Are Ad Dollars Influencing Auto Bailout Coverage?

The Detroit News was recently involved in a controversy surrounding a negative Chrysler 200 review by auto critic, Scott Burgess. Jalopnik.com reported that after receiving a complaint by an advertiser identified as a Chrysler dealership, the Detroit News softened the criticism on an online version of the review. Mr. Burgess displayed journalistic integrity by resigning over the incident. Since that time, the Detroit News has apologized and Burgess has returned to his position. This affair may just be a small scale indicator of a much wider flaw in the quality of journalists' coverage of the auto industry, particularly regarding General Motors.

Multiply the ad revenue received by the Detroit News by thousands and you get a glimpse of how much money is spent by GM to market their vehicles. The majority of ad spending goes to major television networks that are responsible for news coverage of the auto sector. There is an obvious conflict when journalists who work for these same networks give commentary on the business outlook for GM as well as giving opinions on GM vehicles that offer questionable value, such as the Chevy Volt. The primary concern is that Mom and Pop investors who rely on business networks as a source for unbiased information on potential investment choices, such as GM, are getting information that may be influenced by the millions of dollars the networks are receiving in ad revenue. Add to this the questionable positive coverage by large investment houses that were underwriters for the GM IPO and there is a possibility that the small investors will be the ones that are hurt the most in any subsequent disappointments that negatively impact GM's share price.

I have noticed that the main sources of negative opinions on GM as an investment choice, or on the unlikely viability of the Chevy Volt, come from internet sites that do not receive large amounts of ad revenue from GM. Evidence of mainstream media bias surfaces when commentators refer to the GM IPO as "very successful." I can not remember a time that a busted IPO was referred to as "very successful." The auto industry bailouts are now referred to as the auto industry "rescue", as if this was some heroic act. Just prior to the GM IPO one major business network started a movement to allow every taxpayer to "benefit" from the IPO, as if there were no risks involved. Comments were made that GM would be "printing money." I never once heard a disclaimer that viewers should seek their own investment advice. The better part of a day was dedicated to the Chevy Volt roll out with the vehicle being described as a "game changer for GM." The Volt now seems like it is on the verge of becoming a modern day Edsel with dismal sales and a scathing review from Consumer Reports that stated the vehicle "just doesn't make a lot of sense."

The "success" of the auto bailouts in general, as well as the likelihood that they will be a precedent for how our government deals with struggling corporations that have the political clout of entities like the UAW, will be determined by public opinion. If coverage can be influenced by huge sums of cash received by those doing the covering, journalistic integrity may suffer and the American public is deprived of the whole truth that it deserves. Let's hope that the ethics of journalists like Mr. Burgess will win out over those that are willing to sacrifice their ethical responsibilities in order to protect ad revenue.

Mark Modica is an NLPC Associate Fellow and a spokesman for GM Main Street Bondholders.

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