Media executives say one of the recession's earliest casualties - the local ad market - is showing new signs of life, thanks in part to an uptick in auto advertising spurred by the federal government's so-called "Cash For Clunkers" program.

Local advertising has been particularly weak this recession, hurt by the struggles in the automotive, retail and financial industries. Major U.S. automakers, for example, have slashed their dealerships across the country amid the specter of bankruptcy, and marketers have found cheaper and more effective alternatives on the Internet.

Investors, however, hope recent upbeat comments from media mavens mark the first signs of an economic recovery for the nation's depressed ad markets, though some media companies face tough comparisons to last year's third quarter, when the deepening recession was offset by a burst of spending on the Olympics and the presidential election.

"Local businesses were the first to be hit by the recession, and it appears they're the first to come out of it as well," CBS Chief Executive Les Moonves said last week. "Let me stress that they're not back at the levels we want them to be, but they're clearly on the rise."

Moonves said third-quarter ad sales at the company's local TV and radio businesses are running ahead of where they were at the same time last quarter by four to eight percentage points, accelerating a trend that began in the company's second quarter.

He also said the "Cash For Clunkers" program, which provides cash incentives for consumers to trade in old cars and trucks for new, fuel-efficient cars, was "a real shot in the arm" for ad spending at the local and national level.

Local advertising on U.S. television stations fell 9% in 2008, the steepest decrease of all television advertising segments, and is expected to fall another 16.1% to $11 billion in 2009, according to PricewaterhouseCoopers. The firm doesn't see growth in the market until 2012.

For its part, E.W. Scripps Co. (SSP) posted Monday a 24% drop in revenue at its TV station group, with its auto advertising cut in half. But Chief Financial Officer Timothy Stautberg noted those results came as General Motors Corp. (GM) and Chrysler Corp. were mired in bankruptcy proceedings and the federal government had yet to roll out its spending program. He said the auto category is "starting to show signs of improvement in the third quarter."

Any stimulus to auto spending from "Cash For Clunkers" may be temporary, though Congress recently approved an additional $2 billion in funding for the program.

"We think it's sustainable," said CBS Chief Financial Officer Frederic Reynolds. "'Cash For Clunkers' got people off the couch and into looking in the market" and many vehicles are being sold beyond the scope of the program.

Meanwhile, talk of a recovery comes as media watchers are still struggling to gauge the full extent of permanent changes to the media business wrought by the rise of digital communications.

Rupert Murdoch, chairman and chief executive of News Corp. (NWS NWSA), owner of this newswire and The Wall Street Journal, said "the tumultuous and unprecedented change affecting the entire media sector and particularly newspapers and free-to-air broadcasters cannot be ignored."

Nonetheless, he too observed early signs of recovery in the company's various businesses, including local broadcasting.

"Not in newspapers but elsewhere, we saw some life in the advertising market," Murdoch said last week.

-By Nat Worden, Dow Jones Newswires; (212) 416-2472; nat.worden@dowjones.com