CBS moves to terminate £1bn London Underground ad contract

CBS Outdoor won the London Underground contract, estimated at £1bn, said to be the largest outdoor ad sales contract in the world, after a competitive pitch in 2006. Since then it has invested significantly in the estate.

The contract was expected to end in 2015, but CBS Outdoor is threatening to extract itself only months before the Olympics are staged in the capital next summer.

In a statement today CBS Outdoor said London Underground (and its parent company Transport for London) has refused to "acknowledge that changes implemented by London Underground have resulted in an adverse event under the contract, requiring that London Underground negotiate new terms reflecting the massive cost over-runs suffered by CBS".

CBS Outdoor has asked the High Court to confirm its view that London Underground's changes have resulted in an adverse event and so give CBS the right to terminate the current contract with LUL and to receive compensation for damages.

CBS Outdoor claims that cost overruns were caused primarily by fundamental changes within London Underground, including the "massively delayed Public Private Partnership construction projects undertaken by London Underground’s Infracos".

In the statement CBS Outdoor said these changes made it impossible for it to "gain the access and approvals and to have the information necessary to complete its upgrade work in a timely fashion and within budget".

Richard Sauer, executive vice president and general counsel for CBS Outdoor said: "For several years, CBS Outdoor has sought to engage London Underground in fruitful, bona fide discussions to address the extraordinary costs and delays attributable to them.

"Our contract with LUL contains a clear mechanism to address these issues.  Consistent with its rights under the contract, CBS Outdoor is seeking a fair and equitable resolution of this matter."

CBS Outdoor claims that while it has been seeking recourse from London Underground since 2007, London Underground has refused to acknowledge that an adverse event has occurred and has offered no remedy other than termination.

While there has been speculation over the performance of the London Underground contract for some time the situation deepened in April this year when it emerged that CBS Outdoor was planning to take Transport for London to court.

London Underground has flatly denied there are any grounds to terminate the contract.

This article was first published on mediaweek.co.uk