Home Subway Advertising Finding the money: Ad agency owes MTA $18M

Finding the money: Ad agency owes MTA $18M

by Benjamin Kabak

Titan Outdoor Holdings oversees ad space on the city’s buses and commuter rail trains. (Photo via Titan Outdoor)

As the MTA looks for ways to shore up its leaking budget, the agency is going to have to pursue every available revenue avenue. From service cuts to the unthinkable fare hike, nothing is off the table, and that includes milking every last dollar out of its available advertising surface. What happens, though, if the companies contracted to manage and sell the authority’s ad space can’t pay up?

Today, the Daily News asks just that question in highlighting an internal audit that shows how one of the MTA’s advertising contractors owes the authority $18 million. Titan Outdoor Holdings, the company that sells ad space on city buses and the MTA’s commuter rail system, has not been fulfilling its contractual obligations to the MTA. Pete Donohue has more:

Titan Outdoor Holdings has stiffed the MTA out of about $18 million, coming in short with its monthly payments for nearly a year and engaging in some questionable accounting, an internal Metropolitan Transportation Authority audit revealed. The MTA could recoup the money by cashing a multimillion-dollar letter of credit Titan posted. But officials fear the move would bankrupt the company – meaning even less ad revenue for the authority, according to the audit. “We’re exploring all of our options,” MTA spokesman Jeremy Soffin said.

Titan sells and manages ad space in buses and commuter trains. To win the decade-long contract, Titan promised the MTA 72% of gross revenues – the highest in the industry – or $5.4million a month, whichever is greater. Meeting the high bar wasn’t a problem in 2007 – when the contract started – and 2008 but apparently became tougher early last year as companies trying to survive the recession cut back on advertising. Since February 2009, Titan has paid the MTA about $4 million a month, about $1.4 million short of its monthly minimum, the audit states.

According to the audit, Titan has not been forthcoming with its revenue statements and has been filing some financial reports 18 months late. Yet, as Donohue points out, the MTA is not ready to cut ties with Titan. The agency may lower the required monthly payment, but authority officials do not believe they can secure as good a rate as 72 percent from any other media sales company right now.

As Donohue notes in his article, the money owed to the MTA by Titan would be enough to cover the estimated $17.5 million in subway service cuts the agency plans to initiate later this spring. That is, however, something of a false dichotomy because the MTA has to balance its need for this revenue now against the long-term financial health of its advertising partners. Pushing Titan toward bankruptcy by cashing the letter of credit would solve one problem and create another. Still, with money tight, the authority will be looking to draw in as much revenue as it can and as it should.

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5 comments

Mike February 9, 2010 - 8:09 pm

It seems that nobody pays the money that they owe the MTA. Ratner and who ever owes the money for the west side deal are prime examples. Not only did Ratner not pay when he was supposed to but he got the MTA to alter the deal in his favor when he already had a sweetheart deal.

My question is why is nobody held accountable?

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Alon Levy February 10, 2010 - 11:33 am

Who has the power to hold those people accountable, other than judges and politicians who’re employed by the same system?

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Scott E February 9, 2010 - 10:17 pm

What about CBS Outdoor, who handles advertising on the subways? Are they having the same problems? I wouldn’t worry about bankrupting one company that is delinquent in payments if there’s another one – one that already does business with the MTA – that’s doing just fine.

By the way, there’s (at least) one LIRR car which has experimental video screens in place of the typical advertising decals. I don’t know if it’s a Titan or an LIRR experiment, but it has some unlikely transit advertisers (such as Pepsi), which is interesting to note.

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Nathan February 10, 2010 - 8:44 am

$17.5M would cover the amount needed to stave off the service cuts? I thought the cuts were saving more than that (thought I haven’t gone back through all the articles to check).

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MTA dumps delinquent advertising contractor Titan :: Second Ave. Sagas | A New York City Subway Blog February 24, 2010 - 6:37 pm

[…] I wrote on how Titan Outdoor Holdings, one of the MTA’s advertising contractors, had fallen $18 million behind in its payments to the transit authority. Today, the MTA announced that it has terminated its contract with Titan […]

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