Ripple effects from last week’s dramatic elections are bound to gush into the television business, according to ad and media association officials, consumer groups and one Democrat.
With the flip of congressional control from the Republicans to the Democrats, the most immediate impact, advertising groups said, is likely to be on drug ads-a $4.7 billion a year business for broadcasters.
In addition, Congress likely will shift from a pro-media consolidation stance to one that is anti-consolidation, insiders said. The change in power also likely will lead to increased scrutiny of the Federal Communications Commission; they could heighten congressional pressure to limit profiling of consumers at the dawn of one-on-one electronic marketing; and Democrats may be positioned to rekindle the notion of media taxes.
Sen. Ted Kennedy, D-Mass., has repeatedly questioned whether direct-to-consumer prescription drug ad costs are driving up health costs and co-sponsored legislation that could impose a two-year moratorium on spots for any new drugs, which ad groups have contended is unconstitutional.
An aide to Sen. Kennedy-who will take charge of his house’s Health, Education, Labor and Pensions Committee-didn’t return several calls last week asking about plans to push the issue, but ad groups said House Democrats’ desire to rewrite Medicare to let the government negotiate prescription drug prices and Congress’s need to reauthorize a key Food and Drug Administration funding bill offer numerous prospects for attempts to limit the ads.
“It’s our most immediate concern,” said Dick O’Brien, executive VP of the American Association of Advertising Agencies.
The Senate switch also gives Sen. Tom Harkin, D-Iowa, a critic of junk food ads aimed at kids, chairmanship of the Senate Agriculture Committee. Sen. Harkin, while urging marketers to act voluntarily to stop promoting junk foods to kids, has offered legislation letting the Federal Trade Commission curb food ads if “there is evidence that consumption of certain foods and beverages is detrimental to the health of children.”
His bill also limits deductions for tobacco ad spending, raising ad groups’ fears of a precedent to limiting deductions of other industries, especially alcohol ads. Sen. Harkin has also questioned any ads being directed to younger kids.
Spotlight on Ownership
The shift in the media ownership environment comes mostly from House committee leadership changes.
Rep. John Dingell, D-Mich., becomes chairman of the House Energy and Commerce Committee; Rep. Ed Markey, D-Mass., may become chairman of the Energy and Commerce Committee’s telecommunications subcommittee; Rep. Henry Waxman, D-Calif., becomes chairman of the House Government Reform Committee; and Rep. John Conyers, D-Mich., becomes chairman of the House Judiciary Committee.
All four leaders have opposed the FCC’s attempts to ease rules that limit the ability of media companies to buy multiple properties in a market. They also have expressed concern about the prospect of cable and phone companies offering some Internet content providers faster access to consumers than others-the so-called net neutrality issue.
Rep. Dingell reconfirmed his concerns last week, making clear that closer oversight of the FCC would be a top priority of his panel.
“We are going to have to take a careful look and see whether [media ownership changes are] justified and whether we are still having local service or not,” he said, going on to suggest that the agency has engaged in “outrages” and that news and local diversity on local stations is being lost as a result of consolidation.
Aides to the other three representatives generally wouldn’t comment, though an aide to Rep. Markey said the congressman hasn’t decided whether to take the telecom panel or instead head another House committee.
The GOP leadership tilted toward easing limits. But media ownership issues have been relatively bipartisan in the House, and the results of the election could mean the FCC and ownership changes could get greater scrutiny, especially if Sen. Trent Lott, R-Miss., re-enters the GOP leadership. Sen. Lott has frequently questioned easing of ownership rules.
In other election changes, Rep. Charlie Bass, R-N.H., one of the main proponents of requiring arbitration for disputes between broadcasters and cable providers on retransmission disputes, was defeated Nov. 7, as was Sen. Conrad Burns, R-Mont., a former TV advertising salesman who once headed the Commerce Committee’s telecom subcommittee.
In addition, late last week, current House Energy and Commerce Committee chairman Joe Barton, R-Texas, announced a bid to become House Minority Leader.
Sen. Daniel Inouye, D-Hawaii, will replace Sen. Ted Stevens, R-Alaska, as chairman of the key Senate Commerce Committee. Sen. Inouye has pushed net neutrality measures, while Sen. Stevens has opposed them.
The new Democratic House committee chairmen have also questioned whether enough money is being provided for consumers to buy analog-to-digital converters needed after analog TV signals end in 2009.
While the Democratic switch means changes in the media environment in Congress, less clear is how significant media issues will be as Democrats also confront the Iraq war and other topics.
“We think the Democrats will put more emphasis on oversight of the White House and the Bush presidency, but it’s unclear what it means after the intensity of the advertising issues,” said David Rehr, president and CEO of the National Association of Broadcasters.
Dan Jaffe, executive VP of the Association of National Advertisers, warned that the Democrats’ promise to cut the deficit could cause them to eye revenue sources including advertising taxes.