Bloomberg News

TV Ad Makers Earn More Super-PAC Millions for Less Work

July 24, 2012

Ad Makers

Retired Adm. Roy Hoffmann, head of the Swift Boat group, is seen in an anti-John Kerry ad released Aug. 5, 2004. Photograph: Swiftvets via AP Images

Republican media strategist Fred Davis last year found that creating ads for Jon Huntsman’s presidential primary bid was a lot different on the inside than on the outside.

Like most campaigns, policy decisions and proposed commercials were reviewed by the candidate, staff members, a kitchen cabinet of advisers and sometimes family members. For the Huntsman effort, money also was always tight and “coming in little, tiny $2,500 clips,” Davis said, referring to the federal limit on individual donations to candidates.

In July 2011, he left the campaign staff to form Our Destiny PAC, a super political action committee that could raise and spend unlimited sums. With three board members and a lawyer overseeing the super-PAC, “in ten minutes, we would conduct more business than you were able to in a week in a campaign setting,” he said.

Davis’s experience underscores how super-PACs are transforming the business of running a political campaign and changing the pecking order of the most-coveted jobs. Producing and placing ads have long been two of the most lucrative slots in a campaign organization. With a super-PAC, the opportunity to make money is soaring while the job is getting easier to do.

Establishing Firms

To maximize profits, some political strategists tied to super-PACs are creating their own media firms, cutting out the need for a third party that would share the wealth.

“The media-buying business at the top end of the spectrum is as incestuous as any other business that pushes considerable sums of money,” Glenn Totten, a Democratic media consultant, said in an interview. “The fact is that people trust people they know to spend their money.”

Outside spending by groups including super-PACs and issue advocacy organizations through July 24 already exceeds $188 million compared with $73 million during the same period in the 2008 presidential contest, according to the Center for Responsive Politics, a Washington-based research group that tracks campaign giving. The vast majority of that cash is being spent on TV ads that are almost universally negative.

“It’s a huge boon to the industry,” Mark McKinnon, a former adviser to President George W. Bush, said in an e-mail. “Overnight it has at least doubled the amount of business and revenue to media firms and consultants,”

Late Spending

And the real spending hasn’t started. At the close of the 2008 presidential cycle, spending by groups outside of the candidate and party hierarchies reached $302 million, meaning more than $200 million went out the door in the three months leading to the November election, the center’s data shows.

Although rates vary, media firms can make as much as a 15 percent commission on ads. While super-PACs can negotiate to pay lower commissions because they buy so many ads, media firms still welcome the business because of its volume.

A select group of media firms, all closely held, stand to gain millions in added revenue because they have established records of success and close ties to candidates and super-PACs.

Five media firms alone have received at least $66 million so far this cycle to create and place television commercials for candidates and committees that regularly file disclosure reports, according to a Federal Election Commission analysis for Bloomberg. Those same companies received $54.8 million for the entire 2008 cycle, the FEC data show.

Mentzer Media

At the top of the list is Mentzer Media of Towson, Maryland, a firm that places ads with television stations and has landed multiple super-PAC clients.

Mentzer’s roster includes Restore Our Future, a group supporting the candidacy of Republican candidate Mitt Romney; American Crossroads, which was founded with the help of Karl Rove, a former political adviser to Bush; and American Commitment, a new non-profit 501(c)(4) group run by a former vice president to Americans for Prosperity, the group funded in part by billionaire industrialists David and Charles Koch.

Bruce Mentzer founded the company in 1991 and has placed more than $300 million in media time for more than 400 campaigns, from local races to the presidential, according to a biography on his firm’s website. Mentzer declined an interview request.

His firm has received more than $47.5 million from Restore Our Future alone to buy ad times this cycle, FEC filings show.

Swift Boats

In the 2004 presidential campaign, Mentzer Media received more than $18.6 million to place the Swift Boat Veterans for Truth ads that attacked Democratic presidential nominee Senator John Kerry’s Vietnam War service.

