Wells Fargo analyst Marci Ryvicker says that the new political ad requirements for FCC's TV stations "will not only create a time-wasting headache for station groups, but we believe it could also result in downward pressure on ad rates in general."
Ryvicker: Political Rules More Bad Than Good
The FCC’s new rules requiring top stations to post their political advertising files, including the rates they charge, could cause “more harm than good,” according to Marci Ryvicker and her team of securities analysts at Wells Fargo.
Posting the discounted rates that stations charge candidates “is likely to inhibit the competitiveness of the broadcast business model,” the Wells Fargo analyst said in a memo to clients.
“Specifically, having other advertisers and rival stations privy to this information will not only create a time-wasting headache for station groups, but we believe it could also result in downward pressure on ad rates in general.”
“At the end of the day, all this is likely to do, in our view, is cause broadcasters to spend a lot more time and money defending their rates than actually conducting their business, which is not good for any product — particularly news.”
The memo points out that the new rules, which were adopted last Friday, initially affect only the Big Four affiliates in the top 50 markets. But they account for 60% of all political advertising on local broadcast TV.
The rules will cover all stations in 2014.
Wells Fargo said that while the FCC ruling should not be taken lightly, it doesn’t not anticipate any significant changes in its projected earnings for the affected companies this year or next.