TVB: 2016 Political Bonanza May Start In 4Q

Next year’s highly anticipated election-year revenue windfall for broadcasters might actually start building even before this year is over.

That’s the word from TVB President Steve Lanzano, who said Monday that the elections in November 2016 will be so hard-fought that political advertising will likely start showing up in the fourth quarter of this year.

Lanzano made his predictions on the outlook for local and national spot advertising at a panel session at the NAB Show in Las Vegas.

“I think you’ll start seeing [campaign] dollars in the fourth quarter of this year,” Lanzano said during the session, which was titled “Impressions on National Advertising.” Among the reasons he cited: “This will be the first presidential election where there isn’t an incumbent [running] for president since the Citizens United decision, and the Koch brothers are already talking about spending a billion dollars, which would be more than they spent for the last presidential election. So it’s going to be the wild, wild West out there,” Lanzano said.

In the so-called Citizens United decision (Citizens United v. the Federal Election Commission), the U.S. Supreme Court ruled in 2010 that prohibiting nonprofit corporations from making political expenditures was a violation of their First Amendment rights. The court’s decision was also extended to include for-profit corporations, unions and other groups. As a result, the 2016 elections could see a significant increase in this kind of political advertising, with broadcasters as a principal beneficiary.

The Koch brothers — billionaires Charles and David Koch — are vocal political activists, generally in support of conservative causes. They can afford to spend $1 billion on political advertising, much of which would likely wind up in broadcasters’ coffers.

But outside of expected political expenditures, local TV will see just modest growth in ad revenue for the remainder of the year — 2%-2.5%, Lanzano estimated.

With automotive still accounting for a quarter of all local TV revenue, the fortunes of broadcasters are closely linked to the auto industry, and Lanzano said he expects car sales to flatten out a bit this year.

Still, he said, “I’m optimistic in terms of our core business, going forward.”

On the network TV front, panelist David Poltrack, chief research officer for CBS, said he’s sticking with his prediction last year that 2015 would be flat for network advertising revenue, but only in the first half of the year.

“I originally said that I thought that this was going to be a flat year with an underlying growth of 2%,” he said. But he’s more optimistic about the potential for revenue gains in the second half of the year. “I like what I’m seeing in the scatter trends right now,” he said.

Poltrack said the big challenge for broadcast television is to take money back from cable TV. “Cable television took a lot of money out of broadcasters’ pockets as they were growing and their audiences were building,” he said. “That was certainly justifiable. But for the last several years, they continued to take money and share away from broadcasters but their audience was no longer growing.

“This, I believe, is the year for an aggressive broadcast effort to turn that around,” Poltrack said. “I think we’ll recapture some money from cable if we effectively execute that competitive strategy.”

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