GM STOPS CONDE NAST ADVERTISING

Publisher Calls Situation 'Standoff'

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By Jon Fine and Jean Halliday

NEW YORK (AdAge.com) -- Ongoing negotiations between General Motors Corp. and Cond1 Nast Publications over the marketer's 2001 advertising schedule have stalemated. Company publishers say GM is "on hiatus." GM declines to comment.

The automaker, which

Vanity Fair, Glamour and Architectural Digest got the most GM business last May.
spent $28 million with Cond1 Nast last year, will disappear from the publisher's monthly magazines beginning with May issues.

"There's a standoff," one Cond1 Nast executive said.

Hearst, Time, Hachette
The situation appears to be unique to Cond1 Nast, rather than an indication of cutbacks at GM. Executives at Hearst Magazines, Time Inc. and Hachette Filipacchi Magazines confirmed GM has not pulled business from their titles.

Sales executives at rival publishing houses took little pleasure from Cond1 Nast's bad news. "I'd be very surprised if GM would make just one cut," said one executive.

Michael Browner, executive director of media operations at GM, referred calls to a spokeswoman. She declined to comment, saying GM's media buys are proprietary information. Earlier this year, however, she confirmed GM made cuts in TV spending in the second quarter, while insisting its full-year ad spending for 2001 would be about the same as last year. For the first 11 months of 2000, GM spent $2.6 billion on media advertising.

Cond1 Nast President-CEO Steven T. Florio declined to comment; a company spokeswoman said Cond1 Nast was "always in

conversations with clients" but would never disclose the substance of those talks. Peggy Daitch, Conde Nast's group ad director in Detroit, declined to comment.

The news hit, oddly enough, just after Conde Nast, the second-largest magazine company, hosted a breakfast March 8 for the staff of Bcom3 Group's General Motors Planworks, the automaker's dedicated media-planning agency. The point of the breakfast was "to show people doors weren't closed," as one executive put it.

But kind gestures don't fill pages.

500 ad pages last year
Last year, GM ran about 500 ad pages in Conde Nast magazines, according to Competitive Media Reporting. The proposal for this year was around 200 pages, and the companies have yet to come to agreement over pricing. Accounts differ over the status of the negotiations. Some internal talk suggests the two companies will take a break before resuming talks May 1. But others fear it may drag on even longer.

"We've got a lot of business at stake here," said one publisher. In the last three years, the Cond1 Nast titles getting the most ad dollars from GM were Bon Appetit, Glamour and The New Yorker, according to Competitive Media Reporting. Those that got the most GM business last May were Architectural Digest, Vanity Fair and Glamour.

Refusal to negotiate rates
Cond1 Nast executives suggested the standoff stems from a collision between GM's aggressive stance and the publisher's traditional refusal to negotiate rates. If so, it wouldn't be the first time the two companies had clashed over the issue.

From 1986 until 1994, Cond1 Nast titles were basically kept off GM's list because of the publisher's policy. But in 1994, Mr. Florio made peace with GM, and the automaker agreed to spend about $20 million with Conde Nast. Since then, Conde Nast has been in GM's good graces.

GM spent $424 million on magazine buys in the first 11 months of 2000, according to CMR. It spent $484.7 million in all of 1999, and $442.7 million in 1998. Those numbers marked a sharp drop from the $598 million the company spent in 1997.

The auto industry is feeling the pinch of the economic slowdown, with total unit sales down by nearly 7% in the first two months of 2001 vs. last year, when the industry had its best sales year ever, according to Automotive News. GM's vehicle sales slid by 8% in the first two months, and its market share dipped below 30%.

Staff writer Jean Halliday contributed to this report.

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