Gold Rush

Record profits from political ads have critics crying foul

Trailing in a hotly contested primary race last September, U.S. Senate hopeful Mike Ciresi did what any candidate of means would do: He bought more airtime. Like all candidates for federal office, Ciresi was entitled to a steep discount on television ads. Under a 1971 law designed to prevent price gouging, TV stations are required to offer candidates the same low rates they give favored, bulk buyers such as car dealerships and fast-food chains. But when Ciresi went to purchase airtime for a 5:00 p.m. broadcast on WCCO-TV (Channel 4), he ended up forking over $685 a spot--nearly 50 percent above the station's lowest price for that time period. Ciresi chose not to use the fed's so-called Lowest Unit Cost system (LUC). He knew better. And he was not alone.

Under Federal Communications Commission rules, unless a candidate is willing to pay for more expensive, so-called non-preemptible spots, TV stations are permitted to bump their ads to less desirable time slots. And for candidates locked in tight races, it's often worth it to pay top dollar to ensure that a message reaches its target audience. According to a recent report from the Alliance for Better Campaigns, a Washington, D.C.-based public-interest group, by the time Minnesota's 2000 election cycle came to an end, candidates who bought time on WCCO had shelled out an average of 57 percent more what they could have paid under the LUC system.

Bill Hillsman, the adman who made his name helping to elect Sen. Paul Wellstone and Gov. Jesse Ventura, served as a consultant to the Ciresi campaign. He says the lack of stricter federal guidelines virtually guarantees that politicians will overspend: "When I started out in this business 12 years ago, candidates were actually getting ads at the discounted rates. But the TV stations have found their way around the rules, and now it's gotten completely out of control."

In an audit of ad sales at ten stations in major markets across the nation (including WCCO, but no other Twin Cities stations), the Alliance found that candidates paid an average of 65 percent above the LUC rates in the 2000 elections. According to the group's spokeswoman Vidya Krishnamurthy, the trend was most pronounced in markets like Minnesota, where races were tight and candidates had deep pockets. "It was like the stations were running a daily auction. As the campaigns continued, the prices kept spiking upwards," Krishnamurthy observes. "Some commercial advertisers were getting out of the market during the campaign season because the rates were too high. And they could afford to. But the candidates didn't have that luxury. They had to get their word out before Election Day."

In the end, according to Krishnamurthy, the LUC "loophole" drove an ad bonanza that yielded $771 million for television stations across the country. Because the Alliance collected numbers only in major markets, the actual figure may have been closer to $1 billion--a fivefold increase, adjusted for inflation, over the 1980 election cycle. According to the Campaign Media Analysis Group, a Virginia-based market-research firm, the four major television stations in the Twin Cities collected around $18 million in political ad revenue in 2000; WCCO and KARE-TV (Channel 11) led the pack with a take of more than $6 million apiece.

The raw data has spurred calls for a legal overhaul. One such proposal, sponsored by New Jersey Democrat Robert Torricelli, passed by a 40-vote margin in the U.S. Senate on March 23. Tacked on to the proposed McCain-Feingold Campaign Reform Law, the Torricelli Amendment is aimed at closing the LUC loophole, and would provide the FCC with broad auditing and enforcement powers. But the amendment is sure to face stiff opposition from the National Association of Broadcasters (NAB), one of Washington's most powerful lobbies. According to the Center for Responsive Politics, between 1996 and 1998 the NAB, along with five other media organizations, spent an estimated $11 million successfully beating back various proposals touting free airtime. NAB spokesman Jeff Bobeck says his group will work hard to stop the Torricelli amendment in the House of Representatives. "We hate it and we don't think it will work," Bobeck says. "It purports to reduce the costs of campaigns, but candidates will continue to raise as much money as before, so cheaper ads will only mean more ads."

Howard Jaekel, associate general counsel for CBS Broadcasting, Inc., WCCO's corporate parent, agrees: "I don't see why broadcasters are responsible for reducing the costs of campaigns. Airlines aren't required to fly campaign staffs for free; bumper-sticker manufacturers aren't required to give away bumper stickers at a reduced rate. It seems to us, if there's a feeling that campaigns cost too much and candidates ought to receive some sort of assistance, that is a public good which ought to be financed by the public. We're just a convenient target." Jaekel maintains that WCCO, along with other CBS-owned stations, is careful to comply with the letter of the law. "We give all the candidates a very detailed explanation of our rate card," he says. And while Jaekel concedes that political ads have become "an important revenue source," he bristles at the Alliance's contention that the network has taken advantage of candidates' reliance on the medium. "The candidates are not required to buy the non-preemptible times, and if they don't, they still have a good chance of getting their ads run," he contends.

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