Yesterday, I reported that KOMO had given $180,000 worth in TV ad time to Rep. Dave Reichert on credit, an oddity in political advertising.
This morning, Kathy Neukirchen, head of Meida Plus, Rep. Reichert’s media buyer, confirmed for me that KOMO had given Reichert the time on credit, explaining the arrangement to me like this: Her firm gets its TV time for all its clients, political and commercial, on credit. Media Plus is a big local buyer and has an established relationship with the stations. She pays for the time at the end of the month (the practice is called “Net 30″). Her political clients are treated no differently, she says, than her commercial clients.
Neukirchen says Reichert pays her back daily as the ads run, and that Reichert has already paid her for yesterday’s ads and will pay her today for that portion of the rest of the week’s buy.
Burner’s camp says they’ve confirmed that KIRO has also agreed to run Reichert’s ads on credit. The total loaned time between KOMO and KIRO would amount to about $530,000.
KING reportedly turned down Media Plus’s “Net 30″ request for the Reichert ad buys. Neukirchen would only say she doesn’t know what the stations have said, but all her contracts are done on credit. [UPDATE: I just talked to Jim Rose, Director of Sales & Marketing at KING, and he says, in fact, KING is extending credit to Neukirchen for the Reichert buys.]
The Burner campaign tells me their lawyers are “exploring legal options” on the matter. Neukirchen’s daily payback arrangement with Reichert, they say, amounts to a loan, and FEC rules do not allow corporations to loan money to candidates. (Nor are they allowed to donate unless it’s through a Political Action Committee. Corporate PAC limits are $10,000 per election cycle.)
FEC spokesman Bob Biersack would not offer any judgement on this particular case, telling me only that the Burner camp was free to file a complaint with the FEC. He did tell me that firms can “loan” money (and he put it in quotes) to campaigns if it’s “part of the general course of business.”
He explained: “If a company is providing services to a campaign and in the normal course it incurs charges and then gets paid in its established billing cycle, that’s the general course of business.”
Neukirchen’s political clients are lucky to benefit from her good standing with local TV. Political campaigns are not typically extended credit: It can create the appearance of favoritism from the media, and more practically speaking (from the stations’ point of view), fast-moving campaigns, which rely on donations, aren’t particularly stable debtors. (Also, given that not every campaign has access to high-end media firms like Media Plus, it’s not fair allow some campaigns to get ads on credit while others don’t have that opportunity.)
When I wrote a similar article during the 2006 election cycle on Mike McGavick’s special credit arrangement with KOMO (which led to a violation at the FEC because McGavick failed to report an in-kind contribution of $120,000 for loaned TV time), longtime GOP media buyer Brad Mott with Ad Ventures, told me, “Almost all political advertising is done on a ‘pay-seven-days-in-advance’ rule. Credit is a problem because if the bill doesn’t get paid, at what point does it become an illegal corporate contribution?”
Reichert’s quickie-loan arrangement with Neukirchen isn’t likely to be captured by FEC reporting. According Biersack at the FEC, any ad time that Reichert arranged after October 15 won’t be reported until 30 days after the election. At that point, according to Neukirchen’s arrangement, Reichert will have paid his obligations. Or at least, the public, which relies on FEC campaign reports to know how campaigns pay their bills, will have to trust that he eventually paid his obligation.
I am waiting to hear back from the Reichert campaign.
If they don’t speak up, I’ll guess we’ll just have to rely on Goldy’s take on the whole thing.