General Motors cuts off Conde Nast

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Ongoing negotiations between General Motors Corp. and Conde Nast Publications over the marketer's 2001 advertising schedule have reached a stalemate to the point where company publishers now say GM is "on hiatus."

The automaker, which spent $28 million with Conde Nast last year, will disappear from the publisher's monthly magazines beginning with May issues.

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

It's one that appears to be unique to Conde 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.

All the same, there was little schadenfreude from magazine sales executives at rival publishing houses. "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.

Conde Nast President-CEO Steven T. Florio declined to comment; a company spokeswoman said Conde Nast was "always in conversations with clients" but never disclosed them. Peggy Daitch, Conde Nast's group ad director in Detroit, declined to comment. The news hit, oddly enough, just after 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.

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 negotiations. Some internal talk suggests the two companies will take a time-out 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 Conde 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.

Conde Nast executives suggested the stand-off 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, Conde Nast titles were basically kept off GM's list every year 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%.

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