The Q4 revenue decline for Univision Radio is being blamed in part on not having ratings in markets where the company is refusing to subscribe to or encode for Arbitron’s Portable People Meter (PPM). But the Spanish media giant is standing its ground and officials blasted PPM in their quarterly conference call with Wall Street analysts and bondholders.
“Arbitron’s sample methodology and panel maintenance and recruitment is inherently biased minorities, including Hispanics and African-Americans,” CEO Joe Uva declared. “That has to do with in-person recruitment practices, or lack thereof, as well as, we know many minorities, particularly younger Hispanic families are cell phone-only individuals and households. Their recruiting did not reflect accurately the sampling relative to the percentage of population. This is being addressed in a number of ways. At the end of the fourth quarter, the House Governement Oversight Committee held a hearing on Arbitron and required them to get back with a working solution plan to a coalition of minority broadcasters and the Media Rating Council. It is still ongoing. As you’re aware, Arbitron’s CEO resigned shortly after that hearing. We are encouraged that the new CEO is being more responsive. However, we continue not to encode in key markets and we’re not subscribing to use the ratings. We know that in order for this to fix itself we have to take some pain here, and we’re prepared to take that pain to get it fixed, because once it is fixed and is accredited by the MRC it’ll reflect an upside to this business,” Uva told the analysts.
Univision Radio revenues were down 15.8% in Q4 to $83.7 million, which sent operating income before depreciation and amortization plunging 50.7% to $21.4 million.
Returning later to the PPM issue during the call, Uva vowed that “We’re going to continue to push and fight until we fell that Arbitron has come up with an acceptable solution in a timely manner – and implement it.”
Then CFO Andy Hobson weighed in: “Arbitron knows how to fix their samples – and they’