Dollarocracy (25 page)

Depoliticization is an eminently rational, if ultimately self-defeating, response to a political universe where negative political advertising is the lingua franca. The trailblazing experimental research of Stephen Ansolabehere and Shanto Iyengar has been invaluable in this regard. They have demonstrated that the main consequence of negative ads is that it demobilizes citizens and
turns them off from electoral politics, if not public and civic life altogether. As they put it, “The demobilizing impact of negative advertising has been a well-kept secret, and a tacit assumption among political consultants.” The trend is toward “a political implosion of apathy and withdrawal.”
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Even those scholars who otherwise defend TV political advertising acknowledge the research establishes that “exposure to negativity is likely to increase cynicism, especially among nonpartisans.”
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Depoliticization is cancerous to any credible notion of democratic self-government. Subsequent research by professors at Rutgers University and George Washington University “linked negative campaigning with reduced public trust and satisfaction with government.” Richard Lau, Lee Sigelman, and Ivy Brown noted that negative advertising “has the potential to do damage to the political system itself.”
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From 2008 to 2012, voter turnout fell from 58 percent to 52 percent, one of the larger such declines in consecutive presidential elections in recent American history. The explosion in negative advertising was not solely, or even necessarily primarily, responsible for such a drop-off, but it likely played a role. If nothing else, the correlation is striking. America's chattering classes and punditocracy were too entangled in their political junkiedom to see the forest for the trees.

So why does the United States have so much TV political advertising compared to nearly all other democracies? A seasoned observer of American life might ask if the reason such a dubious practice as political advertising is playing such a large and definitional role is because someone is getting very rich from it. It is time to follow the money. Where it leads is the subject of the next chapter.

Don't Hate Political Advertising—Profit from It.

INVESTMENT ANALYST SCOTT EYMER, 2012

A
mericans may recognize political ads as an annoyance, or even an entertainment, but the general managers of television network affiliates in communities across the United States understand them as something else altogether: a massive revenue stream. They are now such an important cash cow that television stations in early caucus and primary states and fall swing states plan presidential election years—and the years leading up to presidential election years—around the anticipated windfall. Political ads are no longer a quadrennial bonus; they are essential to the bottom line for old-school broadcast stations that have been hard hit by changing consumer tastes and digital challenges.

When confusion about the date for the Iowa Republican caucuses held up the flow of advertising dollars in the fall of 2011, the general managers and national ad sales directors of stations in Des Moines and Cedar Rapids and Mason City panicked. “We saw a little before the (summer) straw poll and then nothing till late November,” said Anne Marie Caudron, national sales manager of KCCI, the CBS affiliate in Des Moines. “We were”—long pause—“concerned.”
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Over at the ABC affiliate, WOI, general manager Russ Hamilton was more than concerned. When the ads did not come, he said, “We were all dumbfounded. I've been in this a long number of years, and we were like, ‘You've got to be kidding me.'” Then the money spigots opened. Hundreds of thousands, then millions of dollars flowed into the accounts of Iowa stations—$1.4 million in the week before Christmas alone. “It feels like they combined November and December into one month of spending,” a gleeful Hamilton told the
Washington Post
.
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The money was moving so quickly—it would eventually add up to $102.20 per caucus goer—that some local managers grumbled about having to work over the holidays. Not Hamilton. The
Post
reported, “To minimize the chaos before a holiday weekend, affiliates closed their books on the purchases by Friday afternoon—except WOI. Hamilton said he would interrupt his steak dinner on New Year's Eve and upload some more commercials if it meant more dollars.”
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It meant more dollars. A lot more.

In the 2011–2012 election cycle, $10 billion overall was spent on campaigns in the United States. Most of this spending went to pay for millions of television political ads.
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Some of that TV ad money went to advertising professionals and campaign consultants. But the lion's share of the spending for TV political ads—90 percent, according to one report—went to purchase airtime on commercial television stations.
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The airtime was a scarce commodity, and if candidates wanted it, they had to be willing to pay commercial broadcasters . . . a fortune. For the broadcasters, this was manna: a massive infusion of income that required virtually no labor on their part other than to make a bank run to deposit checks. They were like Jed Clampett striking oil in the Ozarks.

Well, not exactly like Jed Clampett. Jed was hunting on his own land when he struck it rich. Local television stations hunt on our land.

Commercial broadcasters receive monopoly licenses to sections of the publicly owned broadcast spectrum at no charge. The law states that the fortunate few who are recipients of these monopoly licenses get them on a temporary basis as long as they serve the public interest. The law is based on the assumption that the primary public interest the citizenry has is seeing that the airwaves are used to promote fair and free democratic life with informed
public participation. The foundation of an effective democracy is credible elections, and broadcasting on the publicly owned airwaves is singularly positioned to make outstanding elections possible.

