"Perishables"

Many years ago, after my 8 year-old son had spent a day in Daddies office, he was asked what his Father did in his office. He thought about it for a moment and then replied, "He talks on the phone a lot, watches movies, and, and he flirts with the secretaries. I about died when he said that, but it was indeed true. I have enjoyed the activities that my son mentioned, as well many more. I have labored under the authority of many companies, and many more managements. Sadly I never realized until recently that I was playing in a game that was different from the Corporate Group. As an operating guy, I always thought that I was to do as much business as possible, while protecting the assets that had been entrusted to me, and consider the long term effect of our day to day activities, and boy was I alone on that one.

I often talk and write about Television, the FCC, the big media companies, the digital revolution, but there is one difficult, but very important activity that I have never spoken about. What I have done in my career is essentially sell things (TV series, movies, videos, etc to people, which was, as a rule, fun and easy, but very often, the hard part was not the selling (after all, the buyers needed what I was selling) was actually getting paid. There were a variety of reasons for this, and at times the buyer just didn't have the money to pay, but most of the time it was the buyers attitude of "Yes Norman I do owe you guys the money, but why should I pay you if I don't have to" that would make me nuts. Now having said that, if I didn't have something else the buyer needed that he knew he wouldn't get if he didn't make payments for the older things he had bought, I was in deep trouble.

Now a moment about how the "Studio" system works as it pertains to collections. I heard a funny story a few weeks ago from a very prominent entertainment attorney. He was working for a studio, and was sent to a station to re-work a feature film contract, which he successfully did. Returning to New York, he noticed that for one of the films he had sold giving 10 year rights, his company only had 9 years remaining on it's contract. He was very concerned, and of course he reported the oversight to his boss. He volunteered to call the client and confess to the oversight. His boss replied, "are you nuts, just let it be. Don't rock the boat at this time, and anyway, do you expect to be here in 9 years? I don't. Let the guys running the company 9 years from now worry about it"

I have heard that the toughest part of the negotiation for a "Production Head" at a studio is setting up the termination package in advance to use when he gets thrown out. Tells you something about the process, doesn't it. The company's preoccupation with the business is about NOW, not later but now which brings me to the subject that I had intended to cover 300 words ago. Almost all Companies accrue income on a sales and availability basis. If you sell something for a million dollars, and it's available, the company can pick it up as income, even if you are not sure you will ever get paid.

International sales departments of Studio Television divisions are under, (as they have always been) enormous pressure to deliver business. This can present many problems, and I'd like to examine some of them here. I will convey a premise that may not be true for everyone. A Theatrical movie is like an apartment in New York, if it's not rented for a month, you will never make up that lost months rent. As a rule Network Televisions series have a tendency to lose their value over time. In essence, you cannot freeze them, and time is not on your side.

Now you've just come from a budget meeting with your management, and they are all over you for more revenue and you are concerned that they are not going to renew your contract. A blessing appears at your door, people who announce that they are opening a new Network in Outer Mongolia, and want to buy your entire catalogue. Lets pretend that you've never sold anything in Outer Mongolia, so you think to yourself that this guy can make your financial Quarter. Can he pay for what he wants to buy? Perhaps, but then again, may be not. You think, if I pressure him for too much financial information, he will take his Outer Mongolian money and go to another Studio. You want the income, and your management wants the income as well. And of course my opinion is that you should make the deal as the product is sitting around, and like many of the women I date, not getting any younger. But here is the rub, your Company should not pick up the deal as income, as the buyer is a credit risk, or you should increase your reserves for bad debts in the amount of the contract. That would be the prudent thing to do.

The example above is not typical, but the principle is the same for much of the business, particularly when deals are being made in countries that do not have stable currencies. If you don't do these deals someone else will, and if you don't get paid.little is in fact lost.

And of course, there is one other important consideration. If you do pick up a questionable deal for income, and it has to be written off, your management can only hope that they will be gone, and a different management will take the hit.

At times collecting money can be an exciting as well as a dangerous activity. At Screen Gems we sent one of our Latin American salesmen to collect our overdue account, and retrieve the prints for our shows that were at the station. He had a meeting in the office of the Stations General Manager who said that he wouldn't pay, and our guy told the manager that he would have to collect our prints. The manager smiled, reached into his desk and pulled out a gun and said "if you set foot in the station again, I will kill you".

I too went on a collection trip to Caracas, and while in the office of the owner of the Company that owed us a lot of money, he came in wearing a gun belt, and pulled out two Colt 45 revolvers, and asked me why I thought he shouldn't kill me? He was no more then ten feet away from me, and the bullets in the gun looked like cannon shells.

Of course the industry is always changing. and is infinitely more complex now then it was as little as ten years ago The business of selling and collecting is not a simple one, and the differing agendas inside of a typical company are all over the place. It is made more difficult by senior managers who are MBA's, Lawyers, and Finance people, who in fact never had anyone, threaten to kill them with a Colt 45.

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