Behind Los Angeles’ Billboards – the litigious rise of Regency Outdoor Advertising

Sunsets media monopoly

Sunsets “media monopoly”, no newcomers allowed. Regency Outdoor is King.

Los Angeles and its famous areas, most notably Sunset Strip, have spawned the emergence of a web of outdoor advertising plants that have waged commercial and legal wars between each other for decades. Not limited to a single case, the city council and other legal administrative organs of Los Angeles metropolitan area have also been sued by the magnates of this multi-billion dollars industry. As a matter of conflict of interests, lack of civic morality or business scruples, the tycoons of these plants have committed numerous acts of bribery, breach of fiduciary, fraud, vandalism, have engaged continuously in corrupt activities and kept thriving financially at the expense of their environment and society.

 

Most relevant to this clause is a company with a tumultuous legal past that was involved in countless court trials and their story of illegal activities is as humorous as it is abominable. The legal business commencement of Regency Outdoor Advertising is as obscure as its past, given that its owners, Brian and Drake Kennedy brothers, had conducted unauthorized activities since the early 90’s. But their prominence in the media appeared roughly in 2005 when evidence of fraud and corruption started emerging. In order to better understand the legal battles and reprobate trajectory of this plant we need to take a look at its inception ideas and origins.

Mastermind of Regency Outdoor

Hailing from San Gabriel, Brian and Drake Kennedy, now in their 70’s, have been at the helm of this firm since its beginnings. Brian, the firm’s public face, is the mastermind of Regency Outdoor, in charge of selling billboard space to advertisers and securing sign locations. On the other side, Drake, the younger brother, acts more as a sidekick from behind-the-scenes. Inspired by their father’s small billboard company and learning the legal intricacies from their mother who worked as a councilwoman for more than 15 years, the Kennedy bothers decided to take the billboard industry by storm. Their acute tendency towards litigation could be noticeable even from the early days when at their company Christmas party their own employees made light of a gag voicemail message. It urged callers to dial “one” if they were sued by Regency, “two” if they intended to sue the agency, and so on with the final message urging to check the number again if they were not involved in any litigation with Regency.

 

One of the first legal actions they took against the city council was back in the early 2000’s when 160 Canary Island palm trees were planted along the Century Boulevard for both aesthetic and salubrious purposes. However, this beautification project angered Regency as the trees blocked sigh lines to valuable signs. As a consequence, Regency, represented by Fisher, sued the city for 18 million dollars. However, Superior Court Judge Jean Matusinka ruled in 2002 that under California law, there was nothing to grant “the right to be seen from a public way”. Shortly afterwards, most of the trees blocking their billboards died and an investigation was opened. Although Regency has never admitted to it, a former company executive and attorney stated under oath that the company had poisoned the trees. However, the culprit of these actions was never caught.

Business on holidays

Regency’s penchant for combining illegal activities with public holidays was further cemented in the New Year’s Eve morning on the Sunset Strip. They were determined to step in the new year of 2005 with a plan intended to haul in a million dollars a year by placing a 40-foot billboard pole at Sunset Boulevard and Queens Road without having a permit to do so. Although the City Hall was closed on that day, the illicit activity was discovered by deputy city manager Joan English who was coincidentally passing by. When Brian Kennedy was prompted for a permit on the spot, he claimed he did not need one as West Hollywood’s restrictions on billboards were unconstitutional. This dispute was taken to court with an unexpected turn when Regency sued back the city council for violating their civil rights.

 

In time, Regency grew into becoming the largest family-owned billboard company in Southern California, with an estimated worth of more than 700 billion dollars. This rapid success came to fruition thanks to hundreds of thousands of dollars donated to politicians controlling signage regulations in Los Angeles. These allegations were supported by the same former executive for the company, made under oath. In light of these events and due to lack of fair play in business, in 2005 Valley Outdoor Agency had filed a complaint in a court in California against Regency Outdoor Advertising and some of its corporate associates. The allegation referred to a web of criminal activities with the most prominent one being racketeering aimed at controlling the revenue stream from billboards in Los Angeles. To the detriment of other competitors, the defendants allegedly monopolized on the advertising space in the most sought-after areas of Los Angeles, including Sunset Strip and Los Angeles International Airport, through bribery and “ghost permits”. As a case in point, the complaint alleges that the personnel from the California Department of Transportation accepted bribes up to 5,000 dollars a month to overlook violations of state law committed by Regency outdoor.

