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So
heated has been the response to electronic billboards
that on July 5, 1999, someone pumped two shotgun shells
into the StoreyBoard at Northeast Broadway and 28th Avenue.
By threatening to add to the city's collection of dreaded
electronic billboards, AK Media/NW boss Frank Podany has
significantly raised the stakes. He says Charlie Hales (above)
and the rest of the City Council forced his hand. "What's
the real issue?" Podany says. "It sits in Charlie Hales'
head."
The
city of Portland banned the installation of any additional
"changing image" signs on Feb. 11, 1999. In the process
the city also banned all new time and temperature signs
and stock tickers.
Under
current law, AK's Southeast Holgate Street electronic
billboards are the last two that can be installed in Portland.
In
1992, AK's predecessor, Ackerley Communications, was found
to have put up 61 billboards without permits in Seattle.
The company was forced to take down 31.
Marie Phillippi (above) and her Brooklyn neighbors Judy
Litt and Jane Schue feel like pawns in the war between
AK Media and City Hall. Former Portland planning director
David Knowles says AK's strategy is simple: "If they can
harass public employees enough, they think they can get
their way."
In
1991, Ackerley spent $500,000 in a successful lobbying
effort to defeat congressional action against highway
billboards.
AK
is not a big contributor to local elections. In 1998,
however, it did contribute $2,000 to Dan Saltzman and
to his rival, Tanya Collier.
Just
how tough is it to forecast the future between AK and
the city? "I'd rather predict tornadoes," says Charlie
Hales, "but they're both about as destructive."
City Commissioner Jim Francesconi came around to the city's
anti-billboard stance but says the 1996 sign code was
"rushed through," leading to the current legal fight.
It's
a family affair: Besides Barry Ackerley, the Ackerley
Group has several family members on its fiscal 1999 payroll:
Gail Ackerley, 62, co-chairman, $500,000 (Barry's wife);
Christopher Ackerley, 30, co-president and director, $173,000
(son); Edward Ackerley, 30, director, $20,000 (son); Kimberley
Ackerley Cleworth, 36, director, $20,000 (daughter).
For 20 years, Mayor Vera Katz has been a billboard critic.
Now she chooses her words carefully when talking about AK
Media. "Because of our statute, I predict over the long
term, they won't have a place to hang their signs." Commissioner
Dan Saltzman now offers lukewarm support to anti-billboard
forces, while Commissioner Erik Sten (above) calls himself
a "conscientious objector," saying the city has more pressing
needs.
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One evening three weeks ago, Frank Podany walked into
True Brew Coffeehouse on Southeast Milwaukie Avenue with
a cocksure set to his jaw and an ultimatum, wrapped in the
rhetoric of outreach, for six Brooklyn neighborhood residents
seated along an oak table.
Podany controls 92 percent of the billboards in this
city, and he's well aware that few Portlanders appreciate
his company's medium, spread against the sky like cutout
magazine pages. But as AK Media/NW prepares to switch
on two electronic billboards along Southeast Holgate Street,
Podany, the company's president, wanted to defuse a potentially
explosive situation.
Podany brought his matches.
Wearing a no-nonsense blue suit and a starched white
shirt with French cuffs closed with onyx cufflinks, he
slid onto a chair at the head of the table. Ignoring an
offer of coffee and pastries, he got right to the point.
"Those signs are ready to go," he said.
"It's going to make us look like Las Vegas," said Marie
Phillippi, chairwoman of Brooklyn Action Corps, in a shy,
tremulous voice.
"Downtown Tokyo," said Johan Mathiesen.
Podany took it all in. He knew that 18 months earlier,
six electronic billboards, owned by another company, had
popped up at high-traffic locations around Portland, assaulting
motorists' eyeballs. The City Council banned them, but
not before Podany's company slipped its applications in,
just under the wire.
Podany told the Brooklynites that if they didn't like
the new signposts with their pirouetting graphics, they
could blame City Commissioner Charlie Hales, Mayor Vera
Katz and the city's urban-planning crusaders. They hadn't
played fair on traditional billboards for years, he said.
Now, AK had no option but to exercise its legal right
to turn on the new $260,000 apiece screens.
"I'm not here looking for neighborhood buy-off," Podany
said. "I'm after neighborhood input. I don't have to be
here."
Still, he said, if any of the neighbors had a problem,
they should bombard City Council, not AK Media.
Conflicts over billboards--high-tech or not--are hardly
new to Portland. For the past 25 years, this city of Douglas
firs and broad-porched bungalows has been ground zero
in the war over who controls the right to regulate its
environment: the urbanists, who herald the religion of
livability, or the old-economy men of commerce, well-financed
and with the shield of Oregon's quirky constitution.
