JESSELL AT LARGE

Jessell | Worried About Ad Collusion? Blame The FCC

While stations are cautioned not to share too much information to avoid charges of price fixing, the FCC requires them to post the rates they charge political advertisers, from which smart rival broadcasters can deduce their entire pricing stategy.

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.

BRAND CONNECTIONS

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.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here. You can read earlier columns here.

 

 

 

 

 

 

 

 

 

 

 


Comments (6)

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[email protected] says:

August 31, 2018 at 9:57 am

This article is a waste. The collusion is about Stations communicating on how to drive up the cost of Ads. The examples given are ridiculous because even though rates for time slots can be figured out – Ads are placed in flights and packages and dozens of different combinations and far much less placed as piecemeal. The Ad Rate CPM’s for internet are not included in FCC files – because they aren’t required for some bizarre reason. “How’s Business?” analogy is preposterous, Sales people in any given industry try a lot harder than asking such a stupid question. Remember there are hundreds of Sales People that have dated, married or had affairs with other Sales people over the decades. Jim Doyle is also out of the loop and/or trying to steer people into a dead end when he says there is no collusion, using a profane word such as “BS” is quite suspicious to be so adament – because there is collusion at some level in every business – especially when dealing with SALES PEOPLE. There is so much social media today – who knows where rates are being posted all over the internet.

[email protected] says:

August 31, 2018 at 10:29 am

I can’t believe Jessell wrote this entire smokescreen to get a dialogue going about getting rid of Political Ad Spending files.. Ad spending can be reported by alternative methods if you are looking for change – such as bulk sum totals, but to get rid of entirely is preposterous. Is this a paid-for agenda Harry Jessell? sure sounds like one.
Some political ad spending isn’t even reported by stations because the FCC never checks – just look at the top ten markets and Spending by the last major presidential candidates – there are stations that reported little or NO spending at all for TRUMP, Clinton and Sanders when there had to have been. I think in all these industry investigation – the influence from TVnewscheck Editorials should be looked at to see if they are Paid Ads without Sponsor Identification.

[email protected] says:

August 31, 2018 at 10:56 am

Just by the title of Jessel’s article – suggests that there ARE people that need to be worried…. Just leaving one Ad Agency or Rep firm – such as going from Katz to Telerep – one would know what the Ad Rates for stations are. The Reps are the ones who should be accountable because it is up to them ETHICALLY, NOT to look at FCC Files to figure out Ad Rates AND Not to disclose Rates from previous employers. Jessell equates the FCC as a 7-11 and TV Stations as Beer Brands. Well, Sales people can buy beer – but if they choose to buy beer for minors, that’s the Risk THEY take. The real issue of the Investigation though is the collusion of Driving Up ad rates – so everybody makes more money, the safety in numbers philosophy – if they all do it then nobody gets punished

[email protected] says:

August 31, 2018 at 11:15 am

so Jessell thinks Ad Collusion is the FCC’s Fault. Remind me not to pay attention to anything Jessell writes

[email protected] says:

August 31, 2018 at 2:33 pm

Perhaps the FCC Public Political Files such as the ones you mentioned are actually the violation. I don’t know that filing SPECIFIC Political Ad Placement info is required in the first place, maybe that’s the communication issue. Perhaps just the Flight information (such as number of orders and the total expenditure is the only thing required in the FCC public file), maybe the time slots are Not required. Also, when the Feds ask how you learned what other Station Ad Rates are – tell them you learned from Harry Jessell in a TVnewscheck article, which by the way is a form of communicating to others about Ad Rates. If TVnewscheck uses a rep firm such as Telerep or Katz, that would certainly be the case. TV Stations love to play stupid, especially when it comes to Ad Sales teams, they know the odds of the FCC ever enforcing anything is slim to none. Clearly the deregulation path the FCC has been on clearly indicates they also have no intention of enforcing other FCC issues.

[email protected] says:

September 4, 2018 at 12:50 pm

Odd that Jessel doesn’t mention how or where someone should complain or report about Ad Collusion they know of OR are involved with….

*Actually, I see here Genachowski supposedly called for specificity in ad placements for FCC files, So if Pai was so much for reform – why wasn’t that changed???
* I also see that Scripps, Meredith & Tegna were used in an example, perhaps to distract from the apparent known targets such as Sinclair & Tribune.
*Also a major detail about Political Ad placements were ignored, but i’m not going to say what it is.
*This article also distracts from the bigger issue of commercial Advertisers in general
*TVnewscheck doing it’s best to Promote it’s reputation as a PR Newswire and Propaganda Machine
*Covering-up the Crime is worse than Committing the crime
*I think Jessell should be responsible and write an article on who and where to report Ad Collusion, simply defending Ad Collusion does not aid in the DOJ Investigation – this article actually hinders the Investigation to some extent, almost to the point of saying it’s okay and Not to worry – when people should be contacting the Feds.


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