TV’s campaign ad addiction, Obamacare outsourced to Canada, and a Romney aide’s new role
This report from the New York Times’ Brian Stelter two weeks ago explains how campaign cash spent in hotly contested presidential election swing states and in close primary and general election congressional races has helped to drive two recent multibillion dollar purchases of television station groups by Gannett and Tribune Company, both of which already own large collections of local television outlets.
As Stelter explains:
“The increasingly expensive elections that play out across the country every two years are making stations look like a smart investment….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, the chief executive of the CBS Corporation, which owns 29 stations, memorably said last year, ‘Super PACs may be bad for America, but they’re very good for CBS.’”
In fact, Stelter may have understated the impact of the changed legal landscape that now allows unlimited personal and corporate contributions to PACs, Super PACs, and “social welfare” nonprofits, all of which have been buying hundreds of millions of dollars in political ads.
At a time when pretty much all of the rest of television advertising is threatened — just the way newspaper advertising has been — by alternative media ranging from Google search ads to Netflix, political ads seem to be the outlier, at least for now. That means that the giant media companies that sell television time will increasingly depend on campaign dollars as a lifeline. Stelter’s story focused on Gannett and Tribune because they had just made these big acquisitions, and because he could make the point that they are legacy newspaper companies that have stopped investing in print products. But every major media company is enjoying the TV political ad bonanza and fast becoming dependent on it. These include businesses far bigger than Gannett or Tribune: CBS, Comcast (NBCUniversal, Telemundo), Disney, Fox, Viacom, every cable channel from ESPN to Animal Planet, and companies such as Time Warner and Cablevision that own local cable systems (which sell highly-targeted local advertising).
So, I’d like to see a more complete story about all of this that includes:
- A projection of what portion of television ad revenue will depend on political money five, 10 or 20 years from now if political spending trends continue and if what Stelter calls the “array of digital alternatives” continues to lure away other advertisers. As this other ad revenue fades, how much more crucial will political money become? Are any companies particularly dependent on the campaign gravy train?
- What kind of lobbying is the industry doing to head off even a hint of campaign spending reform? Could that effort tacitly or explicitly include taking advantage of the companies’ obvious clout as the news channels that report on the politicians who will push or block any reforms?
- Are television outlets in particular localities already trying to influence local decisions that could affect the flow of TV money? For example, they could be involved in trying to get their state moved up in the primary calendar so that they rake in some of that early money now going to South Carolina or New Hampshire. Or they could be pushing for runoffs in close multicandidate races that force a second round of advertising.
On the other hand, a closer look at all of this might produce an entirely different story: Could it be that the celebrated use of big data by the Obama 2012 campaign not only to direct ad buys into low-cost niche cable channels aimed at highly-targeted audiences but also to move money out of television and into more cost-effective, finely-tuned social media and other digital alternatives will be replicated so soon across so many political campaigns that the television industry’s perceived life saver becomes an anchor, regardless of any campaign finance reforms?
2. Obamacare outsourced to Canada?
In an appendix to a recent Government Accountability Office report on the progress (and in some cases lack thereof) of the government’s effort to build Obamacare’s online insurance exchanges in the states where the federal government (and not the state) is going to run them, I noticed that by far the largest outside contractor being paid to assist in launching the exchanges is a Montreal, Canada-based company called CGI Group Inc.
CGI’s $87,997,000 in contracts for services such as “Web Portal & Support” dwarfs the amount being doled out to the usual-suspect domestic consulting contractors, such as Booz Allen Hamilton (for services including “Eligibility Enrollment Strategy and Planning”). How did that happen?
3. Top Romney aide becomes king of the Obamacare consultants:
Speaking of Obamacare, in almost every serious story about its implementation, there’s a quote from someone at a firm called Leavitt Partners, which is typically referred to as a consulting company that is helping states to build their insurance exchanges.
The firm is run by Michael Leavitt, a former three-term Utah governor, who was Health and Human Services Secretary in the George W. Bush administration. Leavitt, himself, is often quoted in these stories opining on how difficult launching the program will be. However, he also points out that the Bush administration’s Medicare prescription drug program also had major problems early on but ultimately got its sea legs.
Leavitt’s measured stance on Obamacare — that it’s now the law and that it can be implemented successfully if done right — is obviously good business; the underlying message is that his firm can help the states do it right. But there’s also an interesting political twist to Leavitt’s new prominence. Leavitt was a close Mitt Romney 2012 campaign adviser, and toward the end of the campaign he ran Romney’s transition planning and was seen as a likely Romney White House chief of staff.
Romney repeatedly vowed during the campaign that the repeal of Obamacare would be an immediate priority if he got to the White House. And since the election, most Republicans at the state level who oppose Obamacare have refused to participate in its implementation, forcing the federal government to make plans to operate the insurance exchanges in those states. Yet when Leavitt or others at his firm are quoted in these articles about Obamacare it is almost always in the context of consulting work they are doing for states that have opted to build their own exchanges.
It appears from its website that Leavitt Partners has more than 60 full-time professionals and advisers, many with blue chip credentials. They work in five basic subject areas ranging from “Medicaid” to “Food, Drug, Device and Dietary Supplements.” There’s also a private equity investing arm.
The division called “LP Center for Health Insurance Exchange Intelligence” doesn’t list all the state exchanges it is advising, but I bet it’s most of them, as well as a slew of what it describes as “health insurance payers, technology vendors, and trade organizations” who want help in dealing with Obamacare.
There’s got to be a great story around the irony that Leavitt seems to be enjoying a more prosperous transition in the Obama administration than the one he would have presided over in a Romney White House.
PHOTO: U.S. President Barack Obama makes a statement about the Supreme Court’s decision on the Affordable Health Care Act in the East Room of the White House in Washington, June 28, 2012. REUTERS/Luke Sharrett