Mentzer works closely with the Republican ad-making firm of McCarthy Hennings Media Inc., a Washington D.C.-based company that has received more than $566,000 from Restore Our Future. McCarthy also does work for American Crossroads.

Larry McCarthy, the firm’s president, is well-known in political media circles: he produced the 1988 “Willie Horton” ad that used an ominous image of a black parolee convicted of murder to accuse Democratic presidential nominee Michael Dukakis of being soft on crime.

In this campaign’s Republican primary race, Restore Our Future ads were focused on attacking Romney’s rivals, including former House Speaker Newt Gingrich, who complained that the McCarthy-produced commercials were inaccurate.

Crossroads Media

Crossroads Media LLC has thrived by handling media for American Crossroads and Crossroads Grassroots Policy Strategies, a related non-profit group. Crossroads Media received $1.7 from American Crossroads this cycle through June, FEC documents show. American Crossroads had more than $31 million left to spend as July began.

The media company was started in the spring of 2001 by Michael Dubke, according to its website. Dubke is also a founding partner of Black Rock Group, a Republican strategic communications and public affairs firm headed by Carl Forti. Forti served as political director and deputy campaign manager for Romney’s 2008 presidential primary campaign and is now directing Restore Our Future, the pro-Romney super-PAC, and is on the board of American Crossroads.

Crossroads Media, which didn’t return a call seeking comment, got more than $38.1 million from Crossroads GPS to place ads from June 2010 to December 2011, an Internal Revenue Service document shows. That accounted for about half of the $76.8 million Crossroads GPS raised during that 19-month span.

Democratic Firms

The biggest Democratic super-PAC is Priorities USA Action, which was founded by former White House aides and has raised $20.7 million to help re-elect President Barack Obama.

It spent $18 million this election cycle through June, including $12.3 million to Mundy Katowitz Media Inc., a Washington, D.C.-based media placement company, and more than $1.7 million to New York-based Global Strategy Group and an affiliated group for research and digital consulting.

Democratic strategist Paul Begala, a onetime political adviser to President Bill Clinton, makes $20,000 per month from Priorities USA Action for media consulting.

Media consultants welcome the freedom that comes from working with super-PACs. “There’s not a lot of supervision, oversight or accountability,” said McKinnon.

It’s also easier to raise the money to produce and air a commercial. With a single wealthy investor, a super-PAC is in business.

Outside Freedom

Financial constraints were a prime reason Davis shifted from Huntsman’s campaign headquarters to the Our Destiny PAC, he said. It raised $3.2 million, including $2.2 million from Huntsman’s father, Jon Huntsman Sr.

“We never had money in the Huntsman campaign to produce or run even a single ad,” Davis said. “But we didn’t know that at first. So we started by producing the rather well-known motorcycle film” of Huntsman riding motocross through the Utah desert. “Even the discussions of that, something that was only designed to play once really, took weeks and weeks.”

At the super-PAC, Davis said that he, the PAC’s two other board members and a legal counsel would have telephonic board meetings almost daily that would run 15 minutes maximum and sometimes no longer than five.

The other board members had already read a proposed script Davis had sent out, and had jotted down their questions. During the call, it would be approved. “I would hit send and it was off” to the production office to be made, he said.

Working for outside groups carry some disadvantages. An outside group’s TV ads may be more controversial than those subject to more careful vetting by risk-averse candidates and campaign staff.

Davis drew criticism this spring after he proposed TV ads linking Obama to his controversial former pastor, Jeremiah Wright. Joe Ricketts, the billionaire businessman Davis wanted to fund the project, backed away after it was publicly criticized by Romney, its intended beneficiary.

“What a candidate puts on the air directly reflects on them personally,” said Totten. “That is not the case for a super-PAC.”

To contact the reporter on this story: Greg Giroux in Washington at ggiroux@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net


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