Arbitron vows to fight Nielsen head-to-head


Despite the loss of nearly all revenue from the 50 markets where Nielsen plans to launch its new radio ratings service next year, Arbitron says it will continue to measure all 50 of those markets and defend its turf.  “Once a year measurement is a step backward,” said Arbitron CEO Steve Morris. And now that the battle has begun, he’s not ruling out an attack on Nielsen’s turf – using the Portable People Meter (PPM) to measure television.

“I want to make it clear up front – the radio measurement business is our core business and we intend to aggressively protect it,” Morris said in a conference call with Wall Street analysts. “We have no intention of exiting any of these markets,” he declared. In addition, he noted that both Cumulus and Clear Channel, the charter subscribers for the new Nielsen service, remain under contract to Arbitron for PPM markets and the company is in renewal talks with Clear Channel for a number of diary markets not covered by the new competitor.

Although business outside the top 100 markets accounts for less than 20% of Arbitron’s total revenues, it will take a hit from those 50 small markets. Morris said it will lose about $7 million from Cumulus and Clear Channel in those markets for 2009, with an annual run rate of about $10 million. All other radio subscribers in those markets supply only $1.5 million in revenues to Arbitron. Still, Arbitron is not backing down. “Yes, we are staying in those markets and we intend to demonstrate in each of them that our measurement is superior to this alternative,” Morris said.

Katz Media Group, owned by Clear Channel, is the national rep for both Clear Channel and Cumulus. How will it deal with having two ratings services in those markets? "We will continue to follow the lead of our client stations. Our current license agreements allow us to use the data of the particular service that our client stations subscribe to. We expect to continue this policy in the future," the rep company told RBR/TVBR.

The Arbitron CEO was derisive of the competing product being launched by Nielsen. Morris noted that the original RFP from Cumulus said no diaries, the product chosen will be diary based. “The outcome proved that we’ve been right all along and diaries is in fact the best solution available today for small and mid-sized markets,” he said. But he doesn’t think much of the type of diary that Nielsen plans to use. Morris said the utility of “sticker diaries” seems to be limited to markets with a small number of stations. He said that the markets where Nielsen plans to use the sticker diaries in Australia typically have 1-5 stations, while the markets where they plan to use them in the US typically have 50-120 stations.

Going to only one survey per year is “a step backward, plain and simple,” Morris said. “Less frequent measurement means less accountability for advertisers who buy radio all year long. Advertisers have told us radio markets need more than once-a-year surveys for stations to maintain accountability to recapture revenue from out-of-home, Internet and online media,” he said.

Relations between Arbitron and Nielsen have been frosty since Nielsen declined to enter into a PPM joint venture after testing its use for both radio and TV measurement in Houston. The two jointly own Scarborough Research and Morris said he could not say what impact the competition in radio might have on that.

But if Nielsen wants a fight, Arbitron might give them one on their own turf. Morris said “nothing is off the table” when asked if Arbitron might now go after the TV ratings business with PPM. “We do know that PPM is an effective way to measure television audiences. We proved that as part of our Apollo project. So I guess the answer is that it’s on the table,” Morris said.

RBR/TVBR observation: It will be interesting to see how many years Arbitron will be willing to keep generating ratings in markets where it is getting little or no revenue. Both Cumulus and Clear Channel have signed multi-year contracts, so they’re not likely to be won back soon. Meanwhile, the smaller players in those markets won’t provide nearly enough revenue to begin to cover Arbitron’s costs – and some of them might switch over to Nielsen as well. A long and bitter fight has been launched in the radio ratings business.