Arb Concall: Kerr Focuses On MRC, Business As Usual
Expect No 'Additional Exposure' From False Congressional Testimony
January 12, 2010 at 11:00 AM (PT)
In a hastily arranged conference call to announce BILL KERR's appointment as CEO, ARBITRON executives basically reiterated what was already known about MICHAEL SKARZYNSKI's resignation, then concentrated on the recent MRC approval developments and in conveying a sense that it's as business-as-usual as much as possible.
Before taking questions, new CEO KERR outlined that he will initially focus on four distinct areas:
1. Lead the organization through the transition and make certain that management and employees remain focused throughout the change.
2. Continue to drive forward on PPM commercialization; make progress in key metrics and marketplace challenges.
3. Work with the executive staff to deliver a long-range strategy in identifying the core radio services and leverage its important assets, continue to improve the PPM panels and launch new lines of business.
4. Continue to evolve the long-term management structure and drive growth for the company.
To illustrate his commitment to the ratings company, KERR said he is "starting the process of disengaging from a number of other business activities, and I have recommended that I be replaced as the Chairman of the MEREDITH board."
In the question-and-answer session that followed, KERR and VP/CFO SEAN CREAMER responded to the propsect that lying before CONGRESS could result in possible jail time for SKARZYNSKI and fines levied against ARBITRON. Before noting that the company carries Directors and Operators (D&O) insurance that have a $500,000 deductible, CREAMER said that "We're not focused on [future Congressional actions]. We cited what the comment was and corrected the record, which we believe resolves the issue."
"When this came up, the company and board acted quickly, forthrightly and transparently, so I don't think they're be any additional exposure to the company," KERR added.
Minneapolis Proves PPM Works
However, the financial analysts primarily focused their questions on ARBITRON's recent MRC accreditation in MINNEAPOLIS and denials in the other markets. CREAMER noted that ARBITRON uses the 'Radio First" methodology in the MINNEAPOLIS market, which "suggests to us there's nothing fundamentally wrong with it, because we've now been accredited in multiple markets. We're committed to continuous improvements in the service, with improved metrics."
He also agreed with an analyst's view that ARBITRON's "dialog and engagement with the MRC has increased ... what we've learned is that the more engaged you are, the easier a difficult process can be. We remain committed to keep our level of engagement as high as possible; we're not going to change anything."
However, "there is absolutely no straight line level for accreditation," CREAMER continued. "The charter of the MRC is to seek continuous improvement in service -- and we're committed to that, too. What makes it difficult is projecting what needs to be done to gain accreditation. So while there is a post-mortem in process [over the markets that were denied], in essence the audit starts over. The new audit will be based on newer data, which has benefited from the improvements in our metric. We expect to be in a better position to move into the next round, but we can't say with any certainty that those markets will be approved [the next time]."
Other nuggets from the Q&A include a reiteration that ARBITRON continues to remain in dialog with UNIVISION about PPM service; that RIVERSIDE, despite reports of data deterioration, remains accredited; and that there was no predetermined timing of the MRC and SKARZYNSKI announcements.
As for any expected changes in ARBITRON under KERR's stewardship, "I don't see a need for a dramatic change in strategy," KERR said. "As I immerse myself as CEO and get more involved in the day-to-day business, I'll be better able to address whether that causes me to change my thinking. Then we'll see if our results validate or challenge elements of our current strategy, but there's no latent or hidden sense for a change of direction."