Tuesday, January 20th, 2009 ::: USA: New York City

We’ve written about Fuel Outdoor before. This is a company that we have termed the “Dirtiest Billboard Company in America.” We also wrote about Fuel’s legal challenge against New York City in Fuel Outdoor Builds 324 Illegal Signs in New York City Then Sues New York City.

Fuel Outdoor is owned by Och-Ziff Hedge Fund which, after it acquired Fuel from Sergio Fernandez De Cordova and Seth Lippert (see an interview with these two), financed a multi-million dollar USA-wide spree of illegal billboard construction.

In addition to installing illegal billboards, Fuel Outdoor would oversell their signs. They would sell, say, 2,500 sign faces nationwide to a major media buyer, then actually install less than that. Pattison Outdoor does the same thing in Canada, although Astral and CBS are careful not to. (When CBS Outdoor acquired the TTC advertising contract from Urban Outdoor TransAD, CBS found that Urban was overselling quite a bit, and CBS Outdoor officials believe that IMA Outdoor currently oversells signs for its GO Transit franchise.)

Fuel’s signature product is their “Metro Lights Panels” which you can see above. They were installed without permits first in Los Angeles, which has a street furniture contract; Fuel Outdoor than challenged the signs by-laws of Los Angeles, under the First Amendment. Fuel was quite successful in the lower courts, which ruled that Los Angeles cannot ban Fuel’s signs because it allows the same type of signs on transit shelters.

Emboldened by the lower court victory in Los Angeles, Fuel Outdoor installed the same signs illegally in other American cities that have Street Furniture contracts including: New York, Boston (in very useless places), Chicago, Philadelphia, Washington DC, and San Francisco. There are currently outstanding challenges by Fuel Outdoor to the signs by-laws in San Francisco and New York. Those challenges in San Fran were stayed pending the outcome of an appellate court ruling in the Los Angeles case.

Thankfully, appellate court completely destroyed Fuel Outdoor and said that municipalities can ban billboards even if they allow the exact same signs on transit shelters. This is the ruling [PDF]:

Fuel Outdoor can now be expected to lose the associated court cases in the rest of the country. One blogger points to a particularly scathing paragraph in the opinion, in which the judges slam Fuel Outdoor’s famous attorney Lawrence Tribe:

Not to be deterred, Metro Lights drew our attention to additional precedents at oral argument in support of a further variation on this allegation of unconstitutional favoritism. Upping the rhetorical ante, Metro Lights accused the City of “auctioning off First Amendment rights” to the highest bidder, in this case CBS. This is strong, if rather sloganeering, language, but after reviewing the case law on which Metro Lights relies, we believe it to be little more than a canard.

Och-Ziff Hedge Fund is currently trading at $4.85/share, down from its $32/share initial public offering price in late 2007.