Sirius XM (SIRI) isn’t the only media business that will be affected by Detroit’s slowdown: So will local TV stations that rely on the auto industry for a significant portion of their ad revenue.
Today’s WSJ notes that 700 new-car dealerships will close this year, up from 430 last year — a 63% jump. That’s only 3% of the car dealerships in the U.S., but still a sharp jump in closures.
In a note today, Pali Research analyst Rich Greenfield estimates (registration required) that auto advertising on local TV stations — which represented more than 25% of local TV advertising — is down 50% year-over-year.
Making matters worse: If Chrysler and GM merge, there will be fewer car companies and less competition — meaning fewer ads, too.
That won’t necessarily crush TV stations this year. But how about next year, when political advertising falls off? “We continue to believe 2009 will be a very challenging year for the local television station business, particularly in the first half of the year,” Greenfield says.
We’ll get to hear more about the state of the TV ad industry this week: Join us for live analysis of Comcast (CMCSA) earnings Wednesday morning and CBS (CBS) earnings Thursday morning.
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