Meeting_Body
EXECUTIVE MANAGEMENT COMMITTEE
June 18, 2015
Subject/Action
SUBJECT: UPDATE ON ADVERTISING CONTRACTS
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE report on the status of Metro's revenue-generating bus and rail advertising contracts.
Issue
ISSUE
In January 2015, Metro's Board approved Director Antonovich's Substitute to Director Fasana's Motion 79.1 (Attachment A), directing the CEO to exercise the next one-year option (for Calendar Year 2016) with Outfront Media, and that the Metro Board direct the CEO to provide quarterly updates to the Board on the contract performance of Outfront Media, specifically regarding the contractor's timely implementation of new opportunities (e.g. bike rack advertising space and digital kiosks) as described in its January 2015 presentation to the Metro Executive Management Committee.
Discussion
DISCUSSION
Outfront Media was awarded two related 5-year revenue contracts (PS12714022 License to Sell and Display Advertising on Metro Buses, and PS12714023 License to Sell and Display Advertising on Metro Rail Systems), each inclusive of three 1-year options. The period of performance for the initial term started January 1, 2013 and ended December 31, 2014. In January 2015, Metro's Board approved to exercise the next one-year option, which extends the term of this contract to December 31, 2016.
Metro receives a fixed, guaranteed amount of revenue from these agreements ($21 million total in calendar year 2014) rather than a percentage of actual sales. Outfront Media has met all of their financial obligations pursuant to contract as of the date of this report. This method shields Metro's revenue from fluctuations in the advertising industry, and relieves the agency of having a financial stake in the acceptance or rejection of any particular ad. Advertising acceptability is governed by the Content Guidelines in Metro's Board-approved Advertising Policy.
Per direction of the Board...
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