fb-pixel Skip to main content

Lawsuit seeks breaks on South Station ad rates because of massive construction project

Clear Channel sues station operator Ashkenazy saying its billboards are blocked by construction of a tower atop the station.

The company that operates billboards in South Station is suing the station's manager, saying it's being overcharged for advertising that is blocked by ongoing construction at the station.Craig F. Walker/Globe Staff

The company responsible for selling ads in South Station is suing the building’s operator, claiming New York-based Ashkenazy Acquisition Corp. is unfairly demanding full payment despite billboards being 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 Jan. 27, 2021, many of its advertising spots in South Station “have been obscured, blocked entirely, or otherwise materially adversely affected” by construction tied to the South Station Air Rights Project, a multi-year expansion that includes a 51-story tower and 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 advertisements in the station. But with construction blocking doors, altering passenger flow, and closing the eastern portion of the station (rendering it “a virtual ghost town,” the suit says), Clear Channel maintains that it owes significantly less, around $120,000.

Prior to the project’s construction, one of Clear Channel’s most profitable advertising locations was a spot above the station’s entrance called the “Exterior Window Spectacular,” which generated over $400,000 in annual revenue and was booked every month, the company said. But with 80 percent of the window now covered with scaffolding and surrounded by exposed wires, Clear Channel could not sell the spot in 2021, “even at steeply reduced rates.”

Advertisement



Clear Channel also claims that by demanding the $500,000 fee, Ashkenazy is in violation of their contract. Under the agreement, if any advertising space is not visible for more than seven days, or if Clear Channel’s ability to sell advertising is negatively impacted by construction, then the company’s obligation to make the payment is suspended until the obstructions can be removed.

“This construction activity undermines Clear Channel’s ability to fully realize the benefits of the License Agreement since, to obtain maximum revenue, advertising displays must be visible, uncluttered, and aesthetically appealing,” said the suit.

Advertisement



The lawsuit states that Clear Channel told Ashkenazy that it would pause payments for the obscured advertising locations on April 19 of last year until the issue was resolved. Ashkenazy in August said it would hold Clear Channel in default if it did not continue payment. Following the contract’s terms, Clear Channel continued to pay the disputed fee, but is now seeking a refund.

Clear Channel said it expects to earn $199,032 in net advertising revenue at South Station for 2021, a 92 percent drop from the nearly $2.5 million it made through advertisements at the station in 2019. The pandemic likely slowed foot traffic in the station, as more commuters opted to stay home and avoid public transit. Construction on the South Station Air Rights Project is set to continue through at least 2025.

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


Annie Probert can be reached at annie.probert@globe.com.