Jessell | Worried About Ad Collusion? Blame The FCC
Since the Wall Street Journal broke the story last month that the Justice Department’s antitrust division was sniffing around to see if broadcasters were colluding on their ad rates, I have had several discussions about how and to what extent broadcasters share information about the ad market.
For the most part, I would say it falls in the category of one broadcaster asking a rival: “How’s business?” and getting a more or less truthful answer about pacing. The shared information is sketchy and not particularly useful if gouging advertisers is the intention.
But one former group national sales manager pointed out to me that there is one place where GMs and GSMs can get plenty of detailed information about what stations are selling spots for. That would be their online political files.
They are there for anybody to peruse from the comfort of their home or office. Even me.
So, let’s take a look at the file of Scripps’ KNXV Phoenix, in one of the states where, as our reporter Janet Stilson colorfully put it this week, the political spending is “hotter than a sun-baked car seat in August.”
Kyrsten Sinema is a Democrat running for the Republican Senatorial seat being vacated by Jeff Flake. She’s said to be a shoo-in to win the primary next Tuesday, but is advertising with an eye on the general election in November. It’s an important race for the Democrats.
The latest of many Sinema orders in the file shows her spending $23,255 for 31 spots between July 17 and July 23. The flight included spots in the local news ranging from $100 (midday) to $1,000 (latenight) as well as several in ABC daytime and prime. She spent $6,000 for 30 seconds in Bachelorette on July 23.
The point is, there is a tremendous amount of detail about what KNXV charging for news and some of its most popular network shows. The folks over at Meredith’s KPHO or Tegna’s KPNX can easily review it and use it to manage their rates to greatest advantage. No need to swap attaché cases in a dark corner of a bar late at night.
But, you say, those rates don’t tell the real story of a station’s pricing because stations are obliged by the government to sell spots to candidates at a discount in the days leading up to an election, at the same rate for each class of spot as they would offer their most favored clients.
That’s true, but broadcasters are free to charge non-candidate political advertisers just as much as they would a local furniture store or PI law firm — that is, just as much as the market will bear.
Back in the KNXV file, I found an order from a self-described SuperPAC. Judging from its website, Defend Arizona is plenty conservative. “We’re fighting for hardworking, patriotic Arizonans. We stand for lower taxes, limited government, a strong military and secure borders.”
(By the way, it kills me that backers of groups like Defend Arizona who portray themselves as brave champions of liberty are often too cowardly to identify themselves on their own websites, let alone in their spots. Viewers have no idea where the Defend Arizona money is coming from. I bet KNXV doesn’t either.)
Having not seen its spots on KNXV, I don’t know what Defend Arizona was defending there, but, in a series of 30-second videos it posted on YouTube this month, it was attacking Kelli Ward, who’s running in Tuesday’s primary to be the Republican nominee for Flake’s Senate seat. Defend Arizona believes Ms. Ward is soft on ISIS and weak on defense.
According to the order, Defend Arizona is paying $10,400 for 24 spots between last Tuesday and next Tuesday’s vote. Most of the spots were scheduled for local news, with prices ranging from $200 (midday) to $600 per (evening). It bought four spots in Good Morning America at $400 per.
This kind of information is going to continue piling up at stations between now and the general election. Armed with the local Nielsens, smart broadcasters can dig into files of competitors and come to a thorough understanding of their entire pricing strategy.
Now here is the irony. Broadcasters never wanted to put all this information online. In fact, when Obama-appointed FCC Chairman Julius Genachowski proposed it in 2012, citing the need for greater transparency and accessibility in political advertising, they pushed back hard.
They argued that it would heap another costly chore on them and, more important, expose their entire spot pricing strategy to rivals.
In an attempt to head off Genachowski’s drop-your-pants scheme, the broadcasters countered with what it called a “win-win solution that provides transparency concerning political candidate spending while avoiding the anticompetitive impact of online disclosure of per-spot rate information.”
Instead of putting all the rates out there, the broadcasters said, let us simply post a running total of how much each candidate or PAC was spending. The total would be updated every other day in the 60 days prior to a general election, except for the final seven days. Then, the updates would come every day.
I thought it was a good plan then and I do now.
Of course, Genachowski, with a better understanding of the commonweal that comes with being a liberal, ignored the broadcasters and imposed the current see-all regime.
So, if the antitrust lawyers at the Justice Department are really alarmed about broadcasters knowing too much about each other’s business, perhaps they ought to visit the FCC and see if they can persuade the new guy running things there to stop requiring broadcasters to post what should be proprietary advertising information online.
Ajit Pai just might listen.