Major Investments Eat Into Arbitron Profit

Audience specialist Arbitron has announced results for the second quarter of the year, ended June 30, with revenue of $74.2m, up 6.2% versus the same period in 2005. However, costs and expenses for the second quarter increased sharply - by 21.4% from $55.4m in Q2 2005 to $67.3m.

Three main reasons are cited for the latter: required expensing of share-based compensation; planned spending on the Project Apollo initiative; and planned spending on the rollout of the Portable People Meter, with which Arbitron has proceeded quickly since Nielsen's decision against a joint venture option in the first week of March (www.mrweb.com/drno/news5240.htm ).

As a result, earnings before interest and income tax expense (EBIT) for the quarter were $11.9m, down 35.8% from $18.6m last year; net income for the second quarter decreased by 52.2% from $15.4m to $7.4m, and net income per share halved to $0.24 (diluted).

Corresponding figures for EBIT and income for the six months ended June 30 were also down, while revenue rose 6.9% to $159.3m.

President and CEO Stephen Morris stressed the dominance of Project Apollo and the PPM rollout in the company's current doings, and the significant progress the company sees in both of these. 'In the second quarter, we announced a number of Portable People Meter ratings contracts with key radio broadcasters. [These clients] recognize that no other company has the infrastructure, the experience, and the financial wherewithal to deliver a proven electronic radio measurement system in the rapid timeframe that the radio industry is demanding.'

On Project Apollo, he comments: 'In June, at two key industry conferences, we released the first tangible evidence that Project Apollo has the power to reveal the significant consumer targeting capabilities of new and traditional media. The advertisers who sit on the Project Apollo Steering Committee continue to help Arbitron and VNU refine the value proposition of our proposed single-source market research service that would use the Arbitron PPM as its primary media measurement system.'

Guidance for the full year 2006 is unchanged. For the third quarter, as for the full year, it expects a revenue increase of 6-8%. Q3 Earnings Per Share (diluted) are forecast between $0.59 and $0.62 versus $0.66 in the third quarter 2005 - the fall is attributable to 'anticipated incremental spending on PPM initiatives, including Project Apollo, as well as previously announced initiatives to improve research quality'. EPS (diluted) for the full year is expected to be between $1.69 and $1.74.

Arbitron's home page is at www.arbitron.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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