A one-of-a-kind billboard on Sunset Boulevard destined to be a tourist attraction hasn’t even been built yet, but Monday night the West Hollywood City Council unanimously agreed to extend its contract by two years.
The “Sunset Spectacular” three-sided digital billboard set to be erected in the city-owned parking lot at 8775 Sunset Blvd. (the old Tower Records overflow parking lot just east of Horn Avenue) will have its contract extended from ten years to 12 years due to the coronavirus economic recession causing a slowdown in advertising dollars.
Orange Barrel Media, the company paying to construct the billboard and selling digital advertising on it, requested the two-year extension as a way to make up for potential lost revenue from the recession. The Council approved the extension without discussion.
At the same time, the Council also agreed to reduce the fee which Orange Barrel Media pays the city in the next two years. Rather than the $1 million per year minimum fee Orange Barrel was initially scheduled to pay, the city will now receive $480,000 each of those first two years. That’s approximately the same amount the city receives each year from the static billboard already in that parking lot.
‘Because of the uncertainly [regarding advertising during this recession], Orange Barrel Media believes that it would be cost prohibitive to begin operation of the Sunset Spectacular at this time with the current minimum annual guarantee payment,” a staff report explains. “There have been other fluctuations in outdoor advertising revenues in the past, but the impact from COVID stay-at-home orders and the associated economic recession have been far more severe.”
The second year of the extension (year 12) is optional at this point, depending on how quickly advertising dollars bounce back from this COVID-induced recession. If industrywide outdoor advertising revenue returns to pre-COVID levels in the next year, the second-year extension will not be triggered and the agreement will end after 11 years.
If the second-year extension is not triggered, Orange Barrell will pay the $1 million minimum fee originally agreed to beginning in the second year. If it is triggered, then Orange Barrel will begin paying the $1 million minimum in year three.
Originally approved by the Council in November 2018, the city’s agreement with Orange Barrel states it will share 40% of the modified gross advertising revenue from the Sunset Spectacular with the city, with a minimum of at least $1 million paid each year, whichever is higher. Thus, the city will receive at least $11 million over the duration of the agreement and possibly as much as $20 million.
The 67-foot-tall, triangular-shaped billboard is scheduled to be installed in the 8775 Sunset parking lot by the end of 2020. It will include three 25-foot wide vertical panels, or “petals,” connected via a skeletal frame. The two petals facing Sunset will have video screens which display digital advertising 80% of the time and digital public art the other 20%. The petal facing north toward the residential area will not have digital advertising.
Orange Barrel Media will cover the $9.5 million cost of constructing the Sunset Spectacular digital billboard and creating a plaza area around it. Architect Tom Wiscombe designed the structure and accompanying plaza. The Museum of Contemporary Art (MOCA) is scheduled to program the digital public art component, which will be on display 20% of the time.