LOS ANGELES—During its semiannual board meeting last month in Los Angeles, the Association of Independent Commercial Producers (AICP) elected Mark Androw, executive producer/co-founder of the Story Companies, bicoastal and Chicago, as its chairman. He succeeds Al Califano, principal in A-List LLC, New York, who continues to serve on the AICP board. The election of Androw came as no surprise in that he was next in line for the chairmanship, having been AICP vice chairman for the past two years.
The Chicago-based Androw becomes the second AICP chairman not headquartered in New York or Los Angeles. (The first was John McCorkle, president/exec producer of Fireside Films, Atlanta and Cashiers, N.C., who was AICP chairman from 1989-?90.)
Replacing Androw in the role of vice chairman is Frank Stiefel, executive producer/exec VP of bicoastal/international @radical.media. Sally Antonacchio, VP of bicoastal The Artists Company, was elected AICP treasurer, succeeding @radical. media co-proprietor Frank Scherma.
The AICP chairman and vice chairman serve one-year terms. The treasurer position carries a two-year term.
Also, the other two AICP officers remain in place: secretary Bob Sacks, an attorney with New York law firm Kane Kessler; and AICP president/CEO Matt Miller, who is appointed to office. Sacks continues to shepherd the AICP?s proposed health plan designed to offer coverage to company staffers and nonunion freelancers who don?t have medical insurance. Years in the making, the plan recently gained an endorsement from the U.S. Department of Labor. Two years earlier, the health plan was approved by the Internal Revenue Service (IRS).
The thumbs-up from the Department of Labor means the AICP can now move onto the next step—putting the health plan out to bid to insurance carriers. The process of finding a suitable underwriter could be time consuming in that the insurance industry has been buffeted by an uncertain business climate. Nonetheless, satisfying the IRS and the Department of Labor represents the clearing of two major hurdles. In fact, Miller noted that the AICP has received inquiries from other trade associations regarding the Department of Labor endorsement. He?s been informed that the favorable ruling from the Department of Labor is the first for this type of trade association health plan.
CONTRACTUAL OBLIGATION
The AICP continues its analysis of ad agency production contracts, which began in ?01. At press time, the AICP had wrapped and was about to distribute its detailed look at the contract of The Richards Group, Dallas. Over the past two-and-a-half years, the AICP has provided analyses of contracts from some 20 agencies.
Analyzed contracts contain highlighted clauses that could prove problematic or at least merit careful examination. The analyses not only identify those provisions, but may also make recommendations on how to deal with them. Such recommendations include production companies striking out objectionable language, replacing it with revised wording and/or simply initiating a dialogue with agencies about legal issues and concerns.
The AICP analyses are designed to serve as a road map to help AICP member production houses navigate their way through a maze of different agency production contracts. Contract issues range from receiving payment on a timely basis to postponement/cancellation contingencies, legal liabilities and proper indemnification. The intent of the AICP studies is to raise awareness of contractual language and related issues, helping production companies make informed choices in dealing with agency contracts. Ultimately, it?s an individual company?s decision as to what options or recommendations it adopts, if any.
INDEMNIFICATION
Clearly related to contractual issues is indemnification language for those jobs that involve blanket or wrap-up insurance. On such projects, insurance coverage for the production is carried by the advertiser or agency rather than the production company. The question of potential liabilities is central to those jobs that involve blanket insurance. The AICP plans to soon distribute to its members a checklist of what to look for in order to determine if agency contract indemnification language provides proper legal protection to the production company on a job covered by wrap-up insurance.
SHOOT has heard of instances in which agency contract indemnification language hasn?t been revised to account for wrap-up coverage. In these cases, the contract still requires the production company to indemnify the agency and client—even though the production company isn?t carrying the prime insurance policy. Legally, in a blanket policy situation, the indemnification should be provided to the production company by the entity carrying the insurance coverage—namely, the agency and/or advertiser.
Even for some wrap-up insurance jobs in which indemnification is provided to production companies, the hold-harmless language needs to be scrutinized. Many production companies assume that the indemnification in agency contracts for projects with wrap-up insurance is in line with the standard that was originally agreed upon several years ago between the AICP and blanket policy-holding advertisers. But as reported in SHOOT, some agencies, clients and insurance carriers have unilaterally made changes in that indemnification language. Thus, it?s become imperative that production company executives read contracts and documents to determine if their businesses are being properly indemnified.
In analyzing indemnification language relative to wrap-up policies over the past year-plus, the AICP found numerous differences in agency contract clauses that Miller described as being ?moving targets,? in that they are constantly changing. So rather than suggest revisions in these ever-changing documents, the AICP instead opted to devise the aforementioned checklist.
Miller noted that there have been significant changes in the wrap-up insurance landscape. For example, Interpublic Group, parent company to a number of multi-national agencies, has decided to pull errors-and-omission insurance out of its ad shops? wrap-up insurance riders. This leaves the production company with the responsibility for E&O coverage on these jobs. Miller said that E&O coverage is ?very expensive? and may be hard for production houses to get on an a la carte basis. He related that production companies are more likely to obtain an E&O policy if they have the leverage of purchasing the overall insurance coverage for projects—leverage which they don?t have on jobs covered by an agency/ advertiser wrap-up policy.
FORD FEEDBACK
Among the other developments at the AICP board meeting were:
Board members extensively discussed Ford?s production guidelines, which—if adhered to—would reduce the production company markup percentage and prevent certain items and services from being marked up (SHOOT, 11/7, p. 19). Miller related that AICP members were encouraged to find that according to recent reports Ford has since softened its stance, based on the unwillingness of many leading production houses to agree to work under those original guidelines.
• It?s likely that the AICP will release to its members later this month the results of the second annual independent survey of production companies that it commissioned Goodwin Simon Strategic Research, San Francisco and Los Angeles, to conduct. Some preliminary findings of the study were first unveiled in New York on Oct. 23 at the SHOOT Commercial Production Forum, presented in partnership with The Source. Among those publicly discussed study tidbits was a finding that slow payment from agencies to production companies remains a prevalent problem. Production companies responding to the survey reported that slow payment cropped up in some 57 percent of jobs (SHOOT, 11/7, p. 15). Miller said that the survey will prove to be ?a very useful business planning tool? for production companies.
• The AICP board approved an amendment to its bylaws whereby at the chairman?s discretion up to three members at large can be added to the national board. The board has traditionally consisted of national officers, past chairmen, and delegates from the AICP?s regional chapters. The amendment enables the AICP chairman, if he or she so chooses, to broaden the board?s expertise by bringing in additional experienced perspectives.
• The AICP and the Association of National Advertisers (ANA) have tentatively agreed to develop an event that will focus on branded integrated content. Though details were not available at press time, the daylong joint event is scheduled to be held during what New York City has proclaimed as its inaugural ?Advertising Week? (Sept. 20-24, ?04), which is designed to celebrate the positive economic impact and creativity of the advertising business. ?Advertising Week? is being launched by the American Association of Advertising Agencies (AAAA) and will feature public events and industry programs.
• The AICP board also decided to commit to again participating in the annual New Orleans Media Experience (NOME) this year and next. The inaugural New Orleans event took place a couple of months ago (Oct. 26-Nov. 1). The convergence festival highlights advertising, music, film and video gaming, featuring panel discussions, screenings and other events (SHOOT, 11/14, p. 7).
