Media Outlets Losing Money From Lack Of Auto Ads
August 11, 2008 at 7:37 AM (PT)
The flight of advertising dollars to the Internet is one explanation for the pain felt by traditional media, write TIM ARANGO and STUART ELLIOTT in THE NEW YORK TIMES.
Another culprit that is increasingly to blame is DETROIT.
For all the discussion of new media’s role in hurting profits and revenues at traditional media outlets -- newspapers, magazines, broadcast television and radio -- the sharp downturn in the auto industry is another big culprit, and is taking an increasing toll on the advertising revenue generated by the media.
The collapse in U.S. automobile consumer demand will materially damage the advertising growth rates of traditional media owners.
In the first quarter alone, the auto industry spent $414 million less on advertising than in last year’s first quarter, according to TNS MEDIA INTELLIGENCE.
In a recent research report titled "U.S. Media: Wreck on the Highway," MICHAEL NATHANSON, a SANFORD C. BERNSTEIN media analyst, wrote, "The collapse in U.S. automobile consumer demand will materially damage the advertising growth rates of traditional media owners."
NATHANSON projected that overall earnings at CBS, whose core business is broadcast television, would be reduced by about 2 cents a share for the year, because of the decline in auto advertising. But CBS is not even the most exposed to the downturn in auto advertising. That would be FOX, which relies on auto advertising for about 15% of its overall ad revenue, compared with 12% for CBS, according to SANFORD C. BERNSTEIN.