Litigation and Hurricane Hit Arbitron Forecast

Ratings giant Arbitron has lowered its expectations for the full year as a result of costs incurred by recent litigation, and the impact that Hurricane Ike had on its Houston reporting.

Last month, Arbitron commenced civil actions against the New York Attorney General and New Jersey Attorney General, who are seeking to prevent the firm from publishing its Portable People Meter (PPM) listening estimates on the grounds that they undercount the listening habits of minorities. These proceedings are pending.

In addition, last month, the State of New York commenced litigation against Arbitron alleging false advertising and deceptive business practices, and the State of New Jersey commenced litigation against Arbitron alleging violations of New Jersey consumer fraud and civil rights laws - in both case relating to the marketing and commercialization of the PPM.

As a result of the costs of both these actions and the impact of Hurricane Ike - which led to suspended reporting from the Houston panel for three weeks and incapacitated Arbitron's Houston polling center - earnings for the year are now at the lower end of Arbitron's guidance range of $1.30 to $1.44.

However, for the full year 2008, Arbitron continues to expect revenue to increase between 8% and 10% compared with last year's revenue from continuing operations.

Chairman, President and CEO Stephen Morris commented: 'We expect most of the impact of these one-time events to hit the fourth quarter as opposed to the third, whether any of these legal issues and expenses are likely to spill over into 2009 is one of those speculations that we're unable to make at this time.'

For the third quarter 2008, Arbitron reported a 9.9% revenue hike to $102.5m, compared with $93.3m for the same period last year. Net income for the quarter was $17.0m, against $17.2m for Q3 2007.

Costs and expenses increased by 14.5%, from $63.0m in 2007 to $72.1m this year, due primarily to planned expenditures for the commercialization of the PPM service.

Morris explained: 'Our priority, as we launch these services, is to continue the help we are giving broadcasters and agencies in their transition to electronic measurement and to maintain advertiser confidence in radio as one of the most effective of all ad media.'

Web site: 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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