In exchange for $110 million in guaranteed revenue during the next five years, L.A. Metro gave CBS Outdoor the right to continue to sell advertising on buses and trains. The deal pays Metro 18 percent less than its previous deal with CBS Outdoor and it leaves on the table $7 million, or enough money to operate 28 buses a year.

CBS Outdoor and outdoor advertising rival Titan had been angling for the deal all year. Though Titan offered about $7 million more than CBS Outdoor, Metro staffed feared Titan couldn’t meet its ad sales goals despite an improving economy. A couple of Metro board members wanted to give the contract to Titan, but the board voted Thursday to take what they termed the less risky option by signing up with CBS Outdoor again.

The expiring five-year contract with CBS Outdoor was to pay Metro $134.2 million. In the midst of the recession, CBS said it was losing money on the deal and sought to renegotiate with Metro. Transit agency officials refused to amend the deal. However, the total still fell short because Metro’s decision to chop several bus routes invoked a clause in the contract reducing CBS Outdoor’s obligations. So in calendar year 2011, Metro received $1.3 million less than the planned $29.2 million. The five-year deal before that gave Metro an average of $15.3 million a year.

The money guaranteed by CBS Outdoor next year in the new deal from selling ads on rail lines, specifically, is more than 60 percent less than it guaranteed this year as part of the expiring deal. Despite the addition of the Expo Line this year, Metro’s office of the director said in a statement that “the revenue being offered for Calendar Year 2013 reflects the changes in the economy since the current contract was bid in 2006.”

Yet, the out-of-home advertising industry is rebounding. Spending related to transit advertising declined faster than the rest of the outdoor industry during the recession. But the overall industry has picked up this year with steady growth. Through September, spending on outdoor advertising was up 4.4 percent nationwide this year compared to 2011 and nearly 9 percent compared to 2010, according to the Outdoor Advertising Association of America.

The OAAA counts both CBS Outdoor and Titan as members. A little less than a fifth of outdoor ad spending went to transit agencies in 2011.

A Latham Watkins attorney speaking in front of Metro’s board of directors Thursday on behalf of Titan said Metro staff projected in March that Titan couldn’t get advertising revenues 6 percent better than CBS Outdoor.

“The economy has gotten better since the spring,” she said, but Metro hasn’t updated the projection.

Metro itself spends $4 million on advertising each year. Officials said in a report that its own advertising department couldn’t possibly afford the type of price hikes Titan would require from other businesses. Officials projected to only amass $106 billion in advertising revenue during the next five years. CBS Outdoor is guaranteeing an extra $4 million.

All told, Metro projects $24 million in ad revenue in the year that ends June 30, 2013. That’s far less the $30.5 million expectation from last year or the $28 million that actually came in the year before that. Metro spokeswoman Gayle Anderson said advertising revenue is used for operating bus and rail service. None of the money goes toward building new lines and routes or buying new equipment.

N.Y. Metro switched from CBS Outdoor to Titan and end up losing out when Titan couldn’t fulfill its payment obligations. The two sides eventually reached a deal on the outstanding money. Still, Titan said it had strong deals with five out of the top eight transit agencies, including Chicago, Boston and Philadelphia. However, the Los Angeles World Airports recently passed on Titan as well.

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