The Shot by General Motors Across the Bow of the LA Times Is a Shot Heard Around the World. No Matter the Final Outcome the Damage Is Already Done.

Philip Stone April 11, 2005

When General Motors (GM) announced it was withholding further advertising from the Los Angeles Times because it didn’t like the way the Times has been writing about America’s largest automobile company, it should have sent a chill down the spine of journalists around the world. Go To Follow Up & Comments

For it really doesn’t matter how the situation eventually plays out and what is said by both sides when all is settled, the fact is that a major global advertiser has sent a strong message to the fourth largest newspaper in the US that enough is enough and, as the saying goes, money is stronger than words.

Editors, journalists and perhaps publishers will beat their chests and swear that advertisers do not have, and will not have, control over what editorial writes, the pragmatic fact is that a line does get drawn in the sand and it is seldom crossed..

First and foremost newspapers are a business. The idealist journalist is taught that all an advertiser buys is space to put across his message. What editorial writes is editorial’s business. If only it was that simple.

GM doesn’t argue the fact. “We recognize and support the news media’s freedom to report and editorialize as they see fit,” said a GM spokesman. “Likewise, GM and its retailers are free to spend advertising dollars where we see fit.” And who can argue with that?

But GM spends about $10 million annually in the Times to promote itself in what is the world’s largest car market. Obviously, it believes it gets a good return on that money or it wouldn’t spend it in the first place, so it could be shooting itself in the foot by withdrawing its advertising.

The Times, however, has its own financial problems and, frankly, the last thing it needs now is a possible $10 million annual hole in its advertising income. The newspaper has been under severe cost cutting for some time since Tribune bought it, and it recently completed a voluntary redundancy program. If the GM ban lasts for a while, and the money is not made up elsewhere, it will result in even more cost savings being ordered and less staff.

GM has not said whether it is just saving the money it would have spent, or if it is spending it on other media in the Los Angeles market. If the latter, and it turns out to be successful, then that is not going to do the Times any good.

GM, the world’s largest carmaker, and the world’s second biggest advertiser behind Procter and Gamble, is currently under a great deal of financial pressure – its bonds are now rated just above junk basis, it has reported very poor Q1 US sales, and its ceo has just appointed himself in charge of US operations to clear up the mess.

GM was reacting to a number of articles in which Dan Neil, the Times’ Pulitzer Prize winning auto columnist, has strongly criticized GM’s management for not introducing more new models and he basically called for the ouster of its most senior managers.

For the sake of argument let’s assume Neil hit the nail on the head and GM is guilty as charged. Given GM’s reaction it is going to take a publisher who is very secure financially to tell a major advertiser to get lost. The pragmatic response is to say it will examine the concerns expressed by the advertiser, which is exactly what the Times did say, adding, “We will make any appropriate corrections.”

When this writer was a young reporter on a local daily newspaper, the newspaper ran a series of articles warning its readers about some of the tricks car salesmen use to make a sale. Before you knew it, the local association of car dealers voted to withdraw their advertising from the newspaper and that lasted for a few weeks. At the end the publisher spoke strong words about freedom of the press and the advertisers said they were glad to be back advertising but you know what, that newspaper never again ran stories warning about tricks by car sales people and no advertiser from then on really got a bad press.

And that is the danger in what GM has done. It has sent a warning that there are limits to what it will accept is being written about it if the publisher still expects to have GM as a customer. And those limits will permeate across newsrooms around the world.

And no matter what is said in the joint statements at the end of the affair, what really counts is what the publisher tells the editor privately. And all too often it will simply be, “Don’t make waves”.

And that is why GM has done us all a disservice, not only for what it has done, but for what it has reminded others they could do, too.

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GM Boycott at LA Times Ends In Fourth Month - August 4, 2005

General Motors has ended its advertising boycott of the Los Angeles Times after four months of holding back corporate advertising (local dealers still advertised).

From the statements put out by both sides, there were no corrections or apologies from the Times for its editorial coverage of GM, and on GM’s part management said they were pleased to have been able to discuss their displeasure of editorial policy with the Times’ senior managers.

The GM boycott began shortly after the Times ran an editorial story that severely criticized senior GM management, but GM said the decision to lift the boycott was made by their manager responsible for the Los Angeles area.

Los Angeles is the largest single car market in the US. GM had spent some $21 million in corporate advertising in the Times in 2004, according to TNS Media Intelligence, so losing three months of advertising could have cost the newspaper some $5 million in revenue, although Times executives refused to comment thereon. Not advertising in the Times, especially now that GM has a special, successful national employee discount pricing program in place, could well have hurt the automaker’s own bottom line sales figures in LA, but again there were no comments thereon.

Both sides said the resignation of Times editor John S. Carroll in July played no part in resuming their business relationship.

LA Times Editor Quits - July 25, 2005

John S. Carroll, editor of the Los Angeles Times, has announced his resignation “for professional and personal reasons.”

Carroll is known to have fought with Tribune Co., owner of the Times, over budget cuts the parent company had been requesting over the past few months.

The Tribune, in turn, has been embroiled in severe cost cutting for several years as its newspapers, including Newsday in New York and the Chicago Tribune, suffer from the general advertising and circulation malaise of US newspapers. In the past 12 months alone the LA Times has seen a drop in daily readership of 6.5% and Sunday readership of 7.9%

Under Carroll’s editorial leadership the newspaper has won 13 Pulitzer prizes, considered the most prestigious awards that US newspapers can win.

GM Boycott at LA Times Continues - July 13, 2005

The General Motors boycott of the Los Angeles Times is already in its fourth month with no indication it will end any time soon.

The Times says it is still in talks with GM, which was thought to be among the newspaper’s top five advertisers. GM pulled its advertising in April because it was unhappy with some of the Times’ editorial copy, some of which criticized GM management.

The financial hit could be quite significant to The Times. According to TNS Media Intelligence, GM paid the Times some $10.8 million for advertising in Q1, whereas the next four largest auto companies combined spent a combined $6.3 million.

A Times spokesperson said, however, that local GM dealers were continuing to advertise in the newspaper even though GM corporately was not.