In many countries, public and private broadcasters make real contributions to the process. But not in the United States, where the civic and democratic values imagined when the licensing system was developed have been trumped by commercial excess. The robust democracy imagined by Progressive reformers who sought to update the founding principles of the American experiment for the modern age seems less attainable than at any time in a century. Where once a poet like Whitman wrote glowingly of presidential elections as America's “powerfulest scene and show,” our ablest interpreters of the national Zeitgeist now suggest that the process does “damage . . . to the American psyche.”
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“What we Americans go through to pick a president is not only crazy and unnecessary but genuinely abusive. Hundreds of millions of dollars are spent in a craven, cynical effort to stir up hatred and anger on both sides,” wrote journalist Matt Taibbi on the eve of the 2012 election. “A decision that in reality takes one or two days of careful research to make is somehow stretched out into a process that involves two years of relentless, suffocating mind-warfare, an onslaught of toxic media messaging directed at liberals, conservatives and everyone in between that by Election Day makes every dinner conversation dangerous and literally divides families.”
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But it wasn't all doom and gloom. As the election approached, newspaper business pages and broadcast industry trade journals were running celebratory headlines, proclaiming:

“E.W. Scripps Posts Profit on Political Ad Spend”
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“Political Boon Leads Gray to Up Estimates”
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“Election Money Fuels Big Gains for Scripps”
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“CBS Profit Climbs 16% as Political Advertising Boosts Radio, TV”
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“Sinclair Broadcast Earnings Rise in 3Q on Political Spending”
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“Politics Ads, Olympics Lift Belo 3Q Profit 81 Pct”
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Stock analysts noticed, counseling investors, “Don't Hate Political Advertising—Profit from It.”

“Who will benefit the most from record setting political revenue?” asked investment analyst Scott Eymer in a fall 2012 column that ran beneath that headline. The answer: “A wide array of businesses profit from political spending, from advertising agencies and marketing companies to media outlets. But especially in 2012 and for the next several weeks, those publicly traded television groups with a coverage footprint which include local markets in battleground states will achieve spectacular political revenue. This is a onetime shot of significant cash flow, all paid in advance.”
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Station owners and investors pocket most of the “spectacular political revenue.” But a portion is diverted to lobbying against campaign-finance reforms that might affect the “significant cash flow.” So it is that while thoughtful Americans fret about the damage done to our national psyche by media excess in the election season, media companies aggressively lobby for more, much more, of the same.

In many other democracies, where commercial broadcasting plays a smaller role and public broadcasting is relatively large, paid TV political advertising plays little or no role in the campaign process. There is no great commercial lobby that so greatly profits by ever-increasing amounts of TV political ad spending. Not so here. “In one of the great perversions of the Constitution foisted on its subjects by its overlords,” Bill Moyers and Bernard Weisberger wrote, “the public airwaves where free speech should reign have become private enclosures to which access must be bought.”
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This chapter follows the money and goes where the bucks stop. It is here, arguably, that the corruption and cynicism of the money-and-media election complex are most revealing.

In contrast to the rest of the democratic world, the United States adopted a commercial—for-profit, advertising-supported—radio broadcasting system in the late 1920s and 1930s. There was strong opposition to the commercialization of the airwaves at the time—a heterogeneous array of Americans fought diligently but unsuccessfully for a significant nonprofit and noncommercial broadcast sector in the 1930s. But not even the harshest opponent of commercial broadcasting could imagine our airwaves being used for political
advertising.
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Indeed, during the 1930s when Congress routinely considered radio regulation, the commercial broadcasters were lavish with free airtime for politicians and candidates from both major parties. Even socialists like Norman Thomas received airtime from NBC. And Franklin Delano Roosevelt, never a favorite of the media owners, broadcast thirty “fireside chats,” ranging in length from fifteen to forty-five minutes, on the nation's new radio networks between 1933 and 1944.
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During this period, when their control over the system was under review, the commercial broadcasters went out of their way to establish that they could be trusted with a central role in the modern political process. For the next two decades, the commercial stations were careful not to appear to favor either political party and equally careful to give a sense that providing access to candidates was a key part of their public-service obligations. There was considerable criticism of how halfhearted the commercial broadcasters' election activities actually were during these years, especially by the late 1940s and 1950s, but by twenty-first-century standards the radio and later television networks might look as if they were being managed by the League of Women Voters.

When the radio networks were granted control over television by the Federal Communications Commission, candidate advertising began in earnest, but it took a long time to get to where the system is today. In the 1950s, political advertising had almost no impact on broadcasters' profit margins. In the 1960s and 1970s, TV candidate advertising was still a minuscule slice of total TV advertising revenues. By the early 1990s, the revenue numbers nudged up to where political ads accounted for around 2 percent of local TV station revenues, and a decade later TV political advertising was between 5 and 8 percent of total local station TV ad revenues.
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In 2012, political advertising accounted for around 20 percent of TV station revenues.
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In some key markets in swing states, local TV stations gained as much as 35 percent of their revenues from political advertising. Confirming a line from former New Jersey senator Bill Bradley, election campaigns were indeed beginning to “function as collection agencies for broadcasters. You simply transfer money from contributors to television stations.”
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Political advertising has become a staple of the commercial broadcasting industry and the indispensable basis for its profitability. It is a dream business as it requires little or no sales force to shake the tree, and the money is paid
in advance. Even before the 2012 campaign was under way, Wall Street stock analysts could barely contain themselves as they envisioned the growing cash flow. “Voters are going to be inundated with more campaign advertising than ever,” one investor service wrote. “While this may fray the already frazzled nerves of the American people, it is great news for media companies.”
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As Carl Salas of Moody's Investors Service put it, “Virtually all U.S. broadcasters will benefit from spending on political ads in 2012.”
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