GM, Chrysler Prepare to Cull Dealerships

Local car lots once brought broadcasters big bucks
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DETROIT: Car and truck dealerships comprised the fourth largest spot-spending category among the top 100 TV markets last year, contributing $801 million of a $16.5 billion total. Now their ranks are in dire jeopardy.

Fiat will announce tomorrow which of the roughly 3,200 Chrysler dealerships go done. About half of that number accounts for 90 percent of revenues, according to Bloomberg. The list of dead dealerships walking will reportedly be filed with the court handling Chrysler’s bankruptcy.

General Motors, inching closer to bankruptcy, is planning to cut around 40 percent of its 6,200 dealership, The New York Daily News said. GM dealerships contributed $264 million in spot spends across the top 100 last year. Ford, the only automaker among the Big Three that didn’t take federal bail-out money and the one most likely to survive, is said to be quietly consolidating Lincoln-Mercury showrooms with Ford dealerships, though no outright cuts have been announced. Ford dealers bought $301 million in spot last year across the top 100 DMAs.

Automakers and dealers represented 12 of the top 25 spenders on local and national spot in the top 100 last year. Together, they spent more than $2.5 billion, or 15 percent of the total. Full-year spending was off by about 20 percent from 2007. For 4Q08, it was down 30 percent, but the impact was buffered by political spending.

Obama’s campaign was No. 12 for the entire year, contributing $174.7 million. Political as a category ranked No. 5 for the full year, contributing $708 million in ad revenues. The previous off-election year was 87 percent less.

Retransmission is not the answer, despite the appearance of aggressive growth in that category. It comprised less than 6 percent of Gray’s revenues in 1Q. It was less than 8 percent at Nexstar for 2008.
For Sinclair, retrans was 14 percent of revenues. Scripps proportion was around 7 percent.

Broadcasters are preparing for the blow. Several of their first-quarter reports contained the following phrase or some version of it:

“At this time it is unclear as to how the bankruptcy filing by Chrysler LLC will, or a possible bankruptcy filing by General Motors Corp. would, affect our revenue for the second quarter.”

Meanwhile, GM’s stock hit a 76-year low The Wall Street Journalsaid, diving to $1.01 as it mulls bankruptcy alternatives and senior executives dump stock. The company has until June 1 to present an acceptable restructuring plan to get more money from the federal government or presumably file for bankruptcy.

Ford announced yesterday it would sell 300 million shares of common stock in a public offering at $4.75 a share to raise $1.4 billion. The proceeds will be used to run the company and pay into a health-care trust to be managed by the United Auto Workers. Ford shares were trading in early afternoon at $4.85. A year-to-date low of around $1.58 was reached in February. --Deborah D. McAdams