New York files suit against Arbitron


Last week was not a good one for Arbitron. At the top of the list: NY Attorney General Andrew Cuomo filed a lawsuit in NY County Supreme Court against the ratings giant. The suit accuses Arbitron of deceptively claiming its Portable People Meter system is valid, fair, and representative of diverse radio markets. It also charges Arbitron with false advertising and failing to disclose important flaws in the PPM methodology to broadcasters, advertisers, shareholders and the public, including serious shortcomings in the accuracy of the new system and its inadequate representation of African-Americans and Latinos.

Cuomo seeks to enjoin Arbitron from engaging in deceptive and illegal practices in utilizing and marketing the PPM in New York, to require Arbitron to pay restitution to minority broadcasters who have lost revenue because of PPM, and to adopt measures to cure the flaws in the PPM methodology in New York.

“Arbitron’s rush to commercialize the PPM system without curing known flaws in the service distorts the marketplace, and threatens to drive minority broadcasters out of business. Arbitron must refrain from using this flawed product in New York until it is truly a reliable and fair service," said Cuomo.

Arbitron went on the offensive first last week (10/7/08 RBR #196 Arbitron Sues Cuomo), filing suit in federal court against Cuomo, who had previously threatened the state lawsuit (10/6/08 RBR #195 Arbitron threatened with lawsuit by New York Attorney General) over deployment of PPM in New York. Arbitron’s suit asked a federal judge to rule that publication of PPM data is protected by the First Amendment. It also wants a temporary restraining order to bar Cuomo from doing anything to block release of PPM listening data.

In its lawsuit against Cuomo, Arbitron insists that there is no evidence to support the idea that minority-owned broadcasters suffer disproportionately in ratings from implementation of PPM audience measurement, nor that it will do them any financial harm (10/9/08 RBR #198 Arbitron says PPM fears are unfounded). Arbitron also accuses Cuomo of harassing the company, even though he has no reasonable expectation of succeeding in litigation to stop PPM.

As well, reply comments were due last week for the FCC’s docket proceeding on whether it should launch an investigation of PPM (10/8/08 RBR #198 Now it’s up to the FCC to decide). Very few of the filings, however, addressed the key issue – whether the FCC has any authority to conduct such an investigation.

According to papers Cuomo filed in court, Arbitron deceived broadcasters, advertisers, shareholders, and the public by:

* Misrepresenting that PPM is valid, fair and representative of the diversity of the New York radio market;
* Failing to disclose in selling ratings based from PPM that the service has serious methodological flaws;
* Creating the false impression that PPM is generally accredited by the Media Rating Council (MRC), when it was denied MRC accreditation in New York;
* Misrepresenting that PPM methodology in New York meets the MRC’s Minimum Standards for commercial use, when it does not; and
* Misrepresenting that it strictly adheres to the MRC’s Voluntary Code of Conduct, while failing to adhere to important code preferences.

The NY lawsuit accuses Arbitron of failing to disclose or cure key flaws in its PPM methodology in New York. For example: Arbitron in New York uses as panelists an insufficient number of households that use cell phones instead of land lines and fails to recruit panelists in person, both of which disproportionately exclude African-Americans and Latinos; fails to appropriately designate households as Spanish dominant; fails to recruit radio listeners who do not speak English or Spanish; and does not sufficiently inform and remind panelists how to use the PPM to ensure adequate compliance.

The lawsuit also alleges that Arbitron’s executives commercialized PPM before it is ready in order to reap financial benefits without regard for its impact on broadcasters or the public, or for the long-term interests of Arbitron. Although MRC and minority broadcasters repeatedly contacted Arbitron to advise it of the flaws in the PPM methodology and their likely effect on minority broadcasters, Arbitron did not suspend the commercialization schedule and failed to acknowledge the flaws, even after assuring the public that it would use best efforts to obtain MRC accreditation. As a result, minority broadcasters in New York are going to experience an unprecedented drop in advertising revenue, and will potentially go out of business.

RBR/TVBR observation: What’s in the water over at the NY AG’s office? First Spitzer, now Cuomo. It seems these power-hungry egomaniacs can’t stay within the jurisdictions they’ve been assigned to. Well, we know what happened to Spitzer, so Cuomo may end up with the same fate. Forcing Arbitron to pay minority broadcasters for "lost revenue" is not a trend the company will be able to manage and stay in business (general market broadcasters would certainly be next). If Arbitron loses, this will hurt broadcasters in the long run because the media agencies want PPM as the currency–they’ve said it time and time again. If PPM is gone due to lawsuits, agencies will just spend their clients’ money in mediums they feel are more reliable and measurable. Of course, let’s also remember, whatever costs Arbitron pays out from lost suits will be passed on to radio clients eventually.

Bottom line, it is not the FCC and AGs who should determine ratings currency. Like we’ve said before, Arbitron must focus on winning Media Rating Council accreditation for PPM in New York and other post-Houston markets – and radio clients need to hold the company’s feet to the fire to get the PPM sample right and win those MRC double-checks. Let the system that is in place decide–not someone like Andrew Cuomo who has no clue about radio—or television—ratings systems.