Battle lines drawn over advertising on towers

Johannesburg - The City of Johannesburg is set to lose over half a million rand a year after selling off the advertising rights to Soweto’s most visible sight – the Orlando Cooling Towers – for less than the present tenant will pay.

And now it is stuck in a legal battle with the company currently managing the advertising rights on the towers to get it to vacate the premises so that their new, cheaper, tenants can move in.

But Adbrite, the company that owns the rights, say they were granted the rights to the towers until they are demolished.

If the agreement is repudiated, FNB, who advertise on the towers, could sue them for R3m.

The towers are owned by the Johannesburg Property Company (JPC), the property portfolio managers of the City of Joburg.

The latest tender was advertised in May 2012 – a bid for a 10-year branding lease on the towers.

Kena Media, who have a joint venture with Adbrite, offered the City of Joburg R150 000 a month for the brand tenant to remain on the towers, but the JPC accepted a lower bid of R100 000 a month from JCDecaux.

Last month the City of Joburg approached the Johannesburg High Court in an attempt to get Adbrite to vacate the premises.

In their notice of motion, the JPC asked the court to confirm that the lease agreement between the City and Adbrite is cancelled and for Adbrite to vacate the property and remove all advertising.

In papers filed, the JPC’s legal manager Tshepo Mokataka argues that when Adbrite signed a memorandum of agreement with the City in December 2000, the rights were only vested for a year and the council had the right to renew the agreement annually.

The parties then amended the agreement to a five-year lease, which would expire in 2005.

At the time Adbrite was paying the council R15 000 month.

Mokataka said seven months before the lease expired, the JPC informed Adbrite they intended to invite public tenders for the lease.

Adbrite was informed that if a new lessee was not appointed by the time the lease expired, Adbrite would occupy the property on a month to month basis until the new lessee was appointed, he said. Once a new lessee was found, the JPC would give Adbrite 30 days’ notice.

Mokataka said the JPC sent Adbrite three notices of termination, which have been ignored.

But in their answering affidavit, Adbrite, opposing the matter, say they have the branding rights until the towers are demolished. Adbrite media manager Tshepo Matsepe disputed Mokataka’s involvement in negotiations for the lease.

Matsepe argues that the lease agreement pertaining to branding rights was intended to govern the relationship between the JPC and Adbrite until the towers are demolished and not month by month.

Matsepe alleges that at the time they signed the contract the landlord of the towers sent them a letter confirming their rights would last until the towers were demolished.

The time period in the addendum, said Matsepe, was simply to satisfy the billing department and the letter contained the real terms agreed between the two parties.

He said Adbrite would not otherwise have spent money preserving the towers, including R160 000 cleaning them, using generators, diesel, extension hoses and high-pressure washers. They also hired security at the site and painted the towers. If Adbrite had not cleaned the towers, said Matsepe, the JPC would not have been able to lease or sell them.

“On noticing that there is value in the towers, the city decided to repudiate the agreement concluded with Adbrite,” said Matsepe.

Matsepe also said last February the Provincial Heritage Resources Authority declared the towers a heritage site and notified the City and Adbrite of their formal protection.

He argues that the City never objected to the “factual allegations” by Adbrite that it had branding rights to the towers until demolition.

He says that the city consented to the declaration of the towers as a provincial heritage site.

Kena Media's Lerumo Maisela said the matter was sub judice and could not comment.

JPC’s Alan Dinnie would not comment on the court case either.

But concerning the towers tender, he said it was based on a total value offering and JCDecaux included an offer of for public environment upgrades to the Orlando eKhaya Precinct. This offer together with the direct financial offer provide a total value offering over the lease period in excess of the Kena Media,” said Dinnie.

JCDecaux and FNB are listed as respondents in the matter.

Sunday Independent