FCC Formally Launches PPM Inquiry
May 18, 2009 at 12:09 PM (PT)
The FCC has a format Notice Of Inquiry into ARBITRON's PPM. "In his Notice of Inquiry (NOI), we seek comment on issues relating to the commercial use of a radio audience measurement device, developed by ARBITRON, INC. known as the portable people meter, or PPM. Broadcasters, media organizations, and others have raised concerns about the use of the PPM and its potential impact on audience ratings of stations that air programming targeted to minority audiences, and consequently, on the financial viability of those stations.
We do not regulate Arbitron, but then we do not regulate banks either, and yet we should --indeed, we must-- take into account the difficulties of access to capital if we are going to develop effective rules
"They claim that the current PPM methodology undercounts and misrepresents the number and loyalty of minority radio listeners.
"They assert that, because audience ratings affect advertising revenues, undercounting minority audiences could negatively affect the ability of these stations to compete for advertising revenues and to continue to offer local service to minority audiences.
"They express concern that such undercounting could particularly affect the ratings of local, urban-formatted radio stations that broadcast programming of interest to African-American and Hispanic audiences.
"This NOI investigates the impact of PPM methodology on the broadcast industry as well as whether the audience ratings data is sufficiently accurate and reliable to merit the Commission's own reliance on it in its rules, policies and procedures.
Comments: Varying Degrees Of Oversight
Judging by the Comments section, it seems that the Commissioners, while agreeing to the NOI, offer slightly differing perspectives on the gravity of the problem. Interim Chairman MICHAEL COPPS cited the need to ensure fair data collection, while not trampling on the rights of ARBITRON, a private business.
"The Commission also has an independent interest in ensuring the accuracy and reliability of PPM," he wrote. "We do not regulate ARBITRON, but then we do not regulate banks either, and yet we should --indeed, we must-- take into account the difficulties of access to capital if we are going to develop effective rules. Anything that affects media diversity and minority ownership -- and I am not drawing any conclusions here -- affects our ability to do our job.
"I want to emphasize that this proceeding is not about preserving the status quo or inhibiting technological progress," he added. "To the contrary, ARBITRON should be commended for trying to improve its ratings methodology and for committing significant resources to that effort. I also appreciate the constructive attitude that all of the stakeholders, including ARBITRON, have adopted and hope that will continue as we move forward."
Departing Commissioner JONATHAN ADELSTEIN seems to be going out with both guns blazing, as he called for a heavy hands-on involvement in ARBITRON's business practices. Although he noted that "This open and neutral inquiry is the first step of Commission action," he also declared, "If the Commission does not conclude that PPM is in fact reliable and accurate, or if there are still many unanswered questions, the Commission may have to reconsider whether its reliance on ARBITRON’s market definitions and audience ratings calls into question the reliability and integrity of the Commission’s own analysis that uses ARBITRON information. The Commission may have to also consider whether prohibiting broadcasters’ participation in PPM altogether is in the public interest."
Republican Commissioner ROBERT MCDOWELL, on the other hand, had little to say, but his most telling comment was his last: "I expect to pay particular attention to analyses of the Commission’s authority to take any further action in this arena."
Arbitron Welcomes The FCC Inquiry ... Not The PPM Coalition
ARBITRON SVP/Press and Investor Relations THOM MOCARSKY issued the official reaction:
ARBITRON welcomes the opportunity to better educate all parties about our Portable People Meter service and its advantages over the diary-based system. The FCC Notice of Inquiry will allow us to further explain why a passive, electronic audience measurement service is a valuable tool that can help the radio broadcast industry compete with the emerging digital media in the 21st century.
We appreciate that Chairman COPPS has commended ARBITRON for trying to improve our ratings methodology and for committing significant resources to that effort. We also appreciate that Commissioner MCDOWELL has acknowledged that ARBITRON and a number of broadcasters have said that our new automated approach to ratings measurement offers significant improvements over the older, manual diary-reporting system.
It is important to note that FCC’s Notice of Inquiry regarding PPM is not the same as the formal investigation demanded by the so-called PPM Coalition.
The Notice of Inquiry is an open proceeding in which any and all parties may express their views on a wide variety of issues. This is very different from a closed, adversarial proceeding before an administrative law judge.
In the ex-parte notices that ARBITRON has filed regarding our one-on-one meetings with the FCC, we have consistently expressed our willingness to participate in a Notice of Inquiry.
We have said that an open proceeding can foster dialogue, education and an exchange of ideas among parties holding differing viewpoints, while a closed investigation would likely lead to "freezing" the parties into a litigation-like adversarial postures. We also said that a closed investigation would divert valuable ARBITRON resources away from our continuous improvement initiatives that are enhancing the quality of our PPM services.
Elsewhere, the NATIONAL ASSOCIATION OF BROADCASTERS declined to comment on the FCC's Inquiry.
For a full look at the NOI, just click here.