Bus ads are serious business, pumping more than $20 million a year into the… (Los Angeles Times )
From the ambulance-chaser sign on the back to the wrap across the side touting Hollywood's latest, a Los Angeles County bus sometimes resembles a billboard on wheels more than a transit alternative. But those ads are serious business, pumping more than $20 million a year into the Metropolitan Transportation Authority's budget at no cost to riders or taxpayers. So when it comes time to pick a billboard company to manage all that advertising, the choice matters.
That time has arrived, and unfortunately so has a nasty dispute between the current contractor, CBS Outdoor, and a rival outdoor media company called Titan. Although the MTA earlier accepted CBS' offer of $110 million to renew the contract for the next five years, Titan has appealed to the MTA board, which is expected to vote on the matter Thursday.
We don't often weigh in on such contract disputes because they usually involve high-priced lobbyists and PR agencies throwing unverifiable charges at one another, and generally speaking, one billboard operator is as good as another. That certainly applies in this case, which has been rendered even more unsavory than usual by the bullying of CBS Chief Executive Leslie Moonves. "We do a lot of production in Los Angeles," Moonves told The Times, adding that transit officials shouldn't award Titan the bus contract unless "they want to urge a company like us to leave and to do production out of state."
Such bloviating and attempted extortion aside, an analysis of the competing bids by the MTA's professional staff points up some good reasons why CBS might be the best choice for the job, even though Titan offered the MTA 6.5% more, for a total of $117 million.
According to the MTA, Titan has on a number of occasions signed contracts with other transit agencies and then come back later and demanded changes. In San Francisco, Boston, Minneapolis and Orange County, Titan stopped making its guaranteed payments until it could renegotiate the contracts, succeeding in lowering its payments to the agencies. During hard times for the ad business in 2009, CBS also tried to renegotiate its contract with the MTA, but when the agency refused, it continued to make its agreed payments; CBS has honored the terms of every contract it has signed with a transit agency, MTA staffers said. Moreover, Titan's current bid contains questionable assumptions, such as a projection that it could raise rates up to 40% higher than what CBS charges.
The MTA board has made some dubious decisions in the past as a result of influence from lobbyists. If board members pick Titan, they'd better have some good arguments to counter the logical conclusions of their staff.