JPMorgan Upgrades Arbitron To 'Overweight'
March 27, 2009 at 12:41 PM (PT)
ARBITRON INC. shares rose as much as 16% FRIDAY after JPMORGAN raised its rating on the stock to overweight from neutral, saying that a contract renewal with CLEAR CHANNEL COMMUNICATIONS for smaller diary markets is likely, writes THE WALL STREET JOURNAL.
In a research note, JPMORGAN analyst ALEXIA S. QUADRANI wrote that ARBITRON's contract with CLEAR CHANNEL for ratings in its smaller diary markets, which expired in DECEMBER, is likely to be renewed.
QUADRANI estimates that the CLEAR CHANNEL's small market business represents about 5% to 6% of ARBITRON's revenue. ARBITRON's 2008 revenue rose about 9% to $368.8 million from $338.5 million.
First, QUADRANI wrote, if CLEAR CHANNEL switched its small-market audience measurement business to NIELSEN CO. from ARBITRON, CLEAR CHANNEL would be left without radio ratings "for a potentially prolonged amount of time."
NIELSEN, QUADRANI wrote, made a surprise entry into the radio market late last year and "hit ARBITRON's stock hard." Shares are down more than 40% since the news. If CLEAR CHANNEL were to sign up with NIELSEN for additional markets, NIELSEN would need to build panels and take a period of measurement, "which it presumably had not already done."
Further, NIELSEN's current measurement methodology is little tested and doesn't fit with larger markets, QUADRANI wrote. NIELSEN's measurement for its signed CLEAR CHANNEL and CUMULUS MEDIA INC. markets is a "once-per-year, truncated methodology geared to small markets which tend to have a lower reliance on ratings," as they get fewer national advertising dollars. ARBITRON's larger diary markets, which depend more on national ads and require more monitoring, are checked four times a year.
Finally, QUADRANI wrote, CLEAR CHANNEL would be at a pricing disadvantage if it split business between monitoring companies. "ARBITRON grants its large customers bundled discounts for all the services it provides," QUADRANI wrote.
Arbitron To Monitor More Radio/TV Signals With PPM
ARBITRON will be reporting audience estimates in its syndicated PPM Radio Market Report service for more stations, starting with the APRIL 2009 report period. The stations are receivable by radio listeners at 87.7 FM, operate as FM stations, but are licensed by the FCC under terms that differ from those of stations previously reported in Arbitron’s PPM Radio Market Report service.
These additional stations are authorized by the FCC to carry video content receivable on analog televisions, in addition to audio programming receivable on FM radios, although they carry no visual advertising content and promote their programming to radio listeners, rather than to television viewers.
To be eligible for reporting, the stations must meet all of the following criteria:
* The audio programming is receivable on FM radio receivers;
* The programming is transmitted under the lawful authority of the FCC;
* The programming is marketed by the station’s operators exclusively to radio listeners;
* The programming is audio-only programming or otherwise unaccompanied by visual advertising content.
Eligible stations will be reported with "alias" call letters beginning will the call letter "X" and will carry the suffix "FM."