The lawsuit calls for breaks on the advertising rates of the Gare du Sud due to a massive construction project

The company responsible for selling advertisements in the South Station is suing the building operator, claiming that New York-based Ashkenazy Acquisition Corp. unfairly demands full payment despite billboards being obstructed by the massive redevelopment of the station.

In a lawsuit filed this week in federal court in Boston, Clear Channel Outdoor, LLC claims that as of January 27, 2021, many of its commercials in South Station “have been obscured, blocked entirely, or otherwise severely affected” by construction related to the South Station Air Rights Project, a multi-year expansion that includes a 51-story tower and refurbishment of rail and road platforms.

Ashkenazy, the real estate investment company that also manages Faneuil Hall, had insisted that Clear Channel pay a minimum annual royalty of $ 500,000 set in its contract for the sale of advertisements in the station. But with the construction blocking the doors, altering the flow of passengers, and shutting down the eastern part of the station (making it “a virtual ghost town,” the lawsuit says), Clear Channel maintains it owes much less, around $ 120,000. .

Before the project was built, one of Clear Channel’s most profitable advertising spots was a location above the entrance to the station called the Exterior Window Spectacular, which generated over $ 400,000 in annual revenue and was booked each month, the company said. But with 80% of the window now covered in scaffolding and surrounded by exposed wires, Clear Channel was unable to sell the spot in 2021, “even at heavily discounted rates.”

Clear Channel also claims that by demanding the $ 500,000 fee, Ashkenazy is violating its contract. Under the agreement, if advertising space is not visible for more than seven days, or if Clear Channel’s ability to sell advertising is adversely affected by construction, the company’s obligation to making the payment is suspended until the obstacles can be removed.

“This construction activity undermines Clear Channel’s ability to fully realize the benefits of the license agreement because, to achieve maximum revenue, displays advertising must be visible, clean and aesthetically appealing,” said the lawsuit.

The lawsuit says Clear Channel told Ashkenazy it will withhold payments for hidden ad slots on April 19 of last year until the issue is resolved. Ashkenazy said in August that it would keep Clear Channel in default if it did not pursue the payment. Pursuant to the terms of the contract, Clear Channel continued to pay the disputed charges, but is now requesting a refund.

Clear Channel said it expects to earn $ 199,032 in net advertising revenue at South Station for 2021, down 92% from the nearly $ 2.5 million it made from station advertisements in 2019. The pandemic has likely slowed foot traffic in the station as more commuters choose to stay home and avoid public transportation. Construction of the South Station air rights project is expected to continue until at least 2025.

“At this point, the lawsuit speaks for itself,” said Jason King, senior vice president of corporate communications and marketing for Clear Channel, in an emailed statement. Ashkenazy did not respond to a request for comment Thursday afternoon.

Annie Probert can be reached at [email protected]

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