Too Little Time.

• Author: TAYLOR, PAUL
• Position: The economic circle between television broadcasting and political candidates

How broadcasters betray the public interest they're supposed to serve

BY ALL APPEARANCES, THE $1,000-A-HEAD fundraiser for Rep. Rick Lazio (R-NY) at Manhattan's swank Le Cirque 2000 restaurant this summer was the sort of straight-up, money-for-influence transaction that has become the signature campaign event of our times.

But this one had a twist. The 125 donors were all from the broadcast industry, a special-interest group that finds itself in the rare and enviable position of not having to wait until after the election to draw a return on its political capital. In fact, the checks they cast upon Lazio that night have already returned manyfold, as the candidate spends millions and millions of dollars to buy television ads in his quest to become the next senator from New York.

The swift round-trip journey of those campaign contributions is a tidy metaphor for the most profitable, exclusive, and mutually beneficial relationship in the new Gilded Age of politics--the one between incumbent broadcasters and incumbent politicians. The outlines of this relationship are familiar to all who follow politics and public policy. Politicians give commercial broadcasters the public airwaves for free. During the campaign season, broadcasters turn around and sell air-time back to the politicians, while imposing a virtual news blackout on candidate discussion of issues. This arrangement appears lopsided, but only on first glance. By creating a pay-to-play model for political speech on the nation's premier medium for political communication, the television industry protects incumbents, starves challengers, and enriches itself.

What's less well-known--because the phenomenon is new--is just how much broadcasters have come to profit from democracy. In election years, political campaigns are now the third-best advertising client for the typical network-affiliated local television stations, trailing only automobiles and retail stores. As recently as 1992, political ads accounted for just 3.8 percent of the annual ad revenue of the typical local station, according to an analysis of the industry by Bear, Stearns and Co. This year, that figure is projected to rise to 9.2 percent. There will be more political ads on television this year than ads for fast food or movies.

"We're salivating," Patrick Paolini, general sales manager of WIVB-TV, the CBS affiliate in Buffalo, told the trade publication Electronic Media last year when he was asked about the prospect of a Senate race involving First Lady Hillary Clinton. "No question it will be huge as far as ad revenue."

His counterpart, Dan O'Connor of WSYT-TV, a Fox affiliate in Syracuse, recalled that in 1998, when Gov. George Pataki and then Sen. Al D'Amato both ran for re-election, political ads accounted for 20 percent of his station's fourth-quarter revenues. "People [ad-buyers for the candidates] call you up and say, `Can you clear $40,000 next week?' It's like, `What? Am I dreaming? Of course, I can clear that!' And they send you a check in the overnight mail. It's like Santa Claus came. It's a beautiful thing"

Business is Booming

Owning one of this country's 1,300 commercial broadcast television stations has always been a bit like owning a money machine. Annual pre-tax profit margins at well-run stations reach 30, 40, even 50 percent. Bottom lines have stayed parked at these stratospheric levels despite a steady loss of viewers, first to cable and more recently to the Internet.

The record seems to defy economic gravity, but it conforms to the winner-takes-more logic of modern markets. In a world where audiences keep getting sliced thinner, the medium that attracts the most viewers keeps getting more valuable, even as it loses eyeballs. Certain kinds of advertisers--candidates among them--simply have no choice but to reach for the biggest megaphone in town. That's still broadcast television. And the broadcasters know it: television ad rates have risen at roughly twice the rate of inflation over the past two decades, even as audience shares have dwindled.

The Television Bureau of Advertising estimates that nation-wide, political ads will bring in at least $600 million to local stations this year, a six-fold increase (in real...