In addition, however, we think there are three areas where a new administration would change policy with significant impacts on values.
Advertising and marketing expense.
While both campaigns and Super pacs spent unconscionable amounts of money on the campaign this year, the main beneficiaries were the national networks and local stations in swing states. Every four years, a surge in political advertising expense tends to push advertising prices up for other marketers, but we expect this year was a whopper. We think there are two negatives and one positive that will accompany a Romney administration:
- Elimination or reduction of marketing expense deductibility.
- Withdrawal and auctioning of UHF and other broadcast spectrum and repurposing these to wireless and mobile uses.
- Elimination of all cross ownership rules of any kind. Frankly, we think this is inevitable under either administration as the media industry landscape goes through further tumult and upheaval.
- Net Neutrality elimination will benefit cable companies. The idea behind net neutrality is prevent local access providers--presumably your local cable company or ATT or Verizon from charging usage fees for specific websites. As you can imagine consumer groups and websites are opposed to the elimination of network neutrality while cable companies and telecom companies are for elimination. The Obama administration opposes net neutrality elimination and the current FCC ruled in its favor. We expect that a Romney Administration will choose FCC Commissioners in favor of eliminating net neutrality.While huge levels of spending from the campaigns seems like an unstoppable trend, incumbent politicians seem to newly fear unrestrained spending by anonymous interest groups. We expect that this year's multi billion orgy of spending will mark a historic peak -- unlikely ever to be repeated. Fourth quarter comparisons will be commensurately exceptional; to be followed by commensurately weak earnings in 2013.