Metro - File #: 2020-0306

• File #: 2020-0306
• Type: Contract
• Status: Agenda Ready
• File created: 4/16/2020
• In control: Executive Management Committee
• On agenda: 5/21/2020
• Title: AUTHORIZE the Chief Executive Officer to: A. EXECUTE Modification No. 3 to Contract No. PS41099B - License to Sell and Display Advertising on Metro Bus System, with OUTFRONT Media Group, LLC, to temporarily replace the minimum annual guarantee (MAG) payments to Metro, as required by the Contract, with monthly payments of 55% of actual sales revenues, from May 15, 2020 to December 31, 2020, and to re-schedule the May 2020 payment from May 15, 2020 to May 30, 2020; and B. EXECUTE Modification No. 1 to Contract No. PS41099R - License to Sell and Display Advertising on Metro Rail System, with Intersection Parent, to temporarily replace the minimum annual guarantee (MAG) payments to Metro, as required by the Contract, with monthly payments of 55% of actual sales revenues from May 15, 2020 to December 31, 2020, and to re-schedule the May 2020 payment from May 15, 2020 to May 30, 2020.
• Sponsors: Executive Management Committee
• Indexes: Advertising, Contractors, Contracts, Coronavirus Disease 2019 (COVID-19), Information systems, Intersections, Payment, Procurement, Ridership, Strategic planning

Meeting_Body
EXECUTIVE MANAGEMENT COMMITTEE
MAY 21, 2020

Subject
SUBJECT: METRO SYSTEM ADVERTISING (LICENSE TO SELL AND DISPLAY ADVERTISING ON BUS AND RAIL)

Action
ACTION: APPROVE CONTRACT MODIFICATION

Heading
RECOMMENDATION

Title
AUTHORIZE the Chief Executive Officer to:

A. EXECUTE Modification No. 3 to Contract No. PS41099B - License to Sell and Display Advertising on Metro Bus System, with OUTFRONT Media Group, LLC, to temporarily replace the minimum annual guarantee (MAG) payments to Metro, as required by the Contract, with monthly payments of 55% of actual sales revenues, from May 15, 2020 to December 31, 2020, and to re-schedule the May 2020 payment from May 15, 2020 to May 30, 2020; and

B. EXECUTE Modification No. 1 to Contract No. PS41099R - License to Sell and Display Advertising on Metro Rail System, with Intersection Parent, to temporarily replace the minimum annual guarantee (MAG) payments to Metro, as required by the Contract, with monthly payments of 55% of actual sales revenues from May 15, 2020 to December 31, 2020, and to re-schedule the May 2020 payment from May 15, 2020 to May 30, 2020.

Issue
ISSUE

Metro's bus and rail revenue advertising contractors have requested temporary relief from the revenue Minimum Annual Guarantee (MAG) requirements of the Contracts.

This report details how the current COVID-19 pandemic and Stay at Home orders are impacting the advertising business in the short-term and long-term. Due to the significant impacts of COVID-19, both contractors are experiencing canceled sales, lack of sales, and drop in customer impressions - negatively affecting their ability to generate the level of revenue that is necessary in order to meet the minimum annual guarantee (MAG) payments to Metro.

Staff is recommending the temporary suspension of the minimum annual guarantee payment (MAG) obligation from each contractor, and instead, allowing each firm to pay Metro a monthly revenue of 55% share of actual revenues fr...