This was a bad decision and if a Christian group had wanted to buy space and had been denied, I would bet the same judge would have found for the Bus company.
Sounds like you’re a bit angry right now, but I’ll jump in for a second and say that, whether you like it of not, a public bus company is indeed a government entity. Cities and towns and regional governments — including regional planning districts — are all subsidiaries of the state they are in. (That means they hold only the powers specifically granted by the states).
And the Bill of Rights (including the First Amendment) have almost all been applied to limit the actions of state government over the years by the Supreme Court.
But don’t take my word for it. If you really believe that the First Amendment only applies to members of congress, does that mean that you believe the president has the constitutional authority to direct the military to prohibit you from practicing your religion, since he’s not a member of congress and the Constitution clearly states he is the Commander in Chief of the armed forces?
There's a lot of case law on stuff like this, so the written documents aren't the end of the matter. State governments can certainly limit speech on their property, depending on the use of the property. For example, the state cannot deprive you of freedom of speech in the public way, but they can deprive you of freedom of speech on many types of publicly-owned property.
However, they cannot, under most circumstances, restrict speech only for certain people or groups, while allowing speech by others on the same property. That's where they ran afoul of the law in this case. If they didn't want to allow atheists to advertise on their buses, barring a reason that would stand judicial review, they would have to get rid of all advertisements on the buses.