Price Gouging in 3 Biggest Markets Drove Up Cost of 2000 Election
February 7, 2002
Madison - With Congress set to resume debate on major campaign reform legislation that takes aim at political TV ads, a new Wisconsin Democracy Campaign study shows local stations in the three largest Wisconsin television markets systematically gouged political candidates in the final month of the 2000 campaign, charging 68 percent - or nearly $1 million - more than the lowest candidate rate listed on the stations’ own advertising rate cards.
WDC’s analysis of nearly 7,300 ads purchased by candidates and aired on TV stations in Milwaukee, Madison and Green Bay comes as the U.S. House of Representatives is poised to vote on the Shays-Meehan reform bill, the companion legislation to the McCain-Feingold bill that has already passed the Senate. Among its many provisions, the bill closes loopholes in a 30-year-old federal law designed to protect candidates from demand-driven spikes in TV ad prices.
The law no longer works, the Democracy Campaign analysis shows. In 2000, the so-called "lowest unit charge" safeguard for candidates was overrun by the selling practices of stations, the buying demands of candidates, the sharp rise in issue advocacy advertising and the unprecedented flood of hard and soft money into political campaigns, the report concludes.
"The cost of TV is why campaigns have become so expensive and politicians have such an insatiable appetite for special interest donations. The pressure to raise money for TV ads is at the root of the scandals that now plague state and national politics," WDC executive director Mike McCabe said. "If the law worked as it was intended to work, candidates wouldn’t spend so much time begging for contributions and you wouldn’t be seeing public policy traded for campaign donations."
Nineteen candidates bought 7,272 ads in the 30 days before the November 7 election, paying 11 stations in the three markets $2,461,130. If candidates had paid the lowest rate listed on the stations’ rate cards, they would have paid $1,462,172 for the ads. That amounts to an overcharge of $998,958 - a premium averaging 68 percent. The overcharges averaged $137.37 per ad.
Overcharges averaged 134 percent in the Madison TV market, 57 percent in Green Bay and 15 percent in Milwaukee.
Stations charged candidates even more than their highest listed rate in 184 instances, an apparent violation of the federal law, WDC found. Green Bay CBS affiliate WFRV went "off the rate card" most frequently, charging more than its highest published rate 128 times.
"The law’s intent was to ensure candidates could buy advertising time at the lowest rate. The reality is that the law is not even preventing TV stations from charging more than their highest rate. The price gouging we saw in the 2000 election is proof the lowest unit charge law is not working," McCabe said.
WDC also found that stations charge more for ads during periods of peak campaign activity than they do during non-election periods. A comparison of rate cards for the pre-election fourth quarter of 2000 and the post-election first quarter of 2001 revealed notable differences in ad rates.
For example, Madison’s CBS affiliate WISC charged more than twice as much during the fourth quarter of 2000 for non-preemptible time during the 6 o'clock news on Saturdays. In the pre-election period, the station charged $800 for "fixed" or non-preemptible time, $400 for preemptible with notice and $200 for preemptible without notice. Right after the election, WISC lowered its rates for the time slot to $350, $250 and $125, respectively, for the three classes of ads.
An amendment closing the loopholes in the lowest unit charge law was added last March to the McCain-Feingold campaign finance reform bill that passed in the Senate, McCabe said, adding the same provisions are included in the companion Shays-Meehan bill that will soon be debated in the House. Supporters of Shays-Meehan recently gathered the needed 218 signatures on a "discharge petition" to force a vote on the reform measure in the House.
The broadcast industry is actively lobbying to strip the reduced cost air time guarantee out of the Shays-Meehan bill in the House, he said. Meanwhile, there is growing interest in scrapping the lowest unit charge rule altogether and replacing it with a system of mandatory free air time for parties and candidates who meet qualifying thresholds and agree to voluntary limits on campaign spending. U.S. Senator John McCain, R-Arizona, has drafted such a proposal for possible introduction later this session or next.