If they were foreign films, three of the articles on this week’s front page would carry subtitles that include the headline on this column. Indeed, a caveat for U.S. support service companies is unfortunately apropos in light of such factors as runaway production—as reflected in the lead story on the 4A’s study of the year 2000, and in SHOOT’s report on last week’s California Legislature informational hearing, during which representatives of the commercial community offered testimony. Additionally, the runaway issue and production house closures figure prominently in "2001: An Industry Odyssey," our look back at the highlights—and lowlights—of this calendar year.
As chronicled in SHOOT over the past several years, the runaway problem has heavily impacted the support sector of the commercialmaking community. The six-month-long SAG/ AFTRA strike against the advertising industry in ’00 continues to negatively affect American suppliers and support services. More advertisers were introduced to global production during the strike, and have since come to regard shooting outside the U.S. as a viable option.
"Vendors Beware" is also the warning that underscores the aforementioned attrition in production company ranks reported on in our ’01 retrospective. Now defunct shops such as Straw Dogs, Shooting Gallery Productions (SGP) and Propaganda Films have left behind major trails of debt. In turn, many unsecured creditor vendors have been left high and dry, adding further to the burden already felt by the industry support services sector in a tight market.
Over the past several months, SHOOT has received dozens of phone calls from unsecured creditors of SGP, Straw Dogs and, most recently, Propaganda, seeking info and status updates. A high percentage of those calls concern the binding arbitration case filed by Straw Dogs’ president Craig Rodgers against publicly held, New York-headquartered parent company Paradise Music & Entertainment (SHOOT, 10/5, p. 1). In his arbitration filing, Rodgers alleges that Paradise "misappropriated and withheld from Straw Dogs funds necessary to permit Straw Dogs to conduct its business."
The general consensus is that chances range from slim to none that unsecured creditors of these shuttered production houses will get paid amounts even remotely close to what’s fully owed them. The likely outcome is that many vendors won’t be paid at all—or at most, will get cents on the dollar.
"We haven’t been told we will be paid or that we won’t be paid," said an executive of an unsecured creditor shop, who requested anonymity. "But I’m not too optimistic, based on the extent of debt at Propaganda that I’ve been hearing about—millions and millions of dollars. At this point, we might be fortunate just to get a portion of what’s owed us."
While the trails of such debt further squeeze supplier shops during generally difficult economic times, this same anonymous Propaganda creditor made a chilling observation, striking at the core of what has perennially made the commercialmaking business unique.
"If all this continues—companies closing and leaving us holding the bag, if there’s more runaway production and a damaged economy—we in the support sector have to consider whether to stay in business; or, more directly, how we do business. Trust has always been the norm in this business—you get a phone call that you’ve got the job and you put the wheels in motion to produce a commercial, spending money and deploying resources. You front money before you receive a dime. But with all that’s happened this year, is it prudent to operate this way anymore? How many more times can we get burned?"
