READING THE LAST RITES OR A GAME OF CHICKEN?: As of Sunday night there was still no official bankruptcy announcement from iHeart. According to multiple sources, including the attached Radio Ink link, the top debt holders are negotiating among themselves (without iHeart’s involvement) for the best way to liquidate the company. iHeart also continues to propose various refinancing solutions which involve giving up 93% of the company’s ownership in return for $5.5B in new loans – their latest option is laid out below. While there’s a high probability that iHeart will declare bankruptcy as early as today, there’s also a school of thought that iHeart could be playing a game of chicken with its creditors by using the threat of bankruptcy as a motivation to refinance. The only problem with this theory is that iHeart even admits their last ditch proposal is worse for the creditors than bankruptcy. Keep an eye on your news feeds today.
THE “SOFT LANDING” CONTINUES FOR THE US AUTO INDUSTRY: On Friday the US Auto sales numbers for February were released, and let’s just say there was more red in the report than a mafia movie. As reported in the attached Automobile Magazine link, here are the decliners compared to Feb’17 – Hyundai (-13%), GM (-7%), Ford (-6%), Honda (-5%), Kia (-5%), Nissan (-4%), and Fiat Chrysler (-1%). On the other side of the ledger here are the gainers – Mazda (+13%), Audi (+12%), Toyota (4%), BWM (+7%), VW (+6%), and Mercedes (+2%). With the exception of Toyota the bigger OEMs declined while the smaller ones gained. This led to a YoY unit sales decrease of -2.3%, and that’s compared to Feb’17 which was off a few points from 2016. This is consistent with an overall trend in US Auto Sales which is going through a gradual decline after seven straight years of growth. While shrinking is never as fun as growing, at least it’s still a soft landing, marked by years of gradual decline, instead of one sharp free fall.
COULD THE HOCOs BE FACING DISINTERMEDIATION?: Over the weekend I came across a very in-depth article on the state of WPP (and all the other Holding Companies), in the attached Didigay link. The HoCos are going through the worst financial stretch since the Great Recession ad slump of 2008-09, and this is happening in a period when global media spending is increasing. On one side agencies are dealing with increasingly sophisticated clients who are more likely to in-house parts of their marketing operation and also demand greater billing transparency for media bought on their behalf. This leaves less work for the agencies to do at lower margins. On the other side there are external threats from business consultancies who now offer traditional media services, and the Duopoly whose client penetration is so deep that they’re starting to cut the agency middlemen out of the marketing conversations. All of these factors are putting the HoCos between a rock and a hard place. The long term solution will require some kind of reinvention where agencies can rediscover an essential purpose in the relationship between clients and vendors. If not some of these agencies and their HoCo parents might find out the true meaning of the word disintermediation.
BONUS FUNNY: You know I love a good programmatic cartoon every once in a while. Today’s feature from AdExchanger is a tip of the hat to Pandora’s entry into audio programmatic, which is expected to establish a full prog marketplace in the coming months. Enjoy!
Have a great Monday guys!
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