Arbitron threatened with lawsuit by New York Attorney General


Attorney General Andrew Cuomo has notified Arbitron that he intends to sue the company – charging that the ratings company has engaged in unlawful and deceptive acts regarding its marketing and planned commercialization of its Portable People Meter (PPM) service in New York. The AG charges that the new ratings methodology “appears to contain design flaws that will disproportionately impact minority communities, broadcasters, and businesses.”

Arbitron says it denies all of the allegations and intends to defend itself.

At no point does the letter from the New York AG’s office claim that Arbitron has hidden problems with PPM or tampered with any PPM data. Rather, three of the five allegations essentially come down to the AG’s office not liking the outcome of PPM measurement. Another claims that Arbitron pumped its stock price and failed to disclose potential problems with PPM to Wall Street. That would seem to have no bearing on whether or not PPM should be commercialized, but rather on whether investors are due damages for past delays. And the final allegation is that Arbitron mislead the public into believing that PPM was accredited. That’s hard to fathom, since the company has repeatedly stated publicly that PPM is not accredited by the Media Rating Council (MRC) and publicly disclosed that PPM service in New York and Philadelphia failed MRC accreditation. Indeed, Arbitron’s critics have made the lack of accreditation a major focus of their repeated public objections to commercialization.

Strangely, the letter to Arbitron is signed not by anyone at the AG’s office dealing with business law enforcement, but by Alphonso David, Deputy Bureau Chief of the Civil Rights Bureau within the AG’s office. The letter, however, makes no allegation of any violation of any civil rights law, only the Executive Law Section of the state’s General Business Law.

Click the pdf link at the bottom of this page to read the actual letter.

Arbitron has five business days to respond to the letter from the AG’s office. At the earliest – assuming that the hand-delivered letter dated October 2nd was received on Thursday, which Arbitron confirmed in an SEC filing – Arbitron’s response is due Thursday, October 9th, one day after PPM is scheduled to become ratings currency in New York and seven other markets.

In an SEC filing Friday, Arbitron said it denies all of the New York AG’s allegations and “intends to defend itself and its interests vigorously.”

The company also issued a public statement: “Arbitron is disappointed that the State of New York Office of the Attorney General has stated its intent to pursue litigation in an effort to stop the implementation of Portable People Meter — a measurement tool that is supported by a majority of the radio industry. We intend to vigorously defend the Company and its interests. We also fear that the radio industry will suffer continued harm and be placed at a competitive disadvantage if PPM is delayed further.

After many years of market trials, and almost two years of commercialization, the PPM is providing more timely and detailed insights into the behavior of radio audiences. These insights have already been used with demonstrated success by radio programmers, including those at urban and Spanish-language stations.

Radio broadcasters, radio advertisers and Arbitron all have an important stake in the transition to electronic measurement. At Arbitron, we appreciate the role that all segments of the radio industry must play during this transition. We reaffirm our commitment to working with all radio broadcasters, agencies, and advertisers to facilitate industry-wide success in an electronically measured world.”

Baring any court injunction, PPM is set to become ratings currency effective Wednesday, October 8th, in New York, Los Angeles, Chicago, San Francisco and Riverside-San Bernardino, along with the embedded markets of Nassau-Suffolk, Middlesex-Somerset-Union, and San Jose.

RBR/TVBR observation: Total BS. We thought the abuse of the New York Attorney General’s office for political attacks had ended when Eliot Spitzer left office. Whether you love or hate PPM, Andrew Cuomo has no credentials to judge the validity of a broadcast ratings service and no legal authority to do so. His claims that the PPM methodology somehow violates a broad-based New York business law – the same law that Spitzer sought to apply to areas where he had no authority – is without legal merit. This is 100% politics.