• The Hollywood Reporter, Thursday, June 4, 2009 9:32 AM

Although headlines about the U.S. car industry have sounded dire, Sanford C. Bernstein analyst Michael Nathanson says that because consumer demand for new autos "has rarely been this weak, at some point in 2010, it will strengthen." That rebound will strengthen local ad markets, "most notably local TV stations," he says.

Based on his research, Nathanson increased his fiscal-year 2010 earnings-per-share estimates on CBS Corp., Walt Disney and News Corp. and his price targets across sector stocks. He even upgraded CBS shares to "market perform."

Auto ads declined 17% in 2008, with TV stations seeing an outsized 33% drop. 2009 is likely to be an even worse year for auto advertising after a 29% decline in the first quarter. But 2010 could be different. "The dealership closures by the Detroit automakers sounds disastrous for local advertising, but we believe the 2010 impact will be less severe." Local dealer ad budgets have been relatively small and the shuttered dealers are the weakest. Overall, auto ads will boom in 2010 to serve pent-up demand, he concludes, and "local TV stations will be a big beneficiary of the increased spending."

Read the whole story at The Hollywood Reporter »