LAX media contract bidding may be scrapped, started over


Los Angeles officials will consider throwing out all bids submitted for a lucrative media contract at LAX because of conflict of interest allegations involving a former airport commission president whose firm is vying for the work.

The possibility of canceling the bids and starting over stems from a formal protest by Clear Channel Airports, which brought the accusations against Alan Rothenberg, a prominent investment banker and chairman of Premier Partnerships.

Rothenberg’s company has joined JC Decaux Airport Inc. and Time Warner in a bid to handle indoor advertising, sponsorships and other media opportunities to promote Los Angeles International Airport, the nation’s third-busiest.


Airport staff recommended the joint venture for the contract, which could provide up to $350 million in revenue by the end of 2020 for Los Angeles World Airports, the operator of LAX. Clear Channel, the runner-up, lodged a bid protest.

The Board of Airport Commissioners postponed approval of the contract in June until the city attorney could review the allegations and make recommendations on how to proceed. Commissioners are scheduled to take up the matter again at Tuesday’s board meeting.

Because of the potential risk to airport revenue if Clear Channel prevailed in court, airport staff “reluctantly” concluded that rejecting all proposals was the appropriate course for the board to take, according to a board report. Staff estimated that the revenue loss could be as high as $15 million, compared with $3 million if the bidding process were restarted.

The city attorney’s office, which discussed the matter with commissioners in closed session Aug. 6, determined that the airport department faced significant exposure to a lawsuit if the contract was awarded to JC Decaux.

Clear Channel alleges that Rothenberg has a conflict of interest under the city’s government code because he participated in discussions and worked on plans related to the media contract before he left as a commissioner.

The company further alleged that it could not draft a proper bid because it was not given the same information by the airport as JC Decaux received, creating an uneven playing field. Among other things, the company claims it did not get sales revenue data for 2012, revenue figures for each passenger terminal or business reports.

Airport staff rejected that allegation, stating that Clear Channel had time while preparing its bid to obtain the information it says it was denied.

But “the outcome of the conflict allegation is less certain,” the board report stated. “If Clear Channel were to prevail, the terminal media operator agreement would be void.”

Clear Channel officials said Friday that they were concerned about JC Decaux’s involvement should a second round of bidding be ordered.

“The process is tainted and Clear Channel deserves the contract,” said Fiona Hutton, a spokeswoman for the company. “JC Decaux has benefited from Rothenberg’s advice and participation in the bid.”

Rothenberg could not be reached for comment. After five years on the commission, he resigned in 2010 because he owned $1 million in stock in California Pizza Kitchen, a contender for airport concession contracts at the time.

In a prepared statement, JC Decaux officials said they were disappointed in the recommendation to re-bid the contract, considering that the company was deemed a qualified bidder by airport staff. “We stand by every member of the JC Decaux team and the manner in which we conducted ourselves throughout the entire bid process,” they said.

According to the statement, JC Decaux will review its options and determine whether a re-bid is fair or legal should the airport commission adopt the staff recommendations. At a minimum, the officials said, they would expect any re-bid to contain provisions to avoid giving an economic benefit to other competitors.