BBDO Said To Back Off Request To Bind Media To Greater Chrysler Liability

After sparking concerns among media outlets doing business with Chrysler, agency BBDO is backing off a request to have them sign new agreements that would have shifted more financial liability onto the media as the automaker struggles to emerge from bankruptcy under a federally mandated plan. The plan, which was made public this morning in an advisory from media credit industry watchdog the Media Financial Management Association (MFM), would have bound any media outlet signing it to "sequential liability" terms for all past and future obligations by Chrysler.

"They've started calling [media outlets] and said they've decided not to implement the program," Mary Collins, president-CEO of the MFM, told MediaDailyNews this morning, noting that the language of the agreements BBDO had been sending to the media was particularly troubling, because the new language would have created "sequential liability that went forward and backward" for any media doing business with Chrysler.

Historically, the advertising industry -- especially members of the American Association of Advertising Agencies -- has sought sequential liability terms when purchasing media, a concept that makes agencies liable for paying media creditors only after the agency has been paid by their client, even if the client has defaulted. Many media outlets ignore that boilerplate in their insertion orders and purchase agreements, insisting on so-called "joint and several" liability terms that make both the agency and the client obligated for paying the media.

A BBDO spokesman said the agency had no comment, but the agency is known to be among Chrysler's biggest unsecured creditors. According to the automaker's bankruptcy filing, the agency has a $58 million claim.

According to the MFM's advisory, the new agreements contained other onerous terms for media outlets that would have signed them, including language that might have bound all locations and subsidiaries of a media company to the terms even if only one outlet or location were to have signed it.

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