But for the past three months, largely out of the public
eye, AK Media and the city have engaged in a whole new
level of brinksmanship. Tempers are frayed, more lawsuits
threatened and millions of dollars are at stake. To a
casual observer, this may appear to be just about billboards.
To a true believer, however, this is about who gets to
shape the face of the city.
The Ackerley Group Inc. calls itself a diversified media
and entertainment company. The Seattle-based firm owns 17
television stations across the country, three Seattle radio
stations, the NBA's Seattle Supersonics and the WNBA's Seattle
Storm.
But the largest portion of the $278 million in annual
revenue generated by the publicly held company comes from
what is euphemistically called "outdoor media," the far
less glamorous, but far more lucrative, business of billboards.
The company's AK Media Group owns 6,500 billboards across
the United States. Only in Boston and Seattle does AK
have more dominance than in Portland, where it owns 773
billboard "faces" spread across Portland on 555 "structures."
The billboard business is a highly profitable one. Expenses
are minimal and fees for billboard space are climbing,
thanks, in part, to the influx of dot-com advertising,
which the company concedes has increased some billboard
rental rates tenfold in the past year.
Podany refuses to discuss finances. But, in Portland,
AK is believed to generate as much as $15 million in revenue
and $3 million in profits a year.
In the most valuable locations, such as along I-84 east
of downtown and I-5 near the Rose Garden, a billboard
can fetch more than $15,000 a month. Given this profitability,
it's not a surprise that AK and its founder, Barry Ackerley
(who paid himself $1.1 million last year), have a reputation
for playing tough to protect their business.
The company, which is being sued by a Boston rival for
anti-competitive behavior, is known for engaging in what
is called "Barry Ball," a hard-nosed style of business
that stresses intensive lobbying and, where that fails,
litigation.
"You use it, abuse it or lose it--that's Barry's philosophy,"
says Joe Nicanello, who ran AK's Massachusetts division
until 1997. "That's their strategy."
But competitors are the least of AK's problems. In recent
years, they have faced even more formidable opposition
from local governments, which are trying to regulate billboards
into the history books.
Nowhere is the battle so acrimonious as in Portland,
where AK Media/NW's efforts to protect its franchise have
not, to put it mildly, been welcomed.
"Their strategy is to intimidate public officials," says
David Knowles, director of the Bureau of Planning from
1993 to 1999. "They try to frame this as a free-speech
issue. But it's about money--lots of it."
Among those who really walk the urban-planning talk,
Portland is the American Mecca. It's no accident that
when the Congress for the New Urbanism held its conference
last week, it was here, in what those 1,500 planners consider
the holy of holies: a human-scale large city.
For those who bow their heads at the mention of livability,
little offends more than billboards.
"Billboards are deadly to the public realm," says Knowles.
To urbanists, billboards are visual pollution. They render
a city's skyline a series of marketing invocations. They
are a taunt to the human and natural environment--out
of scale with its character and soul.
Billboards are "sunlight-and-air blocking," says Stevie
Greathouse, a Portland city planner.
Out at Southeast Division Street and 92nd Avenue, an
AK Media billboard advertising Toblerone chocolate competes
with the first 50 feet of a stand of Douglas firs. Elsewhere
billboards disrupt views of Mount Hood's snow-capped isosceles,
downtown's glistening white buildings and other vistas
great and small.
Worse still, billboards are a remnant of the 1950s--the
age of the automobile--and Portland is all about getting
people out of cars.
Perhaps the most zealous of the urbanists is Charlie
Hales, a former lobbyist for the state's homebuilders
who, since first being elected in 1992, has become one
of the most strident defenders of the religion of livability.
And he knows what the anti-Christ is.
"I don't want Portland to become one more spot on the
national strip mall, a wide spot on the road with a billboard
next to it," says Hales.
Fifteen years ago, the City of Portland and AK Media
agreed to limit the number of the company's billboards,
while granting AK the freedom to move them around the
city to higher-visibility, higher-profit locations. Moving
billboards was essential: It let AK respond to changing
traffic patterns.
The agreement expired in 1996.
AK wanted the new rules of engagement to be as friendly
as the old.
But the city had concluded that the 1985 pact had been
weighted in favor of AK. It was not in a giving mood.
"We don't make special deals," says Hales.
In early 1996, the Bureau of Planning, then overseen
by Hales, proposed a new sign code that continued to prevent
AK from adding any new billboards. But this time the city
went for the jugular, proposing to keep AK from moving
its signs around Portland.
This latter proposal hamstrung AK in two ways. If it
couldn't move a billboard, it couldn't deliver its advertisers
the demographics they wanted. Second, the real estate
on which a billboard sits is often developed into more
valuable uses such as apartments or stores; that would
leave AK with nowhere to put its signs.
