The bankruptcy of General Motors Corp., one of America's biggest advertisers, deals yet another blow to TV stations, newspapers and magazines that already are reeling from the recession.
Sports franchises also could feel the sting, with analysts expecting the automaker to continue cutting back its multimillion-dollar sponsorships of professional teams.
GM shelled out $2.1 billion on advertising last year, second only to Procter & Gamble Co., according to Nielsen Co.
A company trying to emerge from Chapter 11 can't spend billions on advertising, though. The Obama administration asked Chrysler, the other member of Detroit's Big Three currently in Bankruptcy Court, to halve its proposed marketing budget, which indicates that advertising could be one of the many things reduced as GM restructures.
GM executives acknowledge that their marketing budget is smaller this year than last, though they decline to say by how much. Chief Financial Officer Ray Young said the company would market its remaining brands heavily despite a 2009 budget he termed "a low point."
The company's woes ripple more broadly. By the end of next year, GM plans to eliminate nearly 2,500 dealerships that might otherwise buy local advertising. U.S. ad spending fell 2.6% in 2008, according to Nielsen.
"You have a double whammy with dealerships shutting down and manufacturers curtailing their ad spending," said Gordon Borrell, chief executive of research firm Borrell Associates. "It's across the board hitting everybody."
GM sponsors at least one team in each of the four major professional sports leagues, said Jim Andrews, senior vice president of IEG Inc., a research and consulting firm that tracks sponsorships.
The automaker pays about $5 million to $10 million a year to Major League Baseball, a deal it renewed before this season began, he said, and about $1 million a year to sponsor teams in the National Basketball Assn., National Football League and National Hockey League.
But GM has been rolling back some of its sports sponsorships, deciding not to renew its deal with the U.S. Olympic team, which Andrews estimates was worth about $7 million. It also has scaled back its NASCAR sponsorship and ended Buick's nine-year endorsement contract with golf star Tiger Woods.
