Getting Paid is Not Hard To Do

In the early days of program distribution, there where two areas of the business that presented some danger: unknowingly going after some military official’s mistress in a strongman country and trying to collect money after sales.

Stories abound of distributors meeting in broadcasters’ offices in open view of their loaded guns, with the clear intent of discouraging talks of payments. Back then the game was played differently: buyers made believe they were going to pay and the distributors made believe they were getting paid.

Indeed, when a program sale was booked on a “sale basis,” the goal was to show revenues. Collection was someone else’s problem. In those days, for a bill to go past 180 days was considered “current,” and when the buyer was clearly unable (or unwilling) to pay, a deal would grant more time on the condition that he’d buy more product.

Showing a program sale on the financial books on a “billing basis,” was not much different and booking on a “cash basis” was simply not done.

As recently as 10 years ago, collection problems were a daily liturgy for most distributors and an open subject to discuss, even with the press. And the problems were not just with Latin America and Asia, but also with countries such as Spain and Italy.

However, in the past five years, the topic has become more of a “non-issue,” especially after getting past the collapse of the Kirch Gruppe in Germany and the currency problems in Argentina, Brazil and areas of Asia, such as Malaysia.

Today, in the opinion of many of the 15 executives interviewed for this story, the distribution business doesn’t have a collection problem; and one even questioned the usefulness of this story. But, added a studio executive: “A lot of it may be pretty sensitive material from a competitive standpoint.” According to a former independent distributor, “This is a hidden problem that nobody wants to discuss because companies do not want to admit that they cannot collect from countries after a sale and they do not want to be open about how much the deal was for.” She called it “the best kept secret.”

“In my estimate,” stated another executive, “problems with collections are well below the one percent of sales.” This is the case even with unstable areas such as the Middle East, because, it was explained, “in that region we sell to agents who are reliable.”

 “Perhaps,” commented another distributor who also preferred to remain anonymous, “there are scattered problems with a few companies, but not with territories.”
Unusually, for a “non-issue” story, however, most of the executives interviewed did not want to be quoted, since this story was considered “too sensitive.”

The distribution side of the business has also been ever-changing. Nowadays, sales are booked as programs became available, plus the buyers tend to be station groups, which removes the risks even in relatively new territories such as Eastern Europe and the former Soviet Republics. In addition, reported a source, “Russia and its former satellite regions are awash with cash.”

Pressed to come up with a problematic territory, a distributor mentioned “Scandinavia.” Definitely an unusual and uncharacteristic area, but he quickly explained: “there are no problems with the main TV channels, only some satellite channels are slow in paying.”

Latin American distributor Pedro Leda of Ledafilms, reported that problems are not with collections but rather with the length of windows. “In general, for us it takes four years from the time we pay the producers to when we can fully collect on the sales.”

According to Tom Devlin of Entertainment Studios: “We live in a relatively stable time as far as getting paid is concerned. I don’t see any particular activity in this regard.”

 In other distributors’ views, some problems still exist in territories such as South Korea, especially in the DVD area, even though, it was asserted, “broadcasters are reliable and the cable guys are pretty mature.”
Some of the people interviewed for this story also mentioned that an aspect that greatly helped improve collection problems was the collection division instituted years ago by the Los Angeles-based AFMA (now IFTA), the international Association (now Alliance) that organizes the annual American Film Market in Santa  Monica, California.

Before its market, the AFMA used to circulate what, among distributors was nicknamed the “Dirty dog list,” which listed all companies and individuals who were delinquent in their payments. The Association was very careful in the way it presented the list, in order not to fall into legal problems with the targeted subjects, but, at the same time, it was very forceful in implementing its no-tolerance stand to the point of expelling buyers from the market if they were repeated offenders.

Lauren Friscia contributed to this story.