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Digital billboard company issues $100-million threat against L.A.

February 23, 2013 |  2:07 pm

This post has been corrected. See note below for details.

A billboard company fighting to preserve dozens of digital signs it has erected across Los Angeles warned this week that it would go to court to seek more than $100 million from City Hall if it is ordered to remove its electronic signs.

In an 11-page letter sent Friday, Clear Channel Outdoor described its digital signs as “valuable assets that the city cannot attempt to take away without paying just compensation.”

The letter comes two months after a three-judge panel struck down an agreement approved by the City Council in 2006 that allowed Clear Channel and CBS Outdoor to replace 840 existing billboards with  digital billboards.

That panel ordered a lower court to invalidate all digital conversions permitted under the agreement. But Sara Lee Keller, Clear Channel's lawyer, warned that if the council instructs the company to turn off the signs “it would be exposed to liability to Clear Channel for the fair market value of such signs, which substantially exceeds $100 million.”

“While litigating these claims would be costly and time-consuming for all … we believe it is important to be clear about the consequences,” Keller wrote. Clear Channel managed to install 79 digital billboards before the agreement was blocked.

The letter drew a sharp response from Summit Media, a competing sign company that successfully sued to block the 2006 agreement. Phil Recht, the company’s attorney, said in a statement that Clear Channel made it clear that it has “no regard for the rule of law.”

“Clear Channel is trying to bully the city into submission so that they can continue to make hundreds of millions of dollars in illegal profits from these digital billboards two courts ruled to be illegal,” he said.

The threat was sent one day before neighborhood activists and outdoor advertising lobbyists –- including Clear Channel and its representatives -- participated in a working group to discuss possible digital sign legislation. One proposal up for discussion would allow new digital billboards to be installed in exchange for the removal of a greater number of static billboards.

Clear Channel and a handful of other billboard companies have contributed tens of thousands of dollars in recent weeks to Proposition A, which is on the March 5 ballot and would hike the sales tax rate to 9.5%. That measure, if passed, would generate more than $200 million annually for the city budget.

Meanwhile, Lamar Advertising, which has proposed its own plan for converting signs to digital formats, has been spending $5,000 per candidate on outdoor advertising promoting the City Council campaigns of Councilman Joe Buscaino, Assemblymen Bob Blumenfield (D-Woodland Hills) and Gil Cedillo (D-Los Angeles), and former Assemblyman Felipe Fuentes, as well as the city controller campaign of Councilman Dennis Zine.

Summit has portrayed the original 2006 digital sign agreement as a “sweetheart deal” that gave CBS and Clear Channel permission to install technology prohibited under city law. The company also argues that digital signs diminish the quality of life in Los Angeles.

Clear Channel has been waging a massive publicity campaign in favor of digital billboards, creating an advocacy group to argue on its behalf. In its letter, the company touted support for electronic signs from such groups as AIDS Project Los Angeles, Art Share L.A. and the Los Angeles Area Chamber of Commerce. Those groups, among others, have asked the state Supreme Court to review the ruling that invalidated the 2006 digital sign pact, according to Clear Channel’s letter.

Jim Cullinan, a Clear Channel spokesman, said his company was still looking for a legislative solution but is required to give 90 days' notice that it may file a legal claim in court. “This letter gives notice," he said in a statement. "But we hope it doesn't come to litigation.”

[For the record, 8:27 p.m. Feb. 23: A previous version of this post identified the company paying for billboards to promote candidates as Vista Media. In fact, it is Lamar Advertising. Lamar also has a different mix of candidates who will appear on its billboards: According to the company, it is not promoting council aide Mike Bonin and Councilman Paul Koretz but is promoting former Assemblyman Felipe Fuentes and Councilman Dennis Zine.]


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-- David Zahniser at Los Angeles City Hall