Automaker Bankruptcies Evident at Upfronts

GM finds buyer for Hummer, court agrees to hear Chrysler challenge
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NEW YORK: The bankruptcy of General Motors is reverberating across the broadcast business, according to coverage from Business Week. The carmaker’s June 1 filing was no surprise, but the impact on television continues to take shape. Wachovia’s Marci Ryvicker said this week the fallout from dealership closures wouldn’t have a huge impact on TV stations because most had already cut back spending. The blow for networks may be more severe, even though spending by the Big Three automakers has already fallen by 18 percent since 2007, BW said.

The broadcast network upfront sales presentations concluded last week. GM filed for bankruptcy in U.S. Bankruptcy Court for the Southern District of New York on Monday. The timing was evident, BW said.

“Traditionally the upfronts have been key to automakers, who were reliably eager to get the best deal for spots to promote new models that come out each October,” the article said. “But this year no one knows how much the Big Three will be able to pay. While Chrysler is in bankruptcy, the federal government's auto task force has slashed in half the $134 million the company wanted to spend over nine weeks, according to data filed in U.S. Bankruptcy Court. GM is likely to cut back, too; for all of last year, GM spent nearly $1.5 billion on national TV spots.”

BW quotes analysts who say upfront sales will decline nearly 15 percent from last season’s $9.2 billion, and that networks may be pressured to drop CPMs--the ad rate per thousand viewers. Using online platforms as loss leaders remains off the table for now, however. 

The Wall Street Journal has additional coverage about GM’s impact on media buyers, many of the largest of which are among the car company’s largest creditors.

In other developments on the GM front, the carmaker said it found a buyer for its Hummer off-road tank division. The as-yet unnamed buyer will take over the brand in the fall, according to USA Today. Hummers are produced in Louisiana and Indiana. The Saturn, Pontiac and Saab brands are still on the auction block.

Chrysler, now in its 35th day of bankruptcy, is in U.S. Bankruptcy Court for the Southern District of New York asking to terminate franchise agreements with 789 dealerships. A federal appeals court also agreed to an expedited hearing on a bondholder challenge of Chrysler’s sale to Fiat. The Fiat deal deadline is June 15, or the Italian automaker can walk. -- Deborah D. McAdams

(image by Scott Shiffman)

Previous coverage from TVB:
GM Goes Down
June 2, 2009
DETROIT: General Motors is trading for 67 cents a share this morning. The grand old dame of the auto industry, incubator of the Corvette, Camaro, GTO, Firebird and Trans Am and hundreds of other models, filed for bankruptcy on Monday after a protracted but futile effort to stay afloat. GM filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York. The company reported assets of $82.3 billion and debt of $172.8 billion. GM’s represents one of the largest bankruptcies in U.S. history and that of a second of a major car company in about a month. Chrysler filed April 30.

TV Market Sector Summary: June 1, 2009
June 1, 2009
NEW YORK:
Thousands of car dealerships closing across the country won’t have a huge impact on advertising because most had already cut budgets, Wachovia’s Marci Ryvicker said.

The Future of Car Dealerships
May 29, 2009
DETROIT: More than 2,000 auto dealerships around the country are expected to close in the coming months, eviscerating a mainstay of TV station ad revenue. The closures were a result of the bankruptcy of Chrysler and an expected filing from General Motors. Now The Economist is proposing a similar fate for the showrooms left standing.

Bankruptcy Nears for GM
May 28, 2009
DETROIT: General Motors is expected to file for bankruptcy after its latest effort to hone debt failed. GM is now working out a deal to give bondholders a bigger piece of the restructured company, but the strategy is now seen as a step toward bankruptcy rather than averting it.

General Motors Struggles to Avert Bankruptcy
May 26, 2009
DETROIT: General Motors today agreed to fund a trust to support retiree health care beginning next year. The move is part of the troubled auto-maker’s effort to restructure without declaring bankruptcy.

One-fourth of Chrysler Dealerships to Close
May 14, 2009
DETROIT: A total of 789 Chrysler dealerships will close under the automakers bankruptcy terms. The number comprises nearly one-fourth of the roughly 3,200 dealers doing business today, and around 14 percent of Chrysler’s total sales volume. 

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