 

In 2010, after the financial crisis, a conflict of interests in this industry created an avalanche of cease-and-desist letters to remove signs, conducted by the LA District Attorney’s office against illegal billboards in Los Angeles on the official premise that residents had been constantly complaining for years about the unregulated number of digital billboards. Leader of these investigations was Los Angeles city attorney Carmen Trutanich who stormed through the illegal walls and wraps and had many plants threatened to get signs down in a jiffy. The most notorious case occurred at Hollywood Boulevard and Highland Avenue when businessman Kayvan Setareh was arrested and put on a bail of 1 million dollars over an illegal eight-story supergraphic. This unusually aggressive move by Trutanich was preceded by a series of lawsuits involving more than a dozen other illegal supergraphics spread across the city. Within the following weeks numerous illegal billboards, walls and wraps belonging to large corporations like CBS Outdoor or Fuel Outdoor were removed from use. What is really interesting in this case is that during the take down letters, all Regency’s illegal billboards were empty and their name did not appear in the court. Even more interesting is the reputation of lead prosecutor Carmen Trutanich. According to a report in the Los Angeles Metropolitan News Enterprise, shocking allegations of extortion against Trutanich were made by Century City attorneys Stephen Morgan and Anthony Salerno. Other legal experts have argued in the media that Trutanich, the city’s top lawyer, was a corrupt officer using extortion and bullying in most of his cases, with infamous threats or bribe requests thrown at his defendants. Voices within the outdoor advertising industry claimed that behind all this pressure on the city attorneys to crack down on illegal billboards, was Regency which was trying to regain their market share after the financial crisis.

 

However, further on in 2011, an eight-day trial court slammed 2 million dollars in punitive and compensatory damages on Regency, accused of malicious conduct by an emerging force in this industry, Ace Outdoor Advertising. Whisky nightclub and Ace, represented by Greenberg Glusker, with Partners Lee A. Dresie and Megan Rivetti at the helm of this trial, secured a victorious verdict against the giant advertising firm. Continuing its long-time tradition of flattening its competitors by any means possible, upon the termination of their contract, Regency breached the lease of a billboard sign on the rooftop of the Whisky nightclub by preventing Ace Outdoor Advertising to take over the rooftop in a timely manner. However, in 2013 Regency made an appeal and challenged the trial court’s decision stating that they did not hold over the rooftop because they did not remain in possession of it. Greenberg Glusker once again convinced the jury that by failing to remove the equipment from the nightclub’s premises, Regency intentionally employed wrongful tactics in conducting business. Although this might seem to come as a great financial loss for Regency, the damages did not break the bank and a proof to this statement is Brian Kennedy’s 12.35 million dollars house in Southern California bought back in 2012.

 

Probably, the most unexpected court trial involving Regency outdoor came in 2013 when Drake Kennedy, part owner of the outdoor advertising agency, sued his brother Brian Kennedy claiming he committed breach of fiduciary duty, fraudulent concealment and involuntary dissolution of the company and stating that in recent years their business relationship has severely deteriorated. While Drake was battling cancer and heart disease, his brother Brian together with a senior manager at Regency secretly transferred the ownership of one of their most lucrative properties from Sunset Strip to a separate company in which Drake had no ownership or shareholding. He claimed in Los Angeles court that his brother deprived him of access to information and diverted revenue of millions of dollars into private bank accounts. Honoring the family tradition and past, Drake has sued his brother for compensatory damages, punitive damages and asked for an investigation of the company’s records among some other requests.

 

Years of litigation experience and numerous trials upskilled Regency outdoor in intricate legal options on how to defend its competitors. A latest presence of the company in the media emerged in 2014 with allegations that Regency was involved in a nebulous campaign and battle against the erection of some new digital billboards in Placentia and later on in Anaheim. City officials speculated that the secretive group opposed to the billboards was the giant firm trying to stop the city from signing on with a competitor. Officially, the group was led by Patricia Duffie and Michael Withrow who stated publicly in a few interviews their concerns with traffic safety as in their acceptance digital billboards could distract motorists. However, Withrow accidentally showed a reporter an uncompleted agreement, listing the name of Regency Outdoor along with other names in the industry.

A wrench into Aneheim transit hub

City officials consider that this alleged pretext was thought out to mask another story. Placentia signed a contract with Lamar Advertising for the exclusive rights of erecting 5 new billboards after negotiations with Regency were stalled due to their exaggerated demands. Without looking at the big picture and trying to crush its competitor, Regency secretly campaigned for the passing of a ballot that could allow residents to vote in favor or against the new billboards. Later on that year, it was reported in the media that Regency resorted to the same double-dealing tactics in Anaheim to stop a signage plan for the city’s transit hub.

 

As long as Los Angeles thrives economically and financially, probably for many decades to come, advertising firms will never be deterred from finding their most convenient ways to succeed in this business environment but hopefully companies like Regency will analyze more their actions and use more ethical and sustainable strategies in their economic and financial upsurge.

