Advertiser late pay is spreading; networks becoming the bank?


Well, you certainly know by now that Anheuser-Busch is making stations, networks and syndicators wait 120 days for payment of ads run (2/18/09 RBR #33).

Now GM has also moved to a 70-day model—which for commercial producers on the TV side is a problem. They are required by unions and labor laws to pay their own crews within 10 days.

The result of this new phenomenon? Networks and syndicators are having to “finance” their advertisers: “We are like an unlicensed banking institution, financing all of our advertisers,” said one syndicator. “You can’t go to GM right now and say, ‘pay me the money you owe me!’ They are two dollars a share and they’re running out of money.”

We’ve heard most advertisers are paying at one third the speed they normally pay.

For some syndicators who are part of a larger empire, such as ABC/Disney, the practice may be less common: “It’s harder to mess with us than with some other people,” said one exec. “The companies that are independent are stuck, because they don’t have any leverage. But if you’re a beer company dealing with ESPN and you don’t pay on time, we’re going to say ‘No’ to TV, ‘No’ to radio, etc. The larger companies with local media properties have more leverage than the ones that don’t.”