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Quick Hits: Fewer Auto Ads Wreck Media Earnings


Brief scrutiny of today's headlines.

In the first quarter alone, the auto industry cut advertising $414 million from the same period a year ago, the New York Times reports.

In recent earnings reports, Viacom (VIA) and Time Warner (TWX) mentioned the downturn in the auto industry as one reason for lagging revenues.

Newspapers lost $131 million in auto advertising, much of it from local car dealers hit by slow sales.

Auto advertising peaked in 2004 at about $24 billion, but could drop this year to about $15 billion, Sanford C. Bernstein says in a research report.

In the first quarter, auto advertising represented 2.8% of national advertising in newspapers. In 2005, it totaled about 10% each quarter.

Quality imports from Toyota (TM) and Honda (HMC) have eroded Detroit's market share. General Motors (GM) recently reported a $15.5 billion quarterly loss.

General Motors will end its sponsorship of the United States Olympic Committee after 2008. The deal, reached in 1997, committed the company to spend $1 billion. The Wall Street Journal reported that General Motors won't be a sponsor of next month's Emmy Awards.

Sanford Bernstein says the downturn in auto advertising is likely to reduce earnings at CBS (CBS) by about $0.02 for the year. But Fox (NWS), which relies on auto advertising for about 15% of its overall revenue, may be hit harder. CBS derives about 12% of its revenue from car ads.

Magazines lost about $72 million in auto advertising in the first quarter.
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