Political Ad Transparency: Should There Be More?
With political ads in full swing during this election year, a debate is heating up in Washington over a proposal from the FCC that would impose regulation on TV stations. The Commission wants TV stations to put the “public inspection files,” which include the names, costs, and running dates of every political ad in recent years on a website that it would oversee.
Although this information is already available to anyone who wants to physically go to a television station and access the files, the FCC has said the move is part of its bigger effort to transition from paper to digital across the board. It also believes that more transparency is necessary in political advertising.
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Political ad campaigns have become particularly controversial of late as financial issues continue to plague the country.
“With the tremendous amount of political advertising that’s being spent already in the Presidential campaign and many other local campaigns, there’s a concern about who’s paying for it all and whether or not there are some interests that are spending an excessive amount of money,” Mark Fratrik, the Vice President and Chief Economist at BIA/Kelsey, told WebProNews.
In spite of these financial concerns, television stations are against the regulation due to concerns of their own. As Fratrik explained to us, they are not opposed to the digital database specifically, but they are instead worried about the additional burden on them.
“[TV stations] are a little concerned about the logistics of it, [and] the amount of additional man-hours that each station would have to incur to respond to these proposed regulations,” he said.
TV broadcasters are also speaking out against the proposal since radio stations were not included. But, according to Fratrik, the vast majority of revenue from political advertising campaigns goes to TV stations. In fact, campaign spending on local TV stations is expected to reach near $3 billion this year. Although radio stations bring in some revenue through political campaigns, Fratrik said it pales in comparison to the amount that TV stations produce. Therefore, the FCC didn’t feel it was necessary to include radio stations in the proposal.
Another concern that TV broadcasters have is the impact the regulation would have on pricing. They fear that once the prices are made readily available, the competitive marketplace will decrease. This fear is magnified since political campaigns have the privilege of receiving the lowest costs possible for spots.
“They’re concerned about the lowest prices being out there and that other advertisers will start demanding them,” said Fratrik.
Various broadcasters have voiced their opposition on this aspect, especially since practices may vary from station to station. In a complaint filed from Allbritton Communications, which owns ABC-affiliated stations in 6 markets, Jerald Fritz, the Senior Vice President, said that the online database would “ultimately lead to a Soviet-style standardization of the way advertising should be sold as determined by the government.”
Furthermore, many of those in opposition have questioned the FCC’s authority in this matter, since campaign finance does not fall into the realm of its governance. However, some have suggested that the Commission is being forced to step in by way of the media since the Federal Election Commission has fallen short.
Commissioner Robert McDowell, who is the sole Republican at the FCC, sides with the TV stations in this debate and has called the proposal a “jobs destroyer.” Last week, at a House Appropriations Subcommittee meeting over the matter, he pointed out the harmful impact the regulation could have.
“While the original goal of such disclosure may have been to create more transparency in the political spending process, the unintended consequence could be to encourage price signaling and other anti-competitive conduct by broadcasters that could produce harmful market distortions,” McDowell said.
Since neither side appears to be backing down from its stance, Fratrik told us it was not likely that the mandate would be approved this year. What’s more, if the administration changes after the election in November, he believes it could impact everything.
Which side of this debate do you take: the FCC or TV stations? Let us know.