spanish-language vote to win the election. What used to not be a target for the campaigners will now be something they are going to focus on," Salas said.
Whatever the market, local TV advertising will still get the lion's share of spending, experts agree, even with the growing popularity of creating buzz through social networks and newer media.
"TV still seems to be the one place that gets the big audiences, and it's so immediate," said Maribeth Papuga, who oversees local TV and radio purchases as director of Local Video Investment and Activation at media agency MediaVest.
Besides, she said, campaign managers and politicians "are simply creatures of habit."
