Omnicom Sought to Delay TV Production Payments; a Sign of Cash Crisis?

(MoneyWatch)  Omnicom has done a U-turn on its attempt to delay payments to TV commercial producers until after clients pay the agency. The move is a possible indicator of Omnicom's cash crisis.

Under the current system, Omnicom agencies would front producers 50 percent of their fees before the shoot and then the other 50 percent afterward. Omnicom wanted to change that, to pay producers only after the client had paid the agency its bill for the shoot.

But an outcry from UK producers had scuttled the plan, Campaign reports.

BNET previously noted that the company was downgraded by a debt rating agency over worries about its ability to pay its creditors.

Also, Omnicom's working capital slipped by $12 million in the last quarter -- an indicator that it is either struggling to delay payments or struggling to collect payments from clients. UPDATE: For an extended discussion of OMC's working capital see the comments section below. The worries seem to stem from Omnicom's exposure to automobile accounts. Final point: Note that the first Campaign report says that Omnicom wants to extend the delayed payment plan to to U.S. producers as well. But the second Campaign item says Omnicom has only settled with the U.K. producers. More on this issue to come?

• See BNET's previous coverage of ad agency finance:
• Clients Are Delaying Payments to Agencies
• Omnicom, Publicis Worst Hit in Auto Brand Axings
• Omnicom's Credit Crunch: a Gamble by CEO Wren That Didn't Pay Off
• WPP Pays Almost No UK Tax; Used "Spider Web" of Debt; Foreign Countries to Avoid Obligations
• Publicis Q4: $15.5M Army Fraud Settlement Not Noted in Its Numbers
• WPP's Ireland HQ Is Nothing But a Tax Dodge
• Is WPP at Risk of Breaching Its Debt Obligations?
• Fitch Cuts WPP's Debt Rating; Suggests Pay Reductions