Omnicom shelves plot to rewrite contracts with production companies

by John Tylee, Campaign 05-Mar-09, 15:40

LONDON - Omnicom has suspended plans to dramatically change the contractual terms offered by its agencies, after Campaign exposed the plot in this week's issue.

The group had planned to end the current arrangements and stop its agencies from paying production houses before the agency was paid by the client.

The move sparked alarm among the production community which feared it could send some companies to the wall and lead to more business being driven abroad.

Now, the group has suspended the order to its UK agencies – Abbott Mead Vickers BBDO, DDB and TBWA\London.

The climbdown follows talks between senior managers of the three agencies and executives of the Advertising Producers Association and a front page story in Campaign this week.

It means there will be a continuation of the current trading terms under which production companies are paid around 50 per cent of their fee upfront and the final 50 per cent paid within 28 days of delivery of a film.

Omnicom’s move is thought to have been sparked by the need to better protect itself against financially troubled clients, including Chrysler.

Steve Davies, the APA chief executive, said: "This is really good news. Production companies have always had a good working relationship with these agencies and we’re very pleased nothing is going to stand in the way of it."