Agencies square up to TV companies as credit row deepens

Agencies and broadcasters are in heated negotiations in an attempt to resolve a dispute over credit worthiness ahead of a 1 April deadline.

The dispute centres on the amount of bank guarantees that a consortium of commercial broadcasters comprising Carlton, Granada, Channel 4, Five and GMTV is demanding from media agencies.

The broadcasters - who have changed the name of the consortium from ITV Network Limited to TV Eye in a bid to distance it from the ITV network and encourage new members - are demanding that agencies increase their insurance, to cover the cost of their TV clients' spend in case they go bust. However this would cost each agency around £250,000 per year.

The IPA has now proposed a solution whereby agencies can choose to contribute to a bond that will cover the costs if one of the member agencies should go bust with outstanding media debts.

TV Eye, chaired by Channel 4's sales director, Andy Barnes, wants agencies to have an equal debt to equity ratio in order to minimise their exposure to debt in the light of various US accountancy irregularities. However, this has proved to be controversial given that most agencies are part of groups with debts of their own.

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