Then, with the final turn of the screw, the code did
one other thing: It said no billboards could be more than
200 square feet. Most commonly, billboards are either
288 or 672 square feet.
"It was a get-out-of-town-by-sundown ordinance," says
Len Bergstein, AK's lobbyist.
Despite his and AK's protests, the City Council adopted
the code on Sept. 11, 1996, on a 4-0 vote (then-Commissioner
Earl Blumenauer was absent).
For the next two years, there was a standoff. That left
Bergstein, one of the best-connected lobbyists in Portland
and a close friend of Mayor Vera Katz, to work City Hall,
wearing out his "knee pads," as he puts it, trying to
persuade the council that what it had done was unconstitutional
and "flat out fucking wrong."
Commissioner Erik Sten and then-Commissioner Gretchen
Kafoury were somewhat sympathetic to AK Media's argument,
while Katz and Hales were on the warpath. Newcomer Jim
Francesconi opted for neutrality. Bergstein couldn't get
three votes to get the city to back down.
In 1998, Bergstein decided to stare into the eye of the
tiger. He visited Hales' office with AK's version of a
sign code. He didn't venture into enemy territory alone.
He brought Frank Podany, who had become AK Media/NW's
de facto president. Podany, 33, is a former rugby player
who started with the company in 1993 as a "light rider,"
the person who screws bulbs into billboard light sockets.
Hales, however, is no stranger to men of commerce asking
for favors; he used to be one himself when he lobbied
legislators on behalf of homebuilders. He has a pronounced
slouch, which often makes him look glowering, and a bad
habit of speaking his mind. He told the two that their
proposal was a non-starter and that AK should learn to
live within the confines of the city's 1996 sign code.
As Bergstein recalls, Hales said, "We're going to win
a war of attrition. Over time you will lose."
Podany was done negotiating--it was time to carpet bomb
the city.
"It was 'Game over,'" Podany says. "We needed to throw
this onto everyone's radar screen."
The morning of July 1, 1998, the phone rang in the Portland
Bureau of Planning.
Representatives of AK Media had just dumped 83 applications
for billboards at the permit center--and they were demanding
immediate approval. Each application was for new structures
larger than 200 square feet or to expand the size of an
existing billboard from 288 to 672 square feet.
Planning director David Knowles caught an elevator to
the first floor. Six-foot-four and with the relaxed focus
of a professor, he could feel the presence of money changers
in the temple.
There stood Terry Sandblast--the city's former planning
director under Mayor Frank Ivancie, and now an AK employee.
He had three boxes of permit applications.
Sandblast also had a letter from Joe Willis, AK's local
attorney. It attacked the new sign code as unconstitutional.
It also stated that anyone who didn't approve the permits
could be held liable as individuals, a claim that Knowles
calls "a threat."
"It was harassment," says Kafoury, who left the council
in 1998.
Several weeks later, the city rejected all 83 permits.
AK filed a lawsuit in Multnomah County Circuit Court.
On Oct. 28, judge pro tem Thomas Brown agreed with AK
Media, ruling that the city's 1996 code was in violation
of Oregon's constitution because it regulated expression
based upon content.
On Nov. 18, City Council fired back and approved a new
sign code. This version grandfathered AK's existing billboards
at their existing sizes. But it kept the prohibition on
shifting billboards around the city.
To avoid the constitutional hurdle yet allow the city
to control new billboards, it had to ban all new
signs over 200 square feet--schoolyard murals and business
signs alike. In driving a stake through billboards, the
city sacrificed art.
For AK, this unrelenting effort to squeeze its business
"had all the tracings of a religious war," says Bergstein.
The company asked for another constitutional review of
this newest code as well as monetary damages.
Following a one-month trial in the spring of 1999, Judge
Michael Marcus handed down a split decision. He ordered
that the city pay AK Media $499,417 plus legal costs (later
pegged at $450,000).
But, more importantly, Marcus also found that Portland's
1998 sign code passed constitutional muster, which had
several practical consequences.
AK's signs at its current locations were legal. But they
couldn't be moved, and new billboards would have to fit
the 200-foot size requirement.
AK Media filed a notice of appeal with the Oregon Court
of Appeals. Although it has yet to submit a brief, AK
says it will fight for its 83 permits and damages of up
to $10 million.
In January, the court ordered AK and the city into mediation
sessions before Edwin Peterson, a retired Oregon Supreme
Court associate justice.
Willis, a bulldog litigator from Schwabe Williamson &
Wyatt, represented AK. The city's advocate was City Attorney
Jeffrey Rogers. Son of a former U.S. attorney general
and secretary of state, the Harvard-educated Rogers is
a devotee of livability who ran for Metro in 1992 on a
no-growth platform.
