Radio, TV Would Be Deeply Affected By Big Three Demise

[Garrett Wollman]

<<On Wed, 19 Nov 2008 18:12:39 -0500, "Laurence Glavin" <lglavin@mail.com> said:

> Subject: Radio, TV Would Be Deeply Affected By Big Three Demise

There are so many erroneous assumptions in that subject heading that I
don't know where to begin.  Did you write that or was it a Fox News
copyeditor?  (No, scratch that -- in Fox World there would have to be
a "Missing Mom" in there somehow.)

TV does depend a lot on automaker advertising.  But nobody who knows
anything about business believes in a scenario that would lead to the
"demise" of the so-called "Big Three".  The worst-case scenario is
that GM, Chrysler, and Ford all file for Chapter 11 bankruptcy -- in
which case, they would still be operating and they would still need to
advertise their products, just like happened with most of the major
airlines in the past decade.[1][2]  Chrysler will probably end up being
owned by someone else (the private-equity firm that currently owns it
doesn't want it), probably another automaker; the only question is
whether they will have to declare bankruptcy first.

There will, without doubt, be declines in automobile advertising -- in
fact, automakers have already announced reductions in their "up-front"
ad buys for the second half of the season.  There will eventually be
secular declines as well: if GM goes into bankruptcy, we should expect
to see at least one of their brands eliminated.  (This would be much
easier to do in bankruptcy as the company would be able to reject
labor agreements and dealership franchise contracts.)  This would
reduce the overall advertising spending at GM, since each brand has
its own advertising program.

-GAWollman

[1] Case in point: during all those airline bankruptcies, the
companies' frequent-flier programs -- practically at the bottom of the
list of unsecured creditors -- were maintained and no DL, UA, or US
frequent flier lost miles in those programs.

[2] According to the UAW, Ford is in the best shape of the three.  Of
course, there are plenty of other automakers: Daimler, Hyundai,
Renault-Nissan, Fuji Heavy Industries, Mitsubishi, Honda, Mazda,
Toyota, and VW, just to name a few that do business in the U.S. market