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Portable People Meter, Part Five: Concerns, Politics, Legalities, Denial, and Stock

This is the fifth installment on Arbitron's new controversial electronic measurement, the Portable People Meter (PPM).

Broadcast Industry Concerns

In June, stating they “speak for the vast majority of the industry”, six major broadcast companies, Clear Channel, Cumulus, Cox, Inner City Broadcasting, Radio One, and Saga, sent a letter to Arbitron asking for improvements, reassurances, and an action plan concerning four issues.

1. During the debut month of PPM in a market, 100% 18-54-year old age sample guarantees. If the 100% is not met, the companies wanted a financial rebate.

2. Ages 18-34, 100% sample guarantee with financial rebates if the goal is not met.

3. Abandon the measurement of ages 6-11. Existing panelists in this demographic should be phased out.

4. Do not implement Portable People Meter (PPM) in any more markets until the Media Rating Council has given accreditation. Also, at no additional cost to broadcasters, the “best practices” methodology in Houston, be applied to all PPM cities. Many feel Houston received accreditation due to the successful combination of door to door canvassing and phone solicitation.

Arbitron’s Response

The cell phone only selection process is being revamped, and beginning with spring 2009, the improvements will be implemented in PPM and diary markets, 50 cities all totaled. Another 75 markets (diary cities) will be added in fall 09, raising the number of markets to 125.

A new study from Nielsen Mobile found that more than 20 million U.S. telephone households (17 percent) are wireless homes without landlines. The new research also suggested that one in five U.S. households could be cell phone only by the end of this year.

The Arbitron Radio Advisory Council has also guaranteed a ten-percent sample increase for ages 12+ and ages 18-54. These enhancements will be phased in until completion by the end of 2010. Theoretically, a larger sample increases the possibilities for a clearer ratings picture in a market.

Political Pressure

Recently, Senators Daniel Inouye, Hawaii, Patrick Leahy, Vermont, Dick Durbin, Illinois, and President-Elect Barack Obama sent letters to Arbitron, stating displeasure with PPM. All four want assurances the new system will not adversely affect any radio station.

New York City Council voted unanimously to request that the Federal Communications Commission investigate PPM and the potential effects on the diversity of radio. In addition, the PPM Coalition, consisting of the Spanish Radio Association and the National Association of Black-Owned Broadcasters, filed a complaint with the FCC. Their concerns include panel selection methodology, non Media Radio Council accreditation, media diversity issues, and possible financial effects on minority owned or operated stations.

Legal Issues

New York State Attorney General Andrew Cuomo has sued Arbitron over “alleged false advertising and deceptive business practices, implementing a Portable Meter system threatens to drive minority broadcasters out of business.” Cuomo has attempted to discourage radio groups and advertisers from using the system due to flaws.

Meanwhile, New Jersey Attorney General Anne Milgram has also sued Arbitron over the Portable People Meter, charging violation of state laws on consumer fraud, advertising and discrimination.

Despite political pressure, eight more markets have implemented the Portable People Meter: Chicago, Los Angeles, Riverside-San Bernardino, New York City, Nassau-Suffolk, San Francisco, Middlesex-Somerset-Union, and San Jose. More rollouts are planned for December, with remaining markets scheduled for operation by the end of 2010.

Denial and Rejection

Arbitron denied all allegations and counter sued in both cases, asking for declaratory judgment and injunctive relief. However, in the New York case, the U.S. District Court, dismissed Arbitron's counter claim. There is some good news, the decision has not affected the right to release PPM rating estimates during the investigation.

Inside Trader Allegations

The scrutiny continues, as New York State Attorney General Cuomo has now subpoenaed seven high ranking Arbitron executives to examine alleged possibilities of insider stock trading. Apparently, just prior to a Portable People Meter delay in November 2007, there was about an eight million dollar sell off of company shares from within the company.

The next and last installment of this series will address the possible advantages of PPM and which adjustments Arbitron might adapt, to improve ratings accuracy for advertising agencies and radio.

About Radio Coach Sam Weaver