GM dealer Hooman Nissani was incensed when a Los Angeles Times auto columnist took shots at the new Pontiac G6. So when General Motors Corp. announced later that day it was pulling its advertising, he decided to do the same thing for his Hooman Pontiac GMC Buick Inc. dealership in Culver City.
Another GM dealer, John Symes, was similarly peeved at the column, but decided to keep shelling out $20,000 a month in Times advertising, figuring to do otherwise would cost sales at his Symes Cadillac-Saab-Land Rover dealership in Pasadena.
The reaction by Nissani and Symes highlight the Times' challenge in trying to keep and win back GM dealers after the automaker dropped its advertising in the newspaper over what it said was inaccurate coverage. The decision includes ads for the General Motors' Buick, Chevrolet and Cadillac divisions, as well as all corporate advertising, but dealers are free to make their own ad decisions. Collectively, they spend more money on advertising than GM's corporate offices in Detroit.
Some dealers, like Nissani, have canceled their ads out of loyalty to GM or because of their own complaints about the Times' coverage of the industry. Others, like Symes, are still running ads for competitive reasons even as they chafe at what they see as unfavorable news coverage.
The Times refuses to say how many dealers have withdrawn their ads.
Representatives of the newspaper, which has struggled with declines in most advertising categories, also refused to say whether they are taking any steps to retain or recapture dealers upset about coverage. "We really don't discuss our relationship with any advertisers," said spokesman David Garcia.
Some advertisers, however, are willing to discuss their strained relationship with the newspaper, a unit of Chicago-based Tribune Co.
"We frequently differ with the editorial coverage in the Los Angeles Times and are continually frustrated with the imbalance of the Los Angeles Times and often times its inaccuracy," said Symes, who sits on the board of the National Automobile Dealers Association. "But when it comes time to do your advertising and your business plan, most dealers don't let that bother them."
'Inaccuracies and mischaracterizations'
Some car dealers have long grumbled over what they see as the Times' bias in favor of imported cars as well as articles that they claim suggests a link between Gov. Arnold Schwarzenegger's decision to cut vehicle license fees and his support from car dealers.
For GM, the tipping point apparently came in Dan Neil's April 6 auto column that mixed criticism of the Pontiac G6 with lacerating comments about GM executives Rick Wagoner and Bob Lutz. Neil, a Pulitzer Prize winner, did not respond to a message seeking comment.
In pulling its ads the next day, GM spokeswoman Ryndee Carney said the car manufacturer was responding to concerns from Southern California dealers about "inaccuracies and mischaracterizations in the Times' editorial coverage over a period of time." The decision wasn't solely related to Neil's column, she said.
Earlier this year, several Southern California dealers met with Times Publisher John Puerner and its advertising executives to discuss what they saw as unfavorable coverage in the newspaper, according to Symes and other participants in the meeting. The dealers feel they got a largely sympathetic reaction from Puerner, although no promises of more favorable coverage, Symes said.
Puerner, through Times publicists, declined comment. Last month, Tribune announced that Puerner was stepping down from his job after five years for a "self-imposed career break."
GM's decision and any subsequent cancellations by individual dealers comes as the Times works to bolster largely stagnant advertising in categories other than pre-printed inserts.
Advertising volume in the full run of the Times fell more than 5 percent in 2004, according to Tribune's annual report. In its monthly revenue statement for February, Tribune indicated that the Times was a weak spot, with an 8 percent decline in full-run advertising and a 15 percent decline in zoned advertising. Most other Tribune newspapers reported modest gains.
Complicating the Times' situation is the pending acquisition by Federated Department Stores Inc., which owns Macy's and Bloomingdale's, of May Department Stores Inc., which owns Robinsons-May. Both chains are major advertisers and their consolidation is likely to result in reduced ad revenue.
Edward Atorino, a media analyst with Fulcrum Global Partners, said automotive advertising remains soft at the Times despite rebounds in the telecommunications and pharmaceutical sectors. Ads from local dealers have been particularly lackluster because of declining used-car sales, Atorino said.
"(GM's decision) is an issue. The Los Angeles Times is struggling with weak circulation and weak advertising," Atorino said. "This is just another log on the fire. It's another nagging issue that Tribune management is going to have to deal with."
Looking for other avenues
The Times, in a written statement, said it was keeping open a dialogue with GM and its dealers.
"We have heard some concerns from General Motors and are examining them," the statement said. "We will look into any complaints GM has about inaccuracy or misrepresentation and will make any appropriate corrections."
Times' representatives declined to say how much of the newspaper's advertising revenue comes from automotive ads, though estimates on its GM business range from $10 million to $20 million a year. Nationally, car dealers and manufacturers spent more than $750 million on newspaper advertising in 2004, accounting for 9.4 percent of newspaper advertising revenue, according to the Newspaper Association of America. Automobiles were the fifth-largest category of newspaper advertising, trailing phone companies, movies, coupons and travel.
John Kimball, senior vice president of the Newspaper Association of America, said local dealers typically account for the bulk of automotive advertising in newspapers, up to two-thirds in some markets. Kimball said dealers generally operate autonomously from the manufacturer.
"There's not always seamless communication between the local group and the manufacturer, even on marketing and promotional campaigns," Kimball said. "One thing that people never argue about is that newspapers are a place that drives people into auto showrooms."
Advertising boycotts by automakers or their dealers are nothing new. San Jose auto dealers pulled their ads from the San Jose Mercury News for several months in 1995 over an article that offered tips on how to spot aggressive sales ploys. Both Chrysler and General Motors have pulled their ads from automotive magazines because of bad reviews or other negative publicity. Typically, the boycotts last a few months, although in the Times' situation there is no indication when GM might decide to resume its advertising buys.
Newspaper advertising remains an important vehicle for car dealers but it is far from the only medium, said Peter Welsh, president of the California Motorcar Dealers Association. Still, Welsh said he expects some GM dealers to buy more space in the Times to compensate for the loss of GM's national advertising.
"It's still the heaviest media outlet in the market," Welsh said of the Times. "Having said that, the market is getting more stratified. We're doing a lot more Internet advertising. We're doing a lot more direct-mail advertising."
Nissani, who estimates that about half his advertising budget went to the Times, said he's exploring alternatives, including direct mailers, television and radio ads, and space in local newspapers near his Culver City dealership.
Nissani acknowledged that Times advertising brought in a large volume of customers but said he's willing to risk losing some sales to make a statement. "I'm supporting (GM) 100 percent," he said. "There's other ways of getting customers."
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