3 Billboard Firms Charged in Effort to Suppress Rents

Three major billboard firms and two former executives were charged Monday with conspiring to suppress competition for billboard advertisements in Southern California during a 20-year period.

The Justice Department’s antitrust division, in a criminal complaint filed in federal court in Los Angeles, alleged that between 1964 and 1984 the three billboard companies reduced rents paid to property owners by agreeing not to compete against each other in the leasing of billboard sites.

The complaint named Gannett Outdoor Co. of Southern California and its former chairman and chief executive, Hal Brown; Metromedia Inc. of Secaucus, N.J., and its former vice president, Michael F. Tobey, and Foster & Kleiser Corp. of Delaware.

If convicted, the corporations each face a maximum fine of $1 million. The executives each face up to three years in prison and a $100,000 fine.

Judy Whalley, acting assistant attorney general in charge of the Justice Department’s antitrust division, could not immediately be reached for comment. But she told United Press International that the charges are the result of a federal grand jury investigation in Los Angeles.

The two executives who were charged could not be reached for comment, but the companies promptly disputed the Justice Department’s allegations.

“We believe these charges are without merit,” said Arnold L. Wadler, vice president and general counsel for Metromedia Inc., a Secaucus, N.J.-based concern of which Foster & Kleiser was an affiliate. “The case will be vigorously defended and we expect to be fully vindicated. The charges are based on alleged events which occurred many years ago with people no longer employed by us in a business in which we no longer engage.”

The billboard operations of Foster & Kleiser were sold in 1986 after Metromedia became the object of a leveraged buyout two years earlier. Metromedia has been transformed into a company that owns several telecommunications businesses, including a cellular phone enterprise, and hotel and restaurant outfits.

Gannett Outdoor, one of the nation’s largest billboard companies, released a statement late Monday saying that the charges were based “on a misunderstanding of the facts and the law.” The company also said “the charges will be contested vigorously.”

Gannett Outdoor said the alleged illegal activity took place before it purchased its Southern California billboard unit, Pacific Outdoor Advertising. Pacific was acquired as the result of a merger with Combined Communications Corp. in 1979.

Gannett Outdoor is a subsidiary of the giant Washington, D.C.-based media concern, Gannett Co.