DETROIT (AdAge.com) -- Many media outlets and their sales reps are worried they'll be stuck holding the bag for outstanding bills with Chrysler, which is restructuring under Chapter 11 bankruptcy proceedings, and anxieties are climbing over bills for GM, which is expected to follow Chrysler into bankruptcy June 1.
Not so for the big guys. NBC, Fox and ABC are getting paid for national ad time on their TV networks bought by Chrysler for its corporate blitz that broke a week ago, since that is covered by an agreement with the government's auto task force that allows the automaker to spend $67 million on advertising during bankruptcy. But, according to three executives familiar with the matter, those buys came with a caveat: a 2% rate reduction to get guaranteed payment. Chrysler would not confirm that.
The timing couldn't be worse for the TV networks, coming on the eve of the upfront. GM has already said it will participate, but pundits don't expect the auto giant to jump in at anywhere near the same levels of the past. With the entire auto industry in a funk, the nets will be looking to other categories to pick up the slack.
Meantime though, GM is buying online ad inventory "at a frenzied" pace, with bookings through the month of May, said an online-media sales rep who is "nervous" about repayments from both troubled automakers. "No one will talk about it. [We] can't get answers" from GM's media agency, Publicis Groupe's Starcom MediaVest Group, which uses the standard line "business as usual," the rep said.
Given that GM has said publicly it is closely following Chrysler's Chapter 11 journey, it's realistic that the auto giant would want to include Starcom as a critical vendor if it declares bankruptcy. Indeed, those talks are said to be under way, according to two execs. Neither GM nor Starcom returned calls by press time.
Another unresolved issue for media sellers is bills for regional dealer ad groups, which are partly funded by the car companies but also based on new-vehicle sales volumes. Both car companies will have even smaller voices regionally after wholesale dealer housecleaning by both GM and Chrysler last week. They are eliminating more than 3,100 combined. Chrysler's dealer reduction is 25%, but it does not necessarily follow that its dealer outlay of $122 million in measured media last year will be reduced by that amount, given that it is presumably the weaker -- and lower-spending dealers -- that will be eliminated. The same goes for GM.
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Contributing: Nat Ives, Brian Steinberg