A recent Campaign feature on the Advertising Producers' Association
has got quite a few backs up (Campaign, 9 February). And it is hardly
The article posed the fundamental question of how directors get paid and
how production companies make their money. One source - a leading London
producer - claims the methods are 'fraudulent'.
The producer claims that intense competition means production companies
are reliant on their shop window directors. Keeping them is the key to
survival and in order to do this, he claims, production companies not
only pay top directors huge fees (between £8,000 and £10,000
per day's shooting) but they also give them a profit share of the job.
This, apparently, can range from 25 per cent to 50 per cent of the net
These costs are covered, he adds, by production companies not being
entirely honest when it comes to budgets.
The whole issue is not new. We have simply reopened a can of worms first
touched on by Tim Delaney and Mike Cozens during Delaney's presidency of
the Creative Directors' Forum four years ago.
In a presentation to creative directors, Delaney lambasted mark-ups and
the fact that there is a rate-card that the client sees, and one with
lower prices that production companies work from.
'Their jaws dropped, but they did nothing,' he claims now. He adds:
'It's a cottage industry that works in a certain way - the figures they
quote are not the figures they pay. Production companies are walking
away with thousands of pounds of client money.
'Clients have cost controllers but they can only measure against what
the norm is. But that 'norm' includes jiggery pokery,' he adds.
'That's bollocks,' responds one exasperated production company source to
the assumption that they give directors a share of net profits while
also building an inflated figure into the budget. He scoffs at the idea
that a cost controller would sign off a budget containing an undeclared
amount covertly stashed aside for the director.
And while Delaney claims that he wouldn't mind paying someone like David
Lynch £250,000, he is not prepared to pander to any hidden agenda:
'I don't want to pay money I'm not asked to pay.'
But such is the nepotism in the industry that Delaney points to the fact
that creative directors bury their heads in the sand with no-one wanting
to stuff up their mates. He also says agencies are partly to blame
because of inexperienced or unskilled people in TV departments. 'We
deserve everything we get,' Delaney states.
Not surprisingly, the APA, which represents the interests of production
companies, is at the centre of the fray, and has hit back at the
Steve Davies, its chief executive, denies claims that production
companies expand their budgets in order to convince directors to stay.
'It's not happening. You can't hike up a budget. It's a highly
competitive market and budgets are already cut to the bone.'
However, in the same way that Delaney points to creatives being
unwilling to rock the boat, observers point to the fact that if APA
council members come from production companies, they are similarly
unlikely to want to shoot themselves in the foot by upsetting the status
'What you're talking about would mean a root and branch restructure of
the business. But if you scrutinised any business, there'd always be
some practices that people would disagree with,' another insider
Still, Davies recognises that top directors are well paid. 'But that's
because there's a big demand for them. Production companies have to
invest to keep them - but by doing that, they're making sure the top
talent is available to everyone,' he says.
Paul Gay, a director at Outsider, claims it's simply a case of market
forces. 'Like football, this is a talent-driven business and the best
people bring in the biggest crowds. There's nothing wrong with mark-ups,
as long as the client isn't being duped in any way. It's the way the
business operates and this profit is shared according to the directors'
arrangement with the managing director.'
Mark Denton, a director at Blink, also argues it's straightforward
'A managing director may decide that it's worth paying a shop window
director more based on the fact that it raises the company's profile and
attracts scripts which can be passed on within the company. But if it
gets to the point where that director is a drain on the company's
resources, then he can stop this practice. People are stupid if they let
it continue,' Denton says.
Instead of worrying about a shop window director, Denton adds, a good
managing director will seek out hot new talent for the future.
Stephen Gash, joint managing director of Stark Films, agrees: 'If the
directors didn't get paid profit here in the UK, they'd go somewhere
else. It's a world market. Do agencies and their clients really want
Nevertheless, far from suggesting that the production companies are
being held to ransom by directors, many strongly believe that the
plethora of directors in the marketplace means that no-one can be too
precious about work.
And calls for greater transparency from production companies will only
continue to serve to ruffle a few feathers, with charges of hypocrisy
levied at agency people. After all, your top creative director will earn
between £250,000 and £500,000 a year.
'Agencies pay their staff salaries and bonuses. And everybody knows
clients ultimately pay for that,' says an angry production company
insider, who also points to the fact that his own staff don't get the
usual perks of the agencies such as a company car, healthcare or pension
There are few people willing to stick their necks out to resolve the
issue. Mark Hanrahan, head of television at Saatchi & Saatchi is someone
who frequently raises it at the IPA and argues for more
'I sympathise with production companies because they're not making
excessive profits, but some of their directors are,' he says.
'The budget shows mark-up on everything except the director's and
producer's salary but it should be clearly spelled out how much the
director is being paid.
'If they are taking a 50 per cent profit share, it could mean they are
earning £60,000 to £70,000 for 15 to 20 days work and
clients and agencies should be able to decide if they're worth
How a company chooses to remunerate its staff is its own business, with
production company observers pointing to the fact that agency personnel
are often on a profit-related bonus themselves. But it seems that until
remuneration procedures are more thoroughly scrutinised and evidence of
'fraud' proved or disproved, the situation will continue unchanged.