Privacy, DTC, media key issues as GOP takes over

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The historic Republican election victory and Senate takeover eases some worries for advertisers in areas including privacy, but also raises the specter of curbs on direct-to-consumer advertising of prescription drugs and a fresh look at retail slotting allowances.

The read is less clear on how the Republican-controlled Senate will treat the pressing issue of media consolidation.

With the White House effectively able to set the agenda, some lobbyists suggested ad issues-formerly viewed as diversions by a divided Congress stalemated on bigger policy issues-might get less attention.

"The issues are the same but the priorities might change," said Jerry Cerasale, senior VP of the Direct Marketing Association. "Clearly more of the administration priorities will come up first. They will be setting the agenda."

musical chairs

Almost all the changes stem from the Senate, where the election victory will give Republicans control of leadership and several committees. Sen. John McCain, R-Ariz., will replace Sen. Ernest "Fritz" Hollings, D-S.C., as head of the Senate Commerce Committee, while Sen. Conrad Burns, R-Mont., will replace Sen. Daniel Inouye, D-Hawaii, as chairman of the Commerce Committee's Communications panel. In two other key changes, Sen. Richard Shelby, R-Ala., will become chairman of the Senate Banking committee and Sen. Kit Bond, R-Mo., will chair the Senate Small Business committee.

The leadership change will almost certainly result in Republicans pushing a prescription-drug bill for seniors, and the push could come quickly.

Early this year, marketers had worried that a prescription-drug bill would contain restrictions of DTC ads, but the House eventually approved legislation without curbs. Ad lobbyists said last week they were worried the issue could be reopened, but were also hopeful that a move to pass something fast could result in Congress starting with the House legislation and never looking back.

"You can never tell, but if [incoming Senate Majority Leader] Trent Lott wants to get this out first, the quickest way is to go along with the Republican House measure," said Dick O'Brien, exec VP of the American Association of Advertising Agencies. "The trick is going to be getting enough Democrats to break a filibuster."

Media consolidation has been a major focus of Sen. Hollings, but it's not as high a priority for Sen. McCain. The Republican, however, has been critical of rising cable rates and media power as part of debates on campaign finance.

Sen. McCain has made few comments since the Federal Communications Commission started its review of media rules. He told Fox News last week that he admired FCC Chairman Michael Powell's work, but that he also had some differences with the FCC and that he will exercise oversight responsibilities. He also promised a series of hearings as the committee readies to reauthorize the FCC.

Mr. Powell favors easing rules on media ownership, which could lead to further consolidation. Media buyers generally fret that such concentration pushes up ad pricing.

Sen. Bond's return to chairing the Small Business committee revives slotting fees as an issue. Sen. Bond has criticized the fees to win or hold retail shelf space, charging that they hurt small businesses. The last time he was committee chairman, Sen. Bond held hearings on the subject, and provided additional money for the Federal Trade Commission to probe the fees.

ease fears

Sen. McCain's return to the Commerce Committee would seem to ease fears of increased regulation, but on some ad issues, such as privacy, the committee has never split on partisan grounds. Sen. Hollings had pushed an opt-in plan for privacy while Sen. McCain favored an opt-out plan, but each had backers from the other's party. "We are in better standing than we were before," said Clark Rector Jr., senior VP of the American Advertising Federation. "Sen. Hollings' proposal was more problematic for business."

Privacy issues are handled in several committees and in the banking committee Sen. Shelby's ascension could raise the profile of financial privacy. Sen. Shelby has offered a number of pieces of privacy legislation.

While generally relieved by the Senate switch, ad groups were also watchful. "You can always be surprised," said the 4A's Mr. O'Brien. "Who would have thought a sweeping review of FDA and FCC rules would be coming from a Republican administration? This is an administration that won't let excesses take place."

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