I'm a bit slow getting my head around the BRTV/FCC arrangement so I thought I'd run an example passed you guys to see if I'm making any progress.
Let's consider the situation where a customer signs up to a video package costing $4000 and wants to take advantage of the 12 month $12,000 interest free loan on offer.
BRTV sends the paperwork to FCC, which triggers, within 2 days, a payment to BRTV of $4000. Out of this $4000:
* 24% or $960 is paid to FCC as a fee.
* 35% or $1400 is retained by BRTV as working capital, and
* 41% or $1640 is deposited in an account controlled by FCC as security.
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The sponsorship pool is "the pool of sponsorship moneys from which FC has agreed to advance to BRTV for Video Offers not yet Finally Accepted, up to the Sponsorship Pool Limit".
As such, I take this to mean that the $4000 advanced to BRTV is taken from the Sponsorship Pool, so the $20,000,000 pool would be reduced by $4000.
It has been suggested to me that actually the Sponsorship Pool is reduced by $12,000 (ie amount of finance offered). However, based on my reading of the documentation that's not my interpretation, but I'd appreciate clarification on this point.
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If the customer accepts the video produced by BRTV, this acceptance triggers the release of the 41% to BRTV ... so that BRTV now has the use of 76% of the money or $3040.
With regard to the customer, their $12,000 credit line becomes operational and the first thing to happen is that $4000 is deducted, leaving the customer with a debt of $4000 and a credit line of $8000.
Under the terms of the arrangement the customer has "an obligation to pay a monthly $1,000 fee for 12 months membership" which I interpret that the customer must pay their debt off at the rate of $1000 per month ... to entitle them to have access to the 12 month line of credit.
Provided the customer doesn't make further use of the line of credit, they should be debt free after 4 payments of $1,000 per month.
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If the customer doesn't accept the video then BRTV retains the funds but has to find a swap for this customer.
We are told that BRTV has been able to 'swap in' customers effectively, as evidenced by the fact that it has not paid any cancellation fees to FCC.
I have read on the forum that BRTV has 120 days to make the swap but that is not clear from the documentation. It appears that the 120 days only refers to situations where BRTV does not deliver a video to the customer. The document is silent regarding time frames if the customer disputes or changes their preliminary acceptance of a video offer. I'd appreciate clarification on this point.
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Has anyone looked into the numbers of customers and accepted customers mentioned in paragaphs 15 and 16 to determine how well BRTV is tracking? The 791 accepted customer figure seems particularly low.
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