OH NO: FCC seeks probe into PPM/Arbitron Stocks Fall

by Mr. Kev - Posted Wednesday, November 19th, 2008. Category: Uncategorized

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One of the two Democrats on the Federal Communications Commission is calling on the agency to investigate whether a new electronic measurement system used by Arbitron Inc. to track radio station listenership is unfairly harming minority broadcasters.

FCC Commissioner Jonathan Adelstein sent a letter Tuesday to FCC Chairman Kevin Martin urging the agency to open a formal investigation into Arbitron’s “Portable People Meter” rating service. The new system relies on a pager-like device that automatically records what radio stations a person is listening to in order to measure radio station audiences.

Arbitron’s station ratings play a crucial role in determining radio advertising rates.

The company argues that the Portable People Meter is more accurate and reliable than the paper diaries it has historically used to track radio listenership. Arbitron launched the system in Philadelphia in April 2007 and has since rolled it out in New York, Los Angeles, Chicago, Houston and San Francisco.

But so far, the service has been accredited by the Media Ratings Council, an industry group, for use only in Houston.

And it has set off alarm bells among minority-owned radio stations and their supporters, who approached the FCC in September about launching a formal investigation. They argue that system has resulted in far lower ratings for many minority broadcasters and pushed down the advertising rates they rely on to stay on the air.

James L. Winston, executive director and general counsel of the National Association of Black Owned Broadcasters, said the fundamental problem is that Arbitron has scaled back the number of listeners it tracks as it has begun using Portable People Meters — resulting in unrepresentative samples that do not adequately reflect audience sizes for many minority-owned stations.

“It’s very easy to get big distortions when you use such small samples,” Winston explained.

And this, Adelstein said, poses a major threat to the tiny number of minority-owned stations operating in the United States and the diversity they bring to American airwaves.

According to Free Press, a public interest group, racial and ethnic minorities currently own only 7.7 percent of full-power radio stations nationwide.

The Portable People Meter, Adelstein said, “constitutes a clear and present danger to media diversity.”

In a statement Tuesday, Arbitron said the FCC lacks authority to regulate audience ratings, adding that “the reliability and methodologies of audience ratings services are best left to private industry groups such as the Media Rating Council.”

Arbitron is already locked in legal battles over the Portable People Meter ratings system with the states of New Jersey and New York, which are seeking court orders to stop the rollout of the service.

The company also faces other concerns among radio broadcasters about the quality of its data and methodology.

Separately Tuesday, radio station owner Cumulus Media Inc. said it will begin using audience measurement and radio ratings services provided by Nielsen Co. instead of Arbitron in 50 small to mid-sized markets beginning in the third quarter of 2009. Arbitron uses its diary system to track listenership in those markets, just as Nielsen is planning to do.

Among other things, the Nielsen service will rely on “large samples to reduce relative error and bounce,” the companies said in a press release. Cumulus Chief Executive Lew Dickey added that the company is making the switch after completing a search for a new measurement service “to improve the quality and value of radio ratings.” Clear Channel Radio will also subscribe to the Nielsen service in 17 of those markets. Both companies subscribe to Arbitron’s Portable People Meter radio ratings service in larger markets. Clear Channel will have to negotiate for Arbitron’s diary ratings in smaller markets not covered by the Nielsen service. Arbitron’s shares fell $2.48, or 10.3 percent, Tuesday. [source]

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