Arbitron’s revenues grew 16.8% in Q4 due to more Portable People Meter (PPM) markets, but profits were down a bit, though in line with expectations. In his first quarterly conference call, new CEO Michael Skarzynski vowed to win back business from Cumulus and Clear Channel in the markets where Nielsen is rolling out its radio sticker diary and he also spoke of growth opportunities in multi-media, measuring not only radio, but the three screens: TV, computer and portable video devices – a clear challenge to Nielsen’s TV dominance.
Having joined the company just over a month ago, Skarzynski said he has been on a “listening tour” with Arbitron’s clients. In his conference call with Wall Street analysts, the new CEO said customer satisfaction improvement plans are a key focus. “Personally, I am very interested in meeting with our customers and I plan to spend a substantial amount of my time listening to and engaging with customers. I am also asking every Arbitron executive to engage with our customers. My personal objective and commitment is to create a fresh start at Arbitron and change Arbitron’s culture and outbound focus so that customers view Arbitron as a partner. I want customers to regard Arbitron as an asset and not simply as a tool,” Skarzynski said.
“I don’t have to tell you that radio broadcasters are experiencing unprecedented declines in ad revenue,” the new CEO said, noting the double-digit percentage declines that many analysts are forecasting for 2009. “Arbitron wants to be in position to help our radio broadcaster customers to navigate this difficult environment. Arbitron wants to help our customers to build their revenue, their audiences and to improve the relative position of radio in the overall advertising marketplace,” Skarzynski said.
Speaking of the challenges and opportunities ahead, the CEO said Arbitron has an ambitious goal of rolling out 19 new PPM markets, in addition to the 14 already up and running. And he reaffirmed the company’s commitment to winning and maintaining Media Rating Council accreditation for all markets, PPM and diary.
Following the challenging year of 2208, Skarzynski said he is joining Arbitron at a “tipping point” for the company and spelled out the top three reasons why he wanted the job. First, he said, Arbitron has a strong research organization and his resume includes past work at companies with world class research organizations, specifically pointing to his time at AT&T and Lucent. “I know that a strong research team can be a tremendous asset when it’s given the right goals, management and resources,” he said. Second, he noted the strong market leadership position that Arbitron has. “This is a tremendous asset and serves as a foundation on which we intend to build future growth for the company,” Skarzynski said.
“Third, Arbitron has a tremendous market opportunity to build a single-source, ROI, multi-media platform. And we can do this based on the success and market leadership in the company’s core radio ratings business. There are numerous opportunities in the company’s home market, in the United States, as well as in international markets, to provide integrated measures of multi-media, including radio and the three screen markets of television, wireless and Internet. Arbitron has developed a solid, extensible technology platform in personal, portable and passive electronic measurement that can be deployed as ur platform for growth in multi-media markets,” Skarzynski said.
Along with that threat to challenge Nielsen in video measurement, the new Arbitron CEO vowed to win back Cumulus Media and Clear Channel Radio as customers in the 51 markets where Nielsen is deploying its new radio “sticker diary” measurement in 2009. CFO Sean Creamer noted later that, as the company had previously advised Wall Street, 100% of the $5 million in revenue lost in those markets will go straight to the bottom line, since Arbitron is continuing to measure all of those markets, whether it has radio customers or not. In his presentation to analysts, CEO Skarzynski warned that there is no guarantee that the company will be able to return to its historical margin levels.
Arbitron reported that Q4 revenues were up 16.8% to $93.6 million, including new revenues from commercialization of PPM in more markets. However, costs were also higher due to PPM, rising 18.2% to $94.5 million, which also included costs associated with settling litigation with the Attorneys General of New York and New Jersey. Earnings before interest and tax (EBIT), which also includes its share of income from Scarborough (owned 50/50 with Nielsen), rose 8.6% to $6.7 million.
For all of 2008, revenues rose 9% to $368.8 million. EBIT declined 0.3% to $63.3 million. And income from continuing operations declined to $37.2 million, or $1.37 per share, from $40.5 million, also $1.37 per share, in 2007. The company had 2.1 million fewer shares at the end of 2008.
Looking ahead, Arbitron is telling Wall Street to expect that revenues will rise 6-10% in 2009. Earnings per share are expected to be in a range of $1.40-1.55 for the year, an increase of 3-14%. Creamer said that wide range was due to the uncertainty of the economy.
RBR/TVBR observation: Look for Skarzynski to make some organizational changes at Arbitron. He isn’t saying what they’ll be, but that they’ll come in Q1, which runs only through next month. He’s also talking about changing the culture of the company with a “fresh start” to improve customer satisfaction. No doubt Arbitron critics will be keeping a close eye on whether he accomplishes that.