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CBS in nasty fight for Los Angeles MTA advertising contract

September 11, 2012|By Joe Flint
  • CBS, in one of its billboards blanketing Los Angeles, reminds Angelenos of its spending power.
CBS, in one of its billboards blanketing Los Angeles, reminds Angelenos… (CBS )

CBS Corp. is blanketing Los Angeles with billboards trumpeting how many Angelenos it employs and the billions of dollars it contributes to the city's economy.

But this isn't part of some feel-good campaign by the media giant. At issue is CBS' contract with the Los Angeles County Metropolitan Transportation Authority (MTA) to sell advertising on county buses and trains.

CBS, which this year received MTA approval on a $110-million bid to renew its contract for an additional five years from 2013 through 2018, is trying to derail a rival's effort to get that winning bid overturned.

That competitor is Titan, a privately held outdoor advertising company whose bid of $117 million for the MTA contract was rejected. Titan is now appealing the ruling to the MTA board, contending it did not get a fair shake. A decision from the MTA board could come as soon as Sept. 27.

CBS executives charge that Titan has a history of making overly aggressive bids with transportation authorities for advertising contracts and then subsequently renegotiating more favorable terms.

"Their record is spotty," said CBS Chief Executive Leslie Moonves.

Titan lost its contract with New York City's Metropolitan Transportation Authority in 2010. In that case, Titan was not making the payment on its contracts and the city eventually took possession of the company's roughly $20-million bank guarantee. CBS, which had been outbid by Titan, was awarded the contract after Titan's default.

In Boston and San Francisco, Titan renegotiated terms of its contracts from what it had originally agreed to pay. The San Francisco situation was cited by the Los Angeles MTA as one reason it chose CBS' lower bid.

In an interview Tuesday, Titan Chief Executive Don Allman said the contracts were renegotiated because the economy was melting down, not because his company was duplicitous.

"We did in fact go back to some of our transit authorities and either renegotiated terms to reflect the new market or we rebid the contracts," Allman said, adding that CBS did the same thing in Atlanta and Los Angeles.

CBS countered that any changes it made to its contracts in those two cities was done because the transportation fleet had been reduced and not because the company couldn't meet its obligations.

"The CBS Corporation has never defaulted on a contract," Moonves said. "To choose that company over ours just seems preposterous; we have financial strength behind our company."

Subtly in its billboards and not so subtly in its remarks CBS is warning city officials that it won't be happy if the MTA board overrules the staff's recommendation and gives Titan the Los Angeles MTA contract.

"We keep a lot of production in Los Angeles," Moonves said, adding that it would be "wrong" to award the contract to Titan unless "they want to urge a company like us to leave and to do production out of state."

Titan's Allman said CBS is not "reflecting what's the truth." Rather, Allman maintains that "everyone went back and tried to fix situations when the worst recession in their life hit and prior to that we were in good standing with all contracts."

Interestingly, Allman was a former CBS employee working for its outdoor advertising unit before joining Titan, which was founded by William Apfelbaum, another former CBS executive. 

"We won 20 contracts away from CBS; it was an amazing growth story," Allman said, noting that it has contracts in Philadelphia, Chicago as well as with Amtrak. After the economy turned, Allman said Titan restructured and has reduced its debt. The Los Angeles MTA staff, he charged, didn't do their homework in evaluating Titan's bid.

Although CBS has the recommendation of the staff behind it, Moonves is concerned about the board.

"In these political situations anything can happen," he said, adding, "It would be a travesty if CBS lost this after being recommended by the staff."

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Follow Joe Flint on Twitter @JBFlint.

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