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NewsMine cabal-elite corporate automotive Viewing Item | General motors pulls times ads for criticism Original Source Link: (May no longer be active) http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=8129707http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=8129707
GM Pulls L.A. Times Ads Fri Apr 8, 2005 01:58 PM ET
By Martha Graybow NEW YORK (Reuters) - General Motors Corp.'s (GM.N: Quote, Profile, Research) decision to yank its advertising from the Los Angeles Times in a dispute over coverage could dent the profit of parent Tribune Co. (TRB.N: Quote, Profile, Research) at a time when the media company is trying to bolster ad sales after a slump.
The world's largest automaker, in a rare move for a major corporation, said late on Thursday it was pulling its ads from one of the country's biggest dailies over what it called factual errors and misrepresentations in the L.A. Times' editorial coverage.
The boycott likely will be short-lived because GM won't want to risk losing market share to its rivals in the large L.A. market, publishing analysts said.
But the Chicago-based media company "doesn't need any more bad news," said Douglas Arthur, a Morgan Stanley stock analyst. "Tribune remains the cheapest major media company in the country, but probably the one with the most issues right now."
Another analyst, William Drewry of Credit Suisse First Boston, estimated that GM's move could lower Tribune's second-quarter earnings by a penny a share if the automaker withholds ads through June. That would translate into a reduction of 4 cents to 6 cents a share on a full-year basis if GM holds back ads for a 12-month period, according to the report.
But Drewry left his profit forecasts for Tribune unchanged, citing uncertainty on the overall impact of the canceled ads.
"We believe that GM is trying to send the paper a pointed and public message that probably lasts a few weeks at most -- maybe a couple of months at the outside," Drewry wrote.
A Tribune spokesman was quoted in the Chicago Tribune, one of the company's other dailies, as saying it is too early to comment on what kind of impact GM's move might have on second-quarter financial results.
Neither GM nor Tribune would comment on the amount of GM's advertising spending at the paper, but Morgan Stanley's Arthur estimated that the lost advertising would amount to roughly $10 million to $15 million on a full-year basis.
The cancellation will cover GM's corporate and brand advertising, GM said. That does not include ads that individual GM car dealers purchase themselves.
Tribune's stock has slumped about 23 percent over the past 12 months on investor concerns about circulation scandals at two of its papers, Long Island, New York-based Newsday and the New York edition of Spanish language paper Hoy.
The company agreed to a $90 million settlement last year with advertisers who were overcharged based on faulty circulation data.
The company also has been struggling with unsteady advertising at its print and broadcast television outlets.
Tribune shares were down about 1 percent on Friday afternoon, off 41 cents at $39.11 on the New York Stock Exchange.
GM's move came a day after the L.A. Times published a column by its Pulitzer Prize-winning auto critic, Dan Neil, about the automaker's brand strategy.
The column's headline called the Pontiac G6 "a sales flop." It also said the automaker should "dump" Chairman and Chief Executive Rick Wagoner and "let the impeachment proceedings begin."
GM spokeswoman Ryndee Carney said the move to withdraw advertising was not spurred by any specific story but by "concerns over accuracy and misrepresentations with the paper's editorial coverage over a period of some time."
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