After a one-day session, talks ground to a halt. Rogers
declined to comment. Willis said, "I think Jeff is sort
of a true believer with the planning staff." Earlier,
Podany had called Rogers a "roadblock" in a March 12 letter
to Katz.
It was time for Podany to slip into a flak jacket.
On March 27, Podany paid a visit to City Hall. He thought
commissioners Erik Sten and Dan Saltzman were willing
to work with him. Hales was a lost cause, so in search
of the needed third vote, Podany scheduled a meeting with
Katz and Francesconi in the mayor's City Hall conference
room.
Sitting around a highly polished table, Podany said he
was willing to cut the number of billboards in Portland--if
only the city would get off his back.
He also let the two elected officials know, if they didn't
already, that the electronic billboards were currency
AK was willing to bargain away. According to the terms
of its permits, AK had just four more days to begin work
on the signs slated for Southeast Holgate Street.
If the city cooperated, Podany just might find a way
to miss that deadline.
He opened by saying he would reduce AK's presence by
10 percent to 500 structures, if, among other things,
the city would let him move billboards as before.
But Katz, who fought billboards as a state legislator
in the 1980s, was immovable. That left Francesconi, who,
for three years, had shown no interest in trading thrusts
with a company known for bruising competitors and politicians
alike.
But the rookie had toughened. Now, Francesconi saw billboards
as a "visual blot," something Portland needed to be guarded
against. He told Podany he was disappointed that the company
couldn't approach the city's number--which he pegged at
300 structures.
"I understand he's trying to protect his business," Francesconi
says. "But our job is to protect the public at the least
cost."
Podany was beyond frustration, saying 300 came out of
the blue. The city was asking him to negotiate against
himself. Podany gathered himself and cut his original
500 to 460, taking a "boning knife" to his business.
Francesconi refused to budge from 300.
After 45 minutes, the meeting ended without resolution.
The next day, Podany wrote a letter to the City Council.
He restated AK's final offer of 460 signs and gave the
city until 5 pm to resolve the entire case "satisfactorily"
or AK would complete construction of the hated electronic
billboards.
To make sure the commissioners didn't miss the point,
Podany made it clear: "We recognize that completion of
these video signs may create political problems."
AK implies, when asked, that its electronic billboards
will be turned on sometime this summer. Inevitably, there
will be phone calls when drivers along Holgate Street
first see moving advertisements for casinos and steak
houses. But the company is not relying solely on that
to fuel outrage with city officials.
The company is pushing ahead with its Court of Appeals
case. While a ruling is at least a year out, AK will tell
anyone who will listen that the city may face a $10 million
judgment.
AK hopes the prospect of the eight-figure penalty will
persuade the city to cave in and return to the pre-1996
rules that gave the billboard king an unassailable revenue
stream.
"There is a tremendous monetary impact that should be
emboldening three commissioners to settle," says Bergstein.
Hales isn't blinking.
"This is one more challenge on the storm on the deck
of public policy," says Hales, who's all but announced
his candidacy for mayor in 2004. "Having gotten onto this
course and facing a little heavy weather, the worst course
would be to try for short-term safety in exchange for
the city's character."
During Charlie Hales' reelection milk run this spring,
he came to WW's offices for an endorsement interview.
Asked if he could name the special interest that threw
its weight around the most at City Hall, Hales didn't
hesitate.
"The billboard industry," he said; it had engaged in
a campaign of "bribery and threats" against City Hall.
This paper reported the comment in its endorsement issue,
in which WW backed Hales over challenger Ted Piccolo
("Picks and Flicks," WW, April 26, 2000).
Within two weeks, Hales opened the mailbox at his Southwest
Portland home to find a letter from Eric Rubin, a lawyer
from the Washington, D.C., firm of Rubin & Winston.
Writing on Ackerley's behalf, Rubin accused Hales of
making a "defamatory statement." Normally, elected officials
enjoy a bubble of legal immunity, but Rubin stated that
the commissioner was speaking in his "personal capacity"
and demanded that Hales issue a statement "satisfactory
to Ackerley." If he didn't, Rubin said, the company would
sue him.
"Govern yourself accordingly," Rubin concluded.
Seven days days later, Hales sent WW a letter,
which included the following statement:
"In the context of ongoing controversy about signs in
Portland, I was using hyperbole to express my opinion
as an incumbent public official about the negotiating
and litigating posture of the billboard industry. I regret
using the word 'bribery,' which can refer to illegal conduct.
I know of no factual support for an assertion that AK
Media has engaged in any illegal conduct."
Cued by Hales' experience, Mayor Vera Katz is exceedingly
cautious when asked about AK. She would answer questions
only with two aides and a tape recorder in the room.
"I can't say what I want to say as a citizen," she says,
"so I'm very nervous talking about this."
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