The company responsible for selling ads at South Station is suing the building operator, claiming New York-based Ashkenazy Acquisition Corp. is unfairly demanding full payment despite billboards obstructed by the station’s massive redevelopment project .
In a lawsuit filed in federal court in Boston this week, Clear Channel Outdoor, LLC claims that since January 27, 2021, many of its South Station commercials “have been obscured, entirely blocked or otherwise materially affected” by construction tied to the South Station Air Rights project, a multi-year expansion that includes a 51-story tower and the renovation of rail and bus platforms.
Ashkenazy, the real estate investment firm that also manages Faneuil Hall, had insisted that Clear Channel pay a minimum annual fee of $500,000 set in its contract to sell ads in the station. But with construction blocking gates, altering passenger flow and shutting down the eastern part of the station (making it “a virtual ghost town,” the suit says), Clear Channel argues it owes much less, around 120 $000.
Prior to the construction of the project, one of Clear Channel’s most profitable advertising locations was a location above the station entrance called the “Exterior Window Spectacular”, which generated over $400,000 in annual revenue and was booked monthly, 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 in breach of their contract. Under the agreement, if an ad space is not viewable 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 obtain maximum revenue, display advertisements must be visible, uncluttered and aesthetically appealing,” the lawsuit said.
The lawsuit says Clear Channel told Ashkenazy it would suspend payments for hidden ad placements on April 19 last year until the issue was resolved. Ashkenazy said in August it would hold Clear Channel in default if it did not pursue payment. Pursuant to the terms of the contract, Clear Channel continued to pay the disputed charges, but is now seeking reimbursement.
Clear Channel said it expects to earn $199,032 in net advertising revenue from South Station for 2021, down 92% from the nearly $2.5 million it made from ads at the station in 2019. The pandemic likely slowed foot traffic in the station as more commuters opted to stay home and avoid public transport. Construction of the South Station Air Rights Project is expected to continue until at least 2025.
“At this point, the lawsuit speaks for itself,” Jason King, senior vice president of corporate communications and marketing for Clear Channel, said in an emailed statement. Ashkenazy did not respond to a request for comment Thursday afternoon.
Annie Probert can be reached at [email protected].
