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

An outdoor advertising company fighting to preserve dozens of digital billboards across Los Angeles warned this week that it would seek “substantially” more than $100 million from City Hall if it is ordered to remove any electronic signs targeted in a recent court ruling.

In an 11-page letter sent Friday, Clear Channel Outdoor told Mayor Antonio Villaraigosa, City Atty. Carmen Trutanich and Council President Herb Wesson that its digital signs are “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 a 2006 legal settlement approved by the City Council allowing Clear Channel and CBS Outdoor to convert 840 existing billboards to digital formats. The company installed 79 digital signs before the settlement was blocked.

The 2nd District Court of Appeal 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,” wrote Keller, who contends that other factors make all of the company’s signs legal.

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 Clear Channel 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.

Clear Channel sent its letter one day before neighborhood activists and outdoor-advertising lobbyists — including the company and its representatives — took part 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 removing a greater number of static billboards.

Summit promised to work with neighborhoods on digital sign issues, saying the technology diminishes quality of life. In recent years, it has described the original 2006 agreement as a “sweetheart deal” that gave CBS and Clear Channel hundreds of millions of dollars in revenue.

Since the ruling, Clear Channel has been waging a publicity campaign in favor of digital billboards, putting together an advocacy group to argue on its behalf and touting support for its 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 take another look at the ruling that invalidated the 2006 digital sign pact, according to Clear Channel’s letter.

Clear Channel and a handful of other billboard companies also have been contributing tens of thousands of dollars in recent weeks to Proposition A, which is on the March 5 ballot and would raise the sales tax rate to 9.5% from 9%. That measure, if passed, is expected to 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.

Friday’s letter from Clear Channel was accompanied by a legal claim, a document submitted before the filing of a lawsuit. Clear Channel spokesman Jim Cullinan said his company sent it because it must provide 90 days’ notice before filing an action in court.

“This letter gives notice, but we hope it doesn’t come to litigation,” he said.

david.zahniser@latimes.com