GM Strike Threatens Local Ad Sales

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Denver -- The United Auto Workers' strike against
General Motors Corp. is shaping up as a major threat to local cable ad sales, according to
cable ad executives.

Julie Dexter Berg, executive vice president and chief
marketing officer at MediaOne, noted that automotive represents about 25 percent of that
MSO's local business.

Two weeks ago, three other MSO executives cited the GM
strike as the one dark cloud on the otherwise-bright local-sales horizon: Jerry Machovina,
executive vice president of ad sales at Tele-Communications Inc.'s TCI Media
Services; Filemon Lopez, senior vice president of ad sales at Comcast Corp.'s Comcast
Cable Communications; and Kevin Dowell, group ad director at Jones Intercable Inc.

But several automotive-industry insiders told local cable
ad executives last week that reduced spending by GM dealerships might be offset by
increased marketing by Ford Motor Co., Chrysler Corp. and other dealerships hoping to
capitalize on the Detroit giant's woes.

Speaking at the Cabletelevision Advertising Bureau's
Local Cable Sales Management Conference here, John Drury, senior vice president and chief
marketing officer at Republic Industries' AutoNation USA, predicted that cable and
other media will "definitely see reduction in advertising spending" by GM
dealers. On the other hand, he said, other automakers' dealerships will increase
their marketing efforts during the third quarter in hopes of capturing market share from
GM.

Thomas LaPoint, automotive-operations vice president at
Garff Enterprises, also felt that non-GM dealers will seize the opportunity to snare
potential GM business by becoming "very aggressive with their marketing."

Even after the strike is settled, there will be a six-month
lag before GM can get new cars into the distribution pipeline to dealerships, said
LaPoint, who's been in the car-dealer business for 26 years.

As an indication of how concerned local cable sales
executives are about the GM strike's ramifications, panel moderator Jim Doyle,
president of consultancy Jim Doyle & Associates, noted that 70 percent of the
questions submitted to the panel touched on some aspect of that strike.

But the strike is not cable operators' only fear when
it comes to the important automotive category.

Another worry is that the consolidation of dealerships into
mega-dealers will slash their local auto dollars. LaPoint noted that the number of dealers
has shrunk from 30,000 in the 1970s to 20,000 now.

"The trend in the industry is consolidation," he
said, to cut costs in personnel, inventory and advertising.

But Drury added that even though cable operators "may
look at consolidation of the business as a negative," it can be a positive, since
"all of the business that we do is local." Thus, he said, AutoNation needs to
advertise locally, with the company supplying a national "umbrella" branding
campaign. But, he added, "branding nationally isn't going to increase market
share."

Local cable can fit into AutoNation's marketing plans,
since it offers "targeting and segmentation," he said, adding that another plus
is cable's future promise of interactivity.

To get more dealers' dollars, cable operators need to
"be proactive, not reactive," and they must come up with cost-effective,
results-oriented solutions and marketing strategies, LaPoint said. He personally favors
cable over newspapers -- which, he said, have become less effective -- but he pointed out
that most dealers remain more comfortable using print.

The Internet can be a threat or an opportunity to
operators, depending on how much they are involved in the Web, auto insiders said.
Although "car dealers are slow to adapt to new technology," LaPoint said, use of
the Web is catching on and contributing to the "rapid pace" of change in auto
retailing. He cited Garff's own Automallusa.com site and Microsoft Corp.'s
CarPoint (carpoint.msn.com)
as examples of popular Web sites.

Yet another aspect of the dealer-consolidation trend
involves Ford's forming the Ford Retail Network. Those superdealers are due in such
markets as Tulsa, Okla.; Indianapolis; Salt Lake City; and San Diego, LaPoint said, with
some showcasing only Fords and others also featuring Lincoln-Mercury and Mazda makes.

LaPoint felt that this will translate into reduced
advertising by the Ford dealers in those markets initially, but that they will turn
"aggressive" eventually.

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