Riding GM To The PoorhouseEven in a perfect economy, the media would be having economic problems dealing with the internet's impact on the traditional media business models. That's more than enough to worry about. But of course the economy is far from perfect, so the media has an extra challenge: its advertisers are losing money. And for some, we're not talking about fluctuations; we're talking about huge ad buyers who might be wiped off the map. This is why every media company is really, really hoping that the government rushes to the aid of General Motors and its dying US auto industry friends. The auto industry is one of the biggest advertisers of all. Local newspapers reap a lot of their revenue from local auto dealer ads. (The recent decline of those, along with real estate ads and retail ads, has local papers scrambling to figure out what to do). But that's just one small piece; television auto ads and sponsorships are declining too. GM spent more than $2 billion on advertising last year, and when they make cuts, media companies can see tens or hundreds of millions of dollars evaporate. In August, GM pulled out of its sponsorship of the Academy Awards. In September, the company slashed its digital ad budget and decided not to sponsor the Super Bowl. Even when GM tries to spend money, they're cursed. They signed up for a big product placement deal in the craptastic new NBC Christian Slater show My Own Worst Enemy—but yesterday NBC announced it was going to cancel the show because of low ratings. Boy that sucks. And today we learned that, thanks the auto industry's troubles, Christmas has been ruined at yet another media company! A tipster sent us an internal memo to staffers at Sirius XM Satellite Radio from the CEO Mel Karmazin, the former Viacom exec; he's copying his old company by canceling the holiday party and giving everyone an extra vacation day instead. "The economy is slowing, our OEM and retail partners are hurting, satellite radio sales are not growing as we would like, and our stock price reflects that along with other issues," Karmazin writes. A major reason: all those new cars with built-in satellite radios aren't selling. How bad is it overall?
Auto makers could reduce their ad spending by as much as $3 billion this year, leaving auto ad spending down $15 billion from its high of $24 billion in 2004, according to Sanford Bernstein & Co.
So US government, on behalf of the media, let's compromise. Let the cars die, save the ads. We'll give you Christian Slater for free.