NEW YORK —
WJLA banked $33 million in election-related advertising last year. Only three stations in the United States earned more, and two of those were also in Washington. That’s because the stations’ signals reach citizens in a crucial battleground state, Virginia, as well as the political power brokers in the nation’s capital. If Allbritton were to sell WJLA by itself, it could fetch $300 million.
That math helps explain why Gannett paid $1.5 billion for 20 stations last month, why the Tribune Co. agreed last week to pay $2.7 billion for 19 stations — and why more consolidation in the marketplace is forecast.
The increasingly expensive elections that play out across the country every two years are making stations look like a smart investment, with the revenue piling up each time a candidate says “I approved this message.’’
Despite an array of digital alternatives and a rapidly transforming television business, 30-second commercials remain one of the most valuable tools of campaigns and political action committees. As Leslie Moonves, chief executive of CBS Corp., which owns 29 stations, said last year, “Super PACs may be bad for America, but they’re very good for CBS.”
Next year’s midterm elections will be a boon to stations, as well, and “2016 could be amazing,” said Mark Fratrik, chief economist for BIA/Kelsey, a media consultancy.
Station owners have come to dread what they call “odd years,” like 2013, when there is little political spending. For stations blessed to be in swing states, political ads routinely represent a third of their overall ad revenue in election years.
For instance, WBNS, the highest-rated station in Columbus, Ohio, grossed about $50 million in advertising last year, of which at least $20 million was attributed to campaign spending. Columbus is the nation’s 32d-largest TV market.
Contrast that to the next biggest market, KSTU, the most popular station in Salt Lake City. Kantar Media estimates that KSTU brought in about $29 million in advertising last year.
On paper, these two stations are equals; WBNS came out far ahead because Columbus was in the middle of a hotly contested race between President Obama and Mitt Romney to win Ohio’s 18 electoral votes.
Fratrik said that stations in Ohio enjoyed, on average, a 38 percent increase in total ad revenue last year, in large part because of political spending. The increases were more than 40 percent for some stations in Wisconsin, where a recall election for governor added to the political drama. One of the stations being bought by Tribune is up the road from Columbus in Cleveland. Another is in Milwaukee. Two others are in Virginia, and one is in Colorado.
As he talked up Tribune’s acquisition to investors this week, Peter Liguori, Tribune’s chief executive, made sure to mention the increased exposure to swing-state advertising.
Analysts say the surge in station consolidation this year has also been driven by low interest rates and by an enormous rise in retransmission fees for stations, which are the equivalent of per-subscriber fees for cable channels like ESPN and MTV.