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Private TV stations want cash and short-term cheques from advertising companies

14 December 2011 / 19:12:56  GRReporter
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The decision of the management of major private TV stations to change the method of payment to them confused the Greek advertising market. Their aim is to reduce risks as much as possible and increase their steadily decreasing revenue, although the cost of television advertising has been tending to rise in recent months.

According to a publication in the journal Marketing Week, there will be two new features in the new billing method. The first is that the invoices are to be paid in cash within 30 days from the date of issue, offering a 4-per cent discount. The second trend is related to loans that cannot exceed a term of four months.

VAT on these invoices will be paid 25 days after the date of issuance by a cheque that will be converted on the same day. The cheques for the 4-month term, which will be used for paying the advertising service, and the cheques for VAT will be submitted 25 days after invoicing.

Interesting to note is the clear condition of television managements that for advertising companies which have or expect negative economic indicators, or are not regular in their payments, payment in cash or by cheque will apply to their customers. In this case, TV stations will decide whether they want to accept these cheques or not.

Thus, the edition comments, TV stations are willing to ensure their liquidity as far as possible. It is expected that next year will be quite difficult for them in view of the anticipated imposition of a tax on TV advertising. Probably, it will not be removed, despite the market unwillingness, because the medium-term recovery programme of the Greek economy provides for revenue from its collection in 2012.

At the same time, the television market has shrunk at least by half in the last two years, the revenue of TV stations is continuously decreasing and cuts of all kinds continue to be at the top of their agenda.

Their decision to start a strict pricing policy is expected to affect the market seriously. According to the unofficial position of a representative of one of the major TV stations, this move in no case was coordinated between the individual managements. One of the TV stations had made that proposal and the rest accepted it.

"In practice, there will be no change in our transactions. There is an incentive for an immediate payment in cash in the new pricing policy - the customer will receive a discount of 4-5 per cent. For us, this is a kind of a security measure both for the programme and for our investments," he said. "Overall, we have had no serious problems with invoiced payments. In some cases, there have been some smaller companies that have tried to take advantage of the enormous power of television, without being able to sustain this action. Our new policy aims to protect us from such cases. "

It seems that the representatives of the advertising market understand the reasons for the decision of TV stations. On the other hand, they are particularly concerned about whether and how advertising companies, agencies and their clients will be affected.

According to the chairman of the union of advertising and communication companies in Greece Dimitris Mavros, "the requirement of TV stations for the invoices to be paid within four months is as if they want from the market funds the amount of € 35-40 million. Because advertising companies are not able to take this funding, the question that arises is whether the advertised companies are able and want to do it. Unfortunately, we do not see such signs."

On the part of TV stations, the head of Star Channel Panos Kiriakopoulos refers to the problems of Alter TV, which has not been broadcasting anything for months because the employees refuse to work until their wages are paid. "After the problems with Alter TV and the advertising company Leo Burnett and the requests for extension of payments of the cheques issued by some advertising companies, the trustworthiness of the industry suffered a blow. The financial problems of television and advertising companies are much more serious than in the past. "

Representatives of advertising agencies have also opposed the new television strategy. They believe that any attempt to intervene to limit the freedom of the market in any way will have short-term effects and will only create problems.

Tags: MediaPrivate TV stationsAdvertising companiesPaymentsFunding
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