Why cant the brothers just enjoy the ton of money they now have in old age and chill the F out? Its not like they are taking the money and company into the next life.

 

 

 

A New Billboard Star on Sunset Strip | West Hollywood

The Outdoor Advertising Pride of West Hollywood:

A New Billboard Star on Sunset Strip

Sunsets media monopoly

Sunsets media monopoly

Probably one of the most star-studded boulevards in the world, Sunset Strip of West Hollywood stands prestigiously as an epitome of financial success with its flickering advertisement panels and billboards that are well integrated into the city’s media and entertainment identity. The mile and a half stretch extends from West Hollywood’s eastern border with Hollywood at Harper Avenue, to its western border with Beverly Hills at Sierra Drive.

With its array of world-class boutiques, restaurants, rock clubs, and nightclubs, all set in a premier location and just down the hills that host the houses of some of the greatest celebrities in the world, it is no wonder that Sunset Strip attracts a clientele of famous people hanging out in the area. And where there are celebrities, business and advertising propels its way into the scene. As such, this part of Hollywood has long been promoting music, movies, fashion and many more eye-catching brands on its pretentious billboards and panels. However, the city of West Hollywood has been slowly veering towards a trend that would reinvent its aesthetics.

For the connoisseurs, it is well known that long-running wars between financially and politically powerful companies that own billboards on the Sunset Strip have been waging since Los Angeles achieved its status as a giant media capital and this boulevard has become its recipient of success. Just like major movie studios in the area, this market is dominated and monopolized by a small group of media oligarchs such as Regency Outdoor of the notoriously arrogant Kennedy brothers, Clear Channel Outdoor and CBS Outdoor/AKA Viacom, the later two (a-going-global) media monopolies respectively. For any other emerging Outdoor firm to challenge their supremacy is truly a huge achievement, but to also go ahead with a very ambitious and audacious plan is a genuine trait of the American values of achieving great financial success.

Camera roll, ACE Outdoor Advertising enters the scene. In 2009 this young billboard plant submitted a proposal to the City Council to place an unusually sized 48-foot-tall by 14-foot-wide billboard atop the Rainbow Bar and Grill at 9015 Sunset Blvd, near North Wetherly Drive, with an overall height at 110 feet above the ground, including the pole. For such a billboard to be approved, which is taller than the former 60-foot height limit, the Council had to consider amending the zoning for the property and also enacting a “development agreement”, on the conditions that the billboard would be creative and provide benefits to the city.

With roughly $120,000 in annual fees coming from ACE Outdoor Advertising it is no wonder that the project was seen as benefiting the city and that the Council approved the proposal in 2010. On top of that, Councilman and Mayor D’Amico stated that new revenue sharing agreements could bring the city as much as $1 million per year. This comes in strong contrast with the traditionally minimal fees collected from billboard companies and it is a huge progress and turning point in terms of economic dynamics in the outdoor advertising field for West Hollywood.

However, the new billboard pole project has been halted by some opponents, backed by competitors of Ace, when they submitted a proposal for a referendum to challenge the Council’s approval. As expected, the Council repealed this enactment and the project was finally green-lit. D’Amico did not consider only the financial benefits of the project but also its aesthetic value adding to the commercial identity of Sunset Strip. The billboard pole, with a V-shaped structure and azure colour, designed by LA-based Lorcan O’Herlihy Architects infuses a new visual quality to the landscape already dominated by various innovative advertising spaces like projected billboards, lit-up billboards or 3-dimensional billboards.

But the million-dollar question, in this case literally, remains in this business. How profitable is for ACE Outdoor Advertising to have this project under their belt? You do not need to understand rocket science to know that ACE makes money from charging advertisers to place ads on their billboards. The answer is Location, Location, Location. Managing Partner Brad Yacullo said that in premier locations such as Times Square and Sunset Strip is where you see some of the largest values in terms of real estate billboard property. And just when you think that the average selling price for a house in LA and the region is between $3 and $5 million dollars it is not hard to estimate that value of advertising for greater real estate properties. As such, achieving advertising space on Sunset Strip can make you a bundle. The property where the billboard pole is placed at the moment used to be of a much less value, and ACE believes they succeeded in transforming it into lucrative investment.

Sunset Strip is in a constant change in perfect tandem with the commercial and cultural tendencies of California. In an increasingly challenging market, any innovative project is welcomed on the premise that it brings in financial rewards. Many parts of West Hollywood are commercially oversaturated and the battle for space is fierce, but Sunset Strip is defined by this very sense of cultural commercialism and there is plenty of interest to fuel up such an identity.