Editors' pick: Originally published June 8.
As Donald Trump goes, so does political advertising in 2016 -- but not in ways you might think.
If Trump's candidacy shows promise following the Republican convention in July, observers expect he'll spend aggressively on television ads to compensate for a modest field operation. But if Trump's campaign fails to demonstrate he can win critical swing states, most notably Florida and Ohio, Republican donors, especially deep-pocketed Super PACs, are apt to divert their money to senate campaigns in hopes that the party can keep full control of Congress. Deep dive: The Trump effect
"On the Republican side, there's a fear that the [Trump] campaign's infrastructure is lacking and they may need to compensate through a lot of TV ads," said Jim Papa, a Democratic strategist at the Washington-based Global Strategy Group. "But if donors and Super PACs think Trump can't win, they'll stop spending on the presidential race and start spending on Republican senate candidates. It's a targeting decision."
While Trump versus Clinton can be expected to hog headlines, senate races should capture the largest share of political ad spending, according to Wells Fargo media analyst Marci Ryvicker. The senate share is likely to reach 45% of total spending, compared to 35% for the presidential race, she said in a May 25 investor report.
There are 34 senate seats up for grabs in November but owing to the partisan nature of most states and the advantages of incumbency, only six-to-eight senate contests are expected to be close. As might be expected, they're races in many of the same swing states that will determine the next president: Ohio, Florida, Pennsylvania, New Hampshire, Nevada, Colorado and Wisconsin. The television companies that own local stations in those states will capitalize on the tightest senate races.
"Local is still the way to go for candidates to get their message out to people in the battleground states who are going to make the decisions for the whole country," said Peter Dunn, president of CBS Television Stations.
Broadcast TV, both locally-owned affiliates and national networks, are expected to receive $5.9 billion out of the $11.8 billion in political advertising expected to be spent during this election cycle, according to Borrell Associates. Even as online political spending is expected to reach $1 billion in 2016, campaigns still view TV as the best means to the widest reach of likely voters, who skew older, just the demographic that still watches network television.
"If you want to make money off of elections, you should either be a consultant or you should own a TV station in a swing state," Michael Franz, an associate professor of government at Bowdoin College and co-director of the Wesleyan Media Project. "If you can own a lot of TV stations in competitive presidential or senate race states, then you're swimming in the money."
In Illinois, incumbent Republican Senator Mark Kirk is facing a formidable challenge from Democratic Representative Tammy Duckworth, a situation that stands to benefit Tribune Media (TRCO) - Get Report , owner of Chicago's WGN as well as CBS (CBS) - Get Report , which owns the network's local affiliate in the region's largest city. Elsewhere in the Midwest, the Ohio senate race between Republican incumbent Senator Rob Portman and former Democratic Governor Ted Strickland may bolster sales at Tribune's WJW-TV in Cleveland, an affiliate of 21st Century Fox (FOXA) - Get Report .
And because senate campaigns rely more on Super PAC money than individual contributors, the prices that local TV station owners can charge for air time will be greater. Federal election law requires station owners to offer campaigns their lowest rate for a given time slot. Super PACs don't qualify for those rates and TV stations can charge whatever they can get.
As of June 1, some 2,304 groups organized as Super PACs reported raising $754 million, according to data compiled by Open Secrets. Of that total, they'd spent less than half or $325 million during the 2016 cycle. In other words, they're sitting on a lot of money waiting to be spent in the months following the July conventions.
"You'll have Super PACs clamoring to pay through the nose to get their ads on TV," Franz added. "And because TV stations can charge the SuperPACs whatever they want, it's very lucrative. Many local TV stations really depend on that revenue."
The lure of political advertising was a major reason both Meredith (MDP) - Get Report and Nexstar Broadcasting Group (NXST) - Get Report battled through much of 2015 to acquire Media General (MEG) . Both sought to expand their local television station holdings in anticipation of the 2016 election. In January, Meredith agreed to walk away from its deal with Media General after Nexstar negotiated a $2.1 billion transaction -- and a $60 million breakup fee for Meredith.
For Nexstar, Media General's TV stations in Columbus, Dayton and Youngstown, Ohio auger well for capturing spending on that state's senate race. Elsewhere, Grey Television (GTN) - Get Report , which owns the top-rated stations in Grand Junction and Colorado Springs, Colo., is keen for a lively race between incumbent Democrat Michael Bennett' and a Republican challenger in an important swing state. E.W. Scripps (SSP) - Get Report stands to gain by owning stations in Tampa, Fort Meyers/Naples and West Palm Beach, Fla., a state that will attract much focus for both its senate race to fill Marco Rubio's seat and for its 29 electoral votes.
But Trump's campaign remains the wild card that could alter the political advertising landscape. A competitive Trump campaign could put other potential swing states into play: Pennsylvania, Michigan, Minnesota, North Carolina, Wisconsin, Indiana and even New York.
Clinton, given her strong standing among Mexican-Americans, is likely to pour money into Arizona where U.S. Representative Ann Kirkpatrick threatens to end Senator John McCain's 30 years in the senate. Clinton may also spend ad dollars in Georgia and Missouri, states that have typically voted Republican but where Democrats say they're making inroads because of demographic shifts and by appealing to urban, younger and more-educated voters.
Depending on how the national campaign unfolds, the number of potential swing states could rise to as much as 17 from 7.
"It will be very important to see which broadcasters have exposure to new swing states," Leo Kulp, a media analyst at RBC Capital Markets, said in a phone interview in New York. "It's all a matter of finding new revenue compared to 2012"
Yet even if Trump doesn't spend money at the level of previous major party nominees, the Republican National Committee and conservative Super PAC are likely to fill the void. Deep dive: Here's how Priorities USA Super PAC plans on spending its $136 million
Both Kirk in Illinois and Portman in Ohio as well as Wisconsin Senator Ron Johnson are first-term senators who were elected in 2010 on the wave of Tea Party disenchantment with President Obama's Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. With Trump and Clinton trading blows, the November election is shaping up to be as divisive as any election in U.S. history.
"Whether or not Trump spends, there's going to be a lot of money supporting his campaign," Dunn said. "This is a very contentious election. Whether that's good or bad, it's very good for us."