By Marcus Leach

CBS Outdoor, the advertising firm that Transport for London (TfL) uses for London Underground's (LUL) advertising posters, is threatening to walk out on their £1 billion contract.

The contract covers 33,000 poster sites in 275 stations, as well as 88,000 panels in trains, and was expected to run until 2015. But with the Olympics less than a year away it now looks to be in jeopardy.

Chief amongst the problems is CBS Outdoor struggling to monetise the contract on the the terms agreed when they won it, due in part to the investment costs involved in upgrading London Underground with digital screens.

And now, unless LUL renegotiate the contract before March 2012, CBS are threatening to walk away from what was, in 2006, one of the biggest advertising deals in the world.

On Thursday CBS Outdoor notified LUL that they will terminate the current contract on 31st March 2012, unless they renegotiate the deal.

The Guardian reported that CBS claims that LUL, and its parent company Transport for London have "refused to acknowledge" that changes implemented on the underground system have triggered an "adverse event" clause in the contract that have caused "massive cost over-runs" by the outdoor advertising company.

"For several years CBS Outdoor has sought to engage London Underground in fruitful, bona fide discussions to address the extraordinary costs and delays attributable to them," said Richard Sauer, executive vice president and general counsel for CBS. "CBS Outdoor is seeking a fair and equitable resolution of this matter."

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