Cornering the Airwaves

As the U.S. Senate gears up for a vote this spring on the
campaign finance reform
bill
drafted by Arizona Republican John McCain and
Wisconsin Democrat Russell Feingold, it would do well to consider a lament from
one of its recent escapees: "Today's campaigns function as collection agencies
for broadcasters," Bill Bradley observed a few years ago. "You simply transfer
money from contributors to television stations."

In 2000 those transfers soared to record levels, not just because political
donations from wealthy contributors were more generous than ever, but also
because television stations were more brazen than ever in jacking up their ad
rates to exploit the unprecedented campaign-driven spike in demand. As a result,
political advertisers spent up to an estimated $1 billion on television
broadcasting last year--five times more than what they spent in 1980, even after
adjusting for inflation. "The rates are becoming extortionist," Jim Jordan,
executive director of the Democratic Senatorial Campaign Committee, said last
fall as he watched the cost of his political ads rise from one day to the next.

Television stations routinely engaged in this gouging despite a 30-year-old
law--known as the "lowest unit charge" (LUC) provision--designed to protect
candidates from such price spikes. Like so many other campaign finance laws, this
one has simply collapsed into its own loopholes. According to a comprehensive
review of more than 16,000 candidate ad sales logs at 10 television stations in
medium-size and large markets, candidates paid, on average, 65 percent more for
their ads in the closing months of last year's campaign than the lowest
candidate rate published on the station's own rate card. Parties and issue
groups, which are not entitled to LUC protection, were hit even harder; in busy
markets, their ad rates doubled and sometimes tripled between Labor Day and
election day. (See www.bettercampaigns.org for detailed results from this study,
which was conducted by the Alliance for Better Campaigns, a public-interest group
that I direct.)

These price spikes ought to be part of the forthcoming Senate debate, for
they underscore a fundamental quandary that reformers face: It's more expensive
than ever to run for office, and any legislation that reduces the supply of
political money without also reducing the demand for it is not a prescription for
a stable campaign finance system. The McCain-Feingold bill would ban soft money,
the large donations that have the greatest potential to corrupt. It's the right
first step, but it's only a first step. If reformers want to create campaigns
that are more competitive, if they want to bring down barriers for candidates who
are neither wealthy nor well financed, and if they want to restrain the nonstop
money chase, they also need to find a way to relieve the demand-side pressures.
And the obvious place to look is at the greatest source of the problem:
commercial television broadcasting.

The United States is one of just a few countries that doesn't require
television stations--as a condition of receiving their government licenses--to
set aside free airtime during the height of the campaign season for candidates
and parties to communicate to voters. It's almost certainly the only
country in the world that permits its television industry to profiteer on
political campaigns, and to do so by using billions of dollars' worth of airwaves
they have been given, free of charge, in return for a commitment to serve the
public interest.

These anomalies are a testament to the broadcast industry's clout on Capitol
Hill. "I've taken them on many times," McCain likes to say, "and my record is
unblemished by victory." The version of the campaign finance reform bill that he
and Feingold will bring to the floor does not contain a provision mandating free
airtime for candidates. The original version did, but the authors had to scrap it
in 1997, after the National Association of Broadcasters spent two years and
millions of dollars lobbying the senators' colleagues. (If you don't recall
seeing or hearing much about this lobbying blitz, it may be because the
networks' newscasts didn't report it.)

McCain remains determined to move forward with a provision for free airtime
and plans to introduce a separate bill later in the year. While this follow-up
measure won't have an easy ride, the television industry is facing some new
sources of resentment in Washington that could pierce its aura of invincibility.
Lately broadcasters have come to be seen as "spectrum hogs" who squat on $70
billion worth of mostly unused airspace that Congress awarded them in 1996, free
of charge, to facilitate their transition to digital technology. Five years
later, the much-hyped high-definition television sets have yet to dent the U.S.
consumer market, while the United States has fallen behind Europe and Japan in
developing the next generation of wireless Internet technologies--largely because
there isn't enough spectrum left to go around.

Another potential sore point is the campaign-season gouging. Purely from the
vantage point of self-preservation, the high cost of modern politics is not an
entirely unhappy development for incumbents; anything that raises the table
stakes is tougher on challengers than on them. Still, no one in Congress likes
dialing for dollars around the clock. And nobody likes being played for a chump.

