Although shares of Arbitron have fallen double digits since announcing a nine month delay of its Portable People Meter (PPM) rollout, Lehman Brothers analyst Anthony DiClemente is more concerned about the impact of the PPM rollout delay on radio companies, saying “we see this primarily as yet another hurdle for the radio industry to confront.” In a note to clients, says the delay of commercialization of PPM means that “another year will pass with the majority of radio audiences being measured using a methodology that is subpar to other media competing for the same advertising dollars, pushing back the time horizon for radio to gain the benefit of credible audience measurement.” DiClemente notes that the 2005 Forrester Research study on the impact of radio switching to passive electronic measurement estimated that not having PPM will cost the radio industry 40-50 million in 2008. “We continue to remain of the view that radio is challenged by the fact that it is currently not as credibly measured as other major media, and that the delay in the PPM rollout has only extended the horizon for the radio industry improving its measurability,” the analyst wrote.
Even if Arbitron is able to resume PPM commercialization in September, as planned, DiClemente is skeptical. “We note that the shift from a more gradual rollout of two to three markets per quarter to eight markets in all in September 2008 is aggressive and we believe there is a risk of further delay until at least December 2008,” he told investors.
