Arbitron Delays PPM Roll Out, Revises Financial Guidance
Following months of complaints from broadcasters that Arbitron's PPM radio ratings sample sizes are too small, the firm has decided to delay the system's roll out in nine of its planned markets. As a result, the company is updating its previously issued guidance to reflect the resultant financial impact.
Chairman, President & CEO Steve Morris said that the delay will give Arbitron time to resolve the issues recently raised by the National Association of Black Owned Broadcasters ( www.mrweb.com/drno/news7569.htm ) and by a consortium of four of the USA's largest radio broadcasters ( www.mrweb.com/drno/news7590.htm ). Reported problems include failure to meet sample sizes for 'in-tab' groups - those people who carry the PPM device, rather than leave it in its charger - as well as targets for young adults ages 18 to 34 and members of ethnic minorities.
The decision will mean a delay of nine months in New York, Nassau-Suffolk and Middlesex-Somerset-Union; six months in Los Angeles, Riverside and Chicago; and three months in San Francisco, San Jose and Dallas. During this time, the firm will extend the use of its current paper-and-pencil diary system, which has been in place since 1965. Roll out in Atlanta, Detroit, Washington DC and other markets is still on schedule.
Morris said that while Arbitron remains confident that audience estimates are valid, recent feedback from customers, the Media Rating Council and other constituencies had led the firm to conclude that 'the radio industry would be better served if we were to delay further commercialisation of the PPM in order to address their issues.'
He stated that a number of initiatives were already in the pipeline to improve the PPM performance in Q1 2008, including programmes to remove non-participants from samples and recruit replacements. 'Our intention is to expand significantly this list of improvement initiatives by working closely with customers, industry organisations and community groups,' he added. 'We expect that the Media Rating Council will be a particularly valuable source of guidance and advice on the more technically oriented aspects of this review and improvement process.'
Following the announcement, the company is updating its previously issued guidance with earnings per share (diluted) for 2007 now currently estimated to be between $1.30 and $1.35 as compared with its original earnings per share guidance of $1.35 to $1.45. The firm also estimates that the impact of foregone revenue and additional costs required to produce diary estimates will reduce 2008 earnings by $0.22 to $0.33 per share (diluted).
Homepage is www.arbitron.com.