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Ad agencies defaults TV channels to the tune of Rs 750 crore

30-July-2001
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Ad agencies defaults TV channels to the tune of Rs 750 crore

The joint working committee of the Indian Broadcasting Federation (IBF) and the Advertising Agencies Association of India (AAAI) is sending notices to nearly 40 advertising agencies which have defaulted on payments to various television channels. The defaulting agencies, which include some of the top players in the industry, altogether owe over Rs 750 crore to TV channels.

This figure is based on the reports submitted by a few channels only. The actual dues could be to the tune of 1,100 crore accumulated in the last three years. The letter gives 15 days time to defaulting advertising agencies to clear their dues or to pay the penalty.

If the agencies fail to pay the outstanding by August 15, the IBF members will either blacklist the agencies and stop doing business with them or withdraw the 75-day credit facility offered to the member agencies of the AAAI in the future.

Currently, IBF has 29 TV channels and airtime marketing companies as members including Star, Sony, Zee, Eenadu, Nimbus, UTV etc.

Earlier, IBF had written to all the defaulting agencies about the default, they responded by saying that their clients, that is, the advertisers have not cleared their dues. IBF then sent out letters telling the agencies that if the advertiser does not pay the agency, its commercials will not be aired.

IBF and AAAI had joined hands to sign a mutually beneficial agreement in February this year. It entailed that the member agencies of the AAAI will get preferential treatment from the IBF member channels in terms of airtime rates and credit period. In turn, all AAAI members will guarantee payments to channels within a specified credit period. An AAAI-IBF Working Committee was also authorised to monitor and take action on defaulting advertisers, agencies and channels.

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