The LUC system, enacted by Congress in 1971, was supposed to ensure that
candidates would receive the same volume discount rates that television stations
provided to their best year-round product advertisers. As a mechanism to control
prices, it's been a misadventure from the get-go. The problem is that a station's
LUC rates come with a catch: Ads can be bumped to a different time if another
advertiser is willing to pay more for the designated slot. This arrangement may
be acceptable to product advertisers, whose goal is to build brand loyalty over
the long haul. But it's not acceptable to candidates. In the fast-paced thrust
and parry of a political campaign, they need assurances that their ads will run
as scheduled. Stations charge a premium for such "nonpreemptible time," and as
election day approaches, these premiums rise.

In recent years, the LUC system has been undermined still further by the
explosive growth in issue advertising by political parties and interest groups.
These ads are not entitled to LUC protection; so when they flood into the market
in the campaign's closing weeks, stations have a field day. Consider the memo
that an ad sales representative for KHQ-TV, the CBS affiliate in Spokane,
Washington, sent last September to Democratic media consultant Peter Fenn: "As
you might know, the state of WA is getting hit pretty hard with political," it
began. "Activity is a lot heavier than the station had anticipated and your
schedules are already getting bumped. Look at the following pages, which detail
your orders & my proposals to get back what we can." Those following pages
advised Fenn that the price he'd been quoted in August for a 30-second issue ad
on KHQ's late local news, $600, was being increased to $1,800.

These spikes have a ricochet effect on candidate ads as well. "Soft money and
issue ads have become the tail that wags the dog," says Democratic consultant
Neil Oxman. "In the old days, the candidate rate was pegged to the rate that a
station's best commercial customer got. Now the candidate rate is pegged to the
rates that the soft money political advertiser pays. Yes, the candidate can get a
discount from that rate, but it's a discount on a rate that has gone through the
roof."

As recently as a decade ago, political advertising accounted for just 3
percent of the gross revenues of the typical network-affiliated local station in
an election year. In 2000 it accounted for nearly 10 percent. Last year local
stations sold more political ads than they did fast-food ads.

While the television industry's paycheck from politics keeps growing,
its commitment to substantive coverage of campaigns keeps shriveling. The
shrinking sound bite, the scaled-back coverage of conventions and debates, the
focus on little else besides the campaign horse race--these have all become
familiar criticisms. Veteran ABC political correspondent Sam Donaldson worried
aloud last year that his network's nightly newscasts had simply "forfeited the
field" of campaign coverage to the niche environs of all-news cable channels. And
the landscape is even more barren at the local level, where most stations don't
even employ a political correspondent.

So if candidates want to be on broadcast television--and they do--their only
option is to buy their way, 30 seconds at a time. In a media-saturated world
where everybody's audience keeps getting sliced thinner, broadcast television is
the closest thing to a public square. For political candidates, it remains the
medium of choice: In 2000, according to advertising industry analysts, more than
80 cents of every political-advertising dollar went to television broadcasting.
A mandate for free airtime could relieve this pressure not just by providing
candidates and parties with no-cost vouchers good for advertising time on
television but also by requiring TV stations to air a minimum amount of
candidate-centered news and public-affairs programming (such as debates, public
forums, and interviews) in the culminating weeks of the campaign.

McCain's new bill proposes a "National Political Broadcast Time Bank,"
financed by a spectrum-usage fee imposed on broadcasters, that would distribute
$750 million worth of political-ad vouchers per election cycle (roughly what
candidates and parties spent on television in 2000). A third of the vouchers
would go to candidates for federal office who raised funds from a threshold
number of small donors and who agreed to voluntary campaign-spending limits.
Two-thirds would go to political parties that agreed not to accept soft
money--roughly replacing the nearly $500 million they raised in soft money in
1999 and 2000 combined. In effect this would eliminate a "dirty" resource in
favor of a clean one and would keep parties where they belong: in the business
of helping their candidates get elected.

The bill would also require that stations air issue-based programming at least
two hours a week in the six weeks preceding a general election. The best antidote
to a money-soaked political culture dominated by special interests is an informed
public. Opening up the airwaves to this sort of robust discourse would help arm
the public with the tools it needs to choose its leaders.

Television stations will complain that the bill infringes upon their First
Amendment rights and is a threat to their property. But these arguments don't
hold up. Since the passage of the Communications Act of 1934, broadcasters have
been treated under law as public trustees as well as private commercial
enterprises. They have been given free and exclusive use of a scarce resource in
return for a pledge to serve the public interest. The Supreme Court has made it
clear time and again that Congress can construe this pledge to include specific,
enforceable obligations such as the ones in the McCain bill. Members of Congress
simply haven't risen to the task. Only when they do will broadcasters be reined
in from gouging them, their challengers, and the entire democratic process.

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