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What has been the effect on the companies who have withdrawn their support? The one highlighted by conservatives the most has been Carbonite (CARB). Why? Because the stock dropped nearly 9% yesterday. Many of the other advertisers were larger, such as J.C. Penney (JCP), Sears Holdings (SHLD) and AOL (AOL), and the controversy hasn’t seemed to affect them. Then again, if you’re a Sears’ shareholder and this is the reason you dump the stock, as opposed to the plethora of other reasons that can be imagined, you may not necessarily be a rational actor.
Carbonite, though, is a business that is easier to boycott. They’re in a tough position because liberal activists could call for a boycott if they continued to advertise with the show, and conservative activists may now boycott since they pulled their ads. Their CEO, David Friend, announced the withdrawal of their ads on Saturday afternoon. It took until Monday at 2:30 in the afternoon to see a drop in the price of their shares.
It’s tough to peg that drop specifically on the Limbaugh event. Investors had Saturday night, all day Sunday, and most of the day on Monday to consider it. Other companies who pulled their ads didn’t have shareholders bail any more than the overall market. The fact is, few people will remember this controversy and base any buying decisions on it six months from now anyway, so any boycott or reverse boycott damage will be minimal.
Ultimately the effect will probably be less advertising for politically active radio and television shows in the future, both for the left and the right. Each perceived slight will be especially highlighted this election year. It’s probably a net negative for society to have corporations bullied in this way and will only encourage them to curry more favor with whoever holds office. That’s how we got Obamacare in the first place.
I’m a conservative, though I’m not a fan of the tactics of Rush or Glenn Beck. I’m also not a fan of the tactics of the liberal organizations that threaten companies who advertise with them. It would benefit everyone if we stop projecting the activities of the hosts, whether its Rush on the right or Rachel Maddow or Bill Maher on the left, from the companies that advertise with them. The advertisers don’t have anything to do with contributing to a “more civilized debate” as Friend said he was doing in Carbonite’s statement. Advertisers will go where the eyeballs and ears are. They’re mercenaries. They react. And they should get off their high horses.
Who would have thought Maher would be the voice of reason when he tweeted this: “Hate to defend #RushLimbaugh but he apologized, liberals looking bad not accepting. Also hate intimidation by sponsor pullout[.]”
Disclosure: No holdings
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I don't watch television much, and am appalled at some of the mindless shows that are on - but I never once thought that Colgate or Lucky Charms was somehow in bed with the mindset of the writers and producers because those companies chose to advertise during the airtime. It's a false association.
I do, however, disagree with you one point. It's my belief that Rush's listeners are similar to Paul Harvey's from decades ago - a product was bought because Paul talked about it on his show. I put coal tar in my hair because Paul said that T-Gel worked. And it did. Everyone knows that Carbonite was pimped hard by Rush, and that they took their sales and ran over this situation. I don't think the customer base will come back as quickly as you suggest. And perhaps Rush, out of spite, and a competitor, out of a desire for market position, will be a replacement to Carbonite.
AOL's stock didn't move? Rush listeners that trade on political whims wouldn't own it because of the HuffPo deal. Further, have you looked at the institutional ownership? There's not enough room left for Rush listeners to move the stock. And I view JCP and Sears as long-term holds anyway - fundamentally different from Carbonite which is kinda sorta a start-up break-out investment.
All that said, great article.