Arbitron told Wall Street analysts that full year 2008 earnings will come in at the low end of the company’s previous guidance, largely due to the costs of fighting multiple court cases dealing with PPM. Meanwhile, Q3 revenues were up 9.9% to $1.2.5 million and the company is expecting growth to pick up in Q4 with more PPM markets now commercialized. Q3 net income was $17 million, down from $17.2 million. But the company has bought back shares in the past year, so earnings per share grew to 63 cents from 58 cents.
“There have now been 17 consecutive months of downticks in radio industry revenue. Some of this is the direct result of the much publicized weakness in the overall economy. We believe some also comes from the relative weakness in radio’s positioning on the subject of accountability versus other media. The importance of moving onto a PPM platform has never been stronger,” Arbitron CEO Steve Morris said in his conference call.
Arbitron is sticking with its guidance to Wall Street that 2008 revenues will be up 8-10%. Because of litigation costs and the impact of Hurricane Ike, earnings per share for the full year are expected to be at the low end of the previously stated range of $1.30-1.44. Arbitron’s Houston calling center remains closed and it has been unable to deliver PPM results in the market for several weeks.
Meanwhile, Morris repeated the company’s denials of the allegations by the Attorneys General of New York and New Jersey and vowed to fight vigorously in court. Arbitron has been sued in the state courts of both states and it has sued both AGs in federal court seeking to bar them from any action which would prevent Arbitron from publishing its PPM data. PPM was recently commercialized in eight more markets, bringing the count to 10, with four more set to go in December.
Arbitron has long-term contracts for its ratings services, but Morris says he has seen some evidence of small market broadcasters “floating in an out of our service” as in past economic downturns. As for whether Arbitron will retain Cumulus as a customer for its 100+ rated markets, he noted that talks are continuing.
RBR/TVBR observation: Morris cites the current tough economy and advertising slump as reasons why the radio industry needs PPM even more so to compete with other media. No doubt his radio group customers would like to see some immediate demonstration of PPM boosting their ad sales, not just their increased ratings payments keeping Arbitron on track with its promises to Wall Street.
