TMZ plans to end its celebrity tour bus partnership with Starline

The largest and oldest tour bus company in Los Angeles teamed up with the nation’s top celebrity news operation nearly six years ago to create a bus tour of the places where celebrities live, play and have headline-making meltdowns.

But that Hollywood marriage is now on the rocks, with the celebrity news operation, TMZ, accusing the bus operator, Starline Tours, of failing to pay TMZ its fair share of revenues on time.

TMZ says it will officially end the relationship Thursday, when TMZ will stop using Starline buses and drivers for the TMZ tours of Hollywood, Beverly Hills and the Sunset Strip. TMZ supplies the deep knowledge of celebrity foibles.

“Starline has repeatedly violated the terms of the agreement for over a year,” said Jason Beckerman, an attorney representing TMZ.

Starline Tours has fired back, saying TMZ failed to justify ending the partnership and, under its contract, is forbidden to operate a tour in the area for two years.

“We had hoped we could work it out but it won’t be worked out,” said Carlos Villar, the senior marking manager for Starline Tours.

With 147 buses and a history that dates to the 1960s, Starline Tours dwarfs all other tour bus operators in Los Angeles, having cornered the sight-seeing tour market from a hub behind the TLC Chinese Theater in Hollywood. Starline Tours roll past the homes and hangouts of celebrities in Malibu, Santa Monica, Hollywood, Beverly Hills and downtown Los Angeles.

TMZ, an acronym for thirty-mile zone (the radius of the historic Hollywood studio area), reigns as one of the nation’s most popular celebrity news operations, with a website that reaches at least 7.5 million people a month and more than 4 million Twitter followers. It is the brainchild of Harvey Levin, a lawyer turned reporter and entrepreneur.

In late 2010, Levin approached Starline with an idea to create a TMZ bus tour with onboard television monitors that could show video clips of celebrity news while the buses pass the homes, bars and eateries where that news took place.

Under the agreement, TMZ would provide the tour guide and the video clips that would be shown on the bus. For its part, Starline agreed to provide three buses and the drivers. The two businesses would split the revenue 50/50, minus expenses.

The tour bus was a big hit with fans and celebrities. Comedian Kevin Hart, actress Sandra Bullock and singer Rihanna and other Hollywood stars have been seen greeting the TMZ bus riders. TMZ incorporates star sightings from the tour into its television show.

“It worked well for both parties,” Villar said.

But a rift between the two businesses began about two years ago, according to a lawsuit filed in March by TMZ against Starline. The lawsuit contends that Starline failed to split the revenues and pay TMZ its share on time.

“Starline missed every payment deadline for the past two years, sometimes by more than four months,” the lawsuit said.

As a result of the late payments, the suit said, TMZ notified Starline on Feb. 11 that it was giving Starline a 60-day notice to end the partnership. But Starline continued to sell tickets for the TMZ tour beyond the 60-day period, the TMZ lawsuit alleged.

TMZ has since extended the deadline to end the partnership to Wednesday. Starting Thursday, TMZ says it will operate the TMZ tour without Starline buses, launching from locations near Hollywood Boulevard and Highland Avenue in Hollywood and the Grove shopping center in the Fairfax district.

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“On May 12, we are launching a tour without Starline,” TMZ attorney Beckerman said.

William Buus, an attorney for Starline, said TMZ never complained about the delays in getting paid until February, when it called for an end to the partnership.

“Everybody seemed very happy with what was happening until February,” he said.

Without showing “good cause” to end the contract, Buus said, TMZ is violating the partnership agreement, which means TMZ has triggered a “non-competition clause” that bars TMZ from operating a tour bus business for at least two years.

Buus said that TMZ raised the issue of the late payments simply to create a reason to end the partnership and avoid triggering the “non-competition clause.”

Starline has filed a counterclaim against TMZ in U.S. District Court, asking a judge to stop TMZ from operating a competing bus tour and pay Starline $1 million in damages. But Buus said he doesn’t expect a judge to address the counterclaim for several months.

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