Arbitron To Fight Nielsen In Small Markets
November 18, 2008 at 2:45 PM (PT)
In a hastily scheduled conference call, ARBITRON executives asserted in no uncertain terms that the ratings company intends to stay in the small markets where CUMULUS and selected CLEAR CHANNEL stations have signed on to NIELSEN, and are willing to take a hit of $7-10 million in their '09 forecasts to stay there and serve the other stations in those markets.
"Radio audience measurement is our core business, and we intend to aggressively protect it,' ARBITRON Pres./Chair./CEO STEVE MORRIS said. "We have no intention of exiting any markets, and we will continue to enhance our offerings for both the diary and PPM. Both CUMULUS and CLEAR CHANNEL remain under contract for PPM and we're still in negotiations with CLEAR CHANNEL for diary markets that aren't involved with the RFP."
We have no intention of exiting any markets, and we will continue to enhance our offerings for both the diary and PPM
MORRIS and CFO SEAN CRAMER reiterated previously held talking points about the inefficiency if an annual survey and the impracticality of sticker diaries in markets with well over a dozen stations. "Once-a-year measurement is a step backward," MORRIS asserted in the press release. "Advertisers have told us that radio markets need more than a once-a-year survey in order for stations to maintain accountability and recapture revenue from out-of-home, Internet and online media. We are committed to continuously improving our services for the benefit of the radio industry in markets of all sizes and we have already initiated an aggressive program of enhancements to our diary service."
CRAMER noted that one reason ARBITRON can continue to fight on the small market turf is because over 80% of its revenue is generated by stations in markets 1-99. "We intend to remain in those markets, even though the revenue is gone and there's no reduction in cost. While there will be a significant bottom line impact, in terms of how profitability breaks out by market ... it's clearly disproportionately high in top-10 and 50 markets, which has allowed us to leverage infrastructure to get into the smaller markets."
Responding to questions from JIM BOYLE of CL KING, MORRIS noted that the $7-10 million loss could go higher if other groups or stations defect to NIELSEN. They wouldn't specify which radio groups have contract renewals in the near future, but they intimated that they intend to protect their current business relationships as well as make every effort to win the lost business back.
Bob Neil, Randy Kabrich Respond To Arbitron
COX RADIO President BOB NEIL minced no words in his criticism of ARBITRON, telling ALL ACCESS, "Bad service and a bad product usually equals competition in any business category and this is overdue. Radio has been a prisoner of ARBITRON's arrogance for too long."
Noted radio consultant RANDY KABRICH, a well known critic of ARBITRON and its PPM methodology, said, "ARBITRON's response has been that agencies want two books, which is typical of ARBITRON. Radio pays for the data, not agencies. ARBITRON should stop telling radio how to run their business and simply be a data supplier.
"By telling radio how to run their business, ARBITRON continues to burn bridges and generate ill will. If ARBITRON and agencies want more than one book, perhaps ARBITRON should collect 99% of their revenue from agencies instead of radio.
"As (ARBITRON Chairman/Pres./CEO) STEVE MORRIS retires next year, one can only hope that the ARBITRON BOARD OF DIRECTORS will seize the opportunity for new blood that will position ARBITRON in a new light, not telling radio how to run their business and does not cost the company millions in unnecessary expenses due to Attorney General investigations as well as opening the door for NIELSEN to enter radio measurement."