Broadcasters to Benefit from Projected $4B Political Ad Spend

October 31, 2011

Political ad spend for 2012 is expected to surpass the previous record in 2010, with estimates as high as $4 billion, benefiting broadcast companies with a wide reach as candidates have access to more campaign funds in their run for office, says Perry A. Sook, CEO of Nexstar Broadcasting Group (NXST).

“The driver of the overall growth of political revenue is twofold. First is the Supreme Court‘s decision to eliminate the ban on corporate contributions to campaigns, which has led to the rise of PACs and super-PACs,” Sook said. “It will be a contested election for the presidency and obviously all the way down to statewide offices.”

Perry expects Nexstar Broadcasting to benefit from the political ad windfall in 2012. The company obtains 60% of EBITDA from television ad spend and reaches 12% of U.S. households, and the company’s local reach is expected to protect the broadcaster from larger conglomerate competition.

“The upside to Nexstar over the next six to 12 months is that in an even-numbered year, political will contribute a midteens percent of our television ad revenue,” Sook said. “Our geography, given that we’re in a number of the battleground states, always leads Nexstar to do well in political ad revenue in the even-numbered years.”