Scripps, Gray, Tegna To See Political Boon

In a note to investors this morning entitled “Thank you, President (?) Donald Trump,” Marci Ryvicker and her team of analysts at Wells Fargo Securities says that Scripps, Gray and Tegna have the most to gain in political revenue this year from the expansion of presidential battleground states and the “hot” Senate, House and gubernatorial races.

Because of where they operate stations, the three groups will have the most  “exposure” to where the political money will be spent, according to the Wells Fargo, analysis.

Using a variety of factors, Wells Fargo boiled down each group’s exposure to a simple percentage. Scripps was tops with 56%, Gray second at 35% and Tegna third at 34%.

The exposure translates into $167 million for Scripps, $150 million for Gray and $205 million for Tegna. Of the non-network station groups, Sinclair, with exposure of just 20%, will actually reap the most political money, $275 million, by virtue of its size.

The station groups will be divvying up a record political spend, the note says.

The note confirms Wells Fargo’s November projection for total political spending this year — $7.5 billion will be raised by the candidates and their supporters and $6 billion — or 80% of that — will go into advertising.

Of the $6 billion, the station groups will get $3.3 billion or 55%, a gain of one share point from 2012, the last presidential election year, the memo says. The total is up 18% from 2012.

In terms of share growth, digital is the big winner. It will take in $810 million or 14% of the total spend. That’s up 141% from 2012.

Digital’s gain will come at the expense of direct mail (share down 34%), outdoor (down 30%) and newspapers (down 25%).

As the title suggests, the note credits Trump for much of the heavy spending. His insurgent campaign has expanded the battleground or swing states from seven (Colorado, Florida, Iowa, New Hampshire, Nevada, Ohio and Virginia) to 13 (add Indiana, Pennsylvania, Michigan, Minnesota, North Carolina and Wisconsin) or maybe 14 (add New York).

On top of that, the note says, likely Democratic presidential candidate Hillary Clinton may try to put Arizona, Georgia and Missouri in play by spending in those states, too.

Behind the numbers is the presumption that Trump will raise $1 billion and spend it in the general election.

“We know there are some skeptics given that Trump hasn’t needed to spend during the primary season — he clearly had enough ‘free’ air time making the talk show circuit,” the memo says.

“But, it sounds like that might change…. Trump has hired a slew of very serious campaign managers and we think it’s telling that Obama’s ad spend was double his two opponents [in 2008 and 2012] — and he won.”

The note says not to forget spending in the competitive congressional and gubernatorial races.

“We believe there will be a huge swell of funds going to Senate races–and in some cases we might even see Senate races with $75 million to $100 million spent on TV.”

The note says to look for hot senatorial races in Arizona, Colorado, Florida, Illinois, Missouri, North Carolina, New Hampshire, Nevada, Ohio, Pennsylvania and Wisconsin.

In addition, it says, there will be competitive races for the state house in Missouri, New Hampshire, North Carolina and West Virginia and for House seats in 12 states.