Local Ad Spending Getting Boost From 'Cash For Clunkers'
10 Agosto 2009 - 12:32PM
Noticias Dow Jones
Media executives say one of the recession's earliest casualties
- the local ad market - is showing new signs of life, thanks in
part to an uptick in auto advertising spurred by the federal
government's so-called "Cash For Clunkers" program.
Local advertising has been particularly weak this recession,
hurt by the struggles in the automotive, retail and financial
industries. Major U.S. automakers, for example, have slashed their
dealerships across the country amid the specter of bankruptcy, and
marketers have found cheaper and more effective alternatives on the
Internet.
Investors, however, hope recent upbeat comments from media
mavens mark the first signs of an economic recovery for the
nation's depressed ad markets, though some media companies face
tough comparisons to last year's third quarter, when the deepening
recession was offset by a burst of spending on the Olympics and the
presidential election.
"Local businesses were the first to be hit by the recession, and
it appears they're the first to come out of it as well," CBS Chief
Executive Les Moonves said last week. "Let me stress that they're
not back at the levels we want them to be, but they're clearly on
the rise."
Moonves said third-quarter ad sales at the company's local TV
and radio businesses are running ahead of where they were at the
same time last quarter by four to eight percentage points,
accelerating a trend that began in the company's second
quarter.
He also said the "Cash For Clunkers" program, which provides
cash incentives for consumers to trade in old cars and trucks for
new, fuel-efficient cars, was "a real shot in the arm" for ad
spending at the local and national level.
Local advertising on U.S. television stations fell 9% in 2008,
the steepest decrease of all television advertising segments, and
is expected to fall another 16.1% to $11 billion in 2009, according
to PricewaterhouseCoopers. The firm doesn't see growth in the
market until 2012.
For its part, E.W. Scripps Co. (SSP) posted Monday a 24% drop in
revenue at its TV station group, with its auto advertising cut in
half. But Chief Financial Officer Timothy Stautberg noted those
results came as General Motors Corp. (GM) and Chrysler Corp. were
mired in bankruptcy proceedings and the federal government had yet
to roll out its spending program. He said the auto category is
"starting to show signs of improvement in the third quarter."
Any stimulus to auto spending from "Cash For Clunkers" may be
temporary, though Congress recently approved an additional $2
billion in funding for the program.
"We think it's sustainable," said CBS Chief Financial Officer
Frederic Reynolds. "'Cash For Clunkers' got people off the couch
and into looking in the market" and many vehicles are being sold
beyond the scope of the program.
Meanwhile, talk of a recovery comes as media watchers are still
struggling to gauge the full extent of permanent changes to the
media business wrought by the rise of digital communications.
Rupert Murdoch, chairman and chief executive of News Corp. (NWS
NWSA), owner of this newswire and The Wall Street Journal, said
"the tumultuous and unprecedented change affecting the entire media
sector and particularly newspapers and free-to-air broadcasters
cannot be ignored."
Nonetheless, he too observed early signs of recovery in the
company's various businesses, including local broadcasting.
"Not in newspapers but elsewhere, we saw some life in the
advertising market," Murdoch said last week.
-By Nat Worden, Dow Jones Newswires; (212) 416-2472;
nat.worden@dowjones.com