State Broadcasters Fear Ad Deduction CutWarn Hill There Could Be Trickle-Down Effect 11/13/2013 5:25 PM Eastern
State broadcasting associations are concerned about potential new legislation's impact on the deductibility of advertising costs, and as a result threaten to reduce their ad revenues.
In a letter to the leadership of the House Ways and Means Committee, those associations--all 50 of them--were responding to reports the committee was pondering changes to ad deductibility. They are particularly concerned with preserving the current law's provision allowing a business to deduct the full cost of advertising in the year in which it is spent.
There have been multiple reports that a draft bill proposed allowing only 50% of the ad cost to be deducted in the first year.
"As advertising is the life blood for local radio and television stations," they said, "any change to deductibility would deal an enormous financial blow to this country."
Broadcasters are currently boosting their retransmission consent fees to help grow that second revenue stream, but advertising is still the river that floats their boat. The associations point out that 84% of TV station revenues still comes from advertising. Moreover, they add, there is a stimulating effect of local ads that extends to the larger economy.