Arbitron is getting ready to blend into the welcoming arms of Nielsen, regulatory-powers-that-be willing, and it will no doubt be good news to the buyer that the radio ratings company will be accompanied by a contrail of black ink, including a positive Q4 and full year results.
Revenue was $124.7 million in Q4, an increase of $4.6 million or 3.8%, compared to revenue of $120.1 million in Q4 2011. Costs and expenses for the quarter were $106.6 million, an increase of $7.1 million or 7.1% over costs and expenses of $99.5 million in Q4 2011. This increase was primarily due to expenses related to the pending acquisition by Nielsen, additional cost of revenue for the PPM service, and additional Scarborough royalties due to increased sales of those services.
Net income in Q4 was $13.4 million, or $0.50 per share, compared with $14.1 million, or $0.51 per share for Q4 2011. Net income for the quarter was reduced by $5.2 million pre-tax—which is $0.18 per share—due to consulting, legal, and other expenses related to the pending acquisition by Nielsen.
Net income for the full year 2012 was up 6.8% to $56.9 million compared with $53.3 million in 2011.
Excluding expenses directly related to the pending acquisition, earnings per share for Q4 and FY 2012 would have been $0.68 and $2.29 respectively. Compared to 2011 earnings per share excluding a $3.5 million non-operating impairment charge taken in Q4 last year, pro-forma earnings per share in 2012 increased 17.2% for the quarter and 14.5% for the year.
For the full-year, revenue was $449.9 million, an increase of 6.5% or $27.5 million, as compared to revenue of $422.3 million in 2011.
Revenue in 2012 increased primarily due to growth in revenue for PPM-based ratings service, in part due to the nearly completed phase-in of contracted PPM price increases. Revenue in 2012 also grew due to an increase in Scarborough qualitative service revenue, an increase in Diary-based ratings service revenue, and an increase in revenue for the Arbitron Mobile service. The 2012 revenue growth was partially offset by a decrease in international equipment sales.
Revenue for cross-platform and Arbitron Mobile was $3.2 million compared to $1.5 million in the 2011.
\Costs and expenses for the full year 2012 were $361.6 million, an increase of $24.4 million or 7.2% compared to costs of $337.2 million in 2011. Contributing to the increase in costs were: expenses related to the pending transaction with Nielsen; increases in PPM survey costs, including costs to maintain and improve panelist response rates; increased costs for address based sampling, in-person recruiting and cell-phone household recruiting; increased Scarborough royalty costs due to improved sales of the Scarborough service in 2012; and higher costs associated with Arbitron Mobile, which was acquired in July 2011. These increases were partially offset by a decrease in costs of goods sold for international equipment sales.
Said Sean Creamer, Arbitron CEO: “In 2012, we maintained our focus on long-standing objectives: continued growth in our core revenue, improving margins while aggressively investing in the quality of our radio ratings services, and entry into new markets such as digital radio, cross-platform, and mobile. Over the past year, we were able to increase the number of PPM markets that are accredited by the Media Rating Council. Today, 18 PPM markets, including six of the top 10 radio markets, display the Council’s coveted doublecheck marks.
He added, “Also in 2012, we enhanced the radio data that advertisers can use in their marketing mix models. We believe our enhanced data will improve the resulting measures of radio’s impact on sales and will help advertisers better appreciate the return on investment that radio can deliver on their marketing dollars. And importantly, we renewed contracts with a number of our top radio group clients, including Cumulus. This contract returned nearly 250 radio stations in more than 50 markets as subscribers to our diary-based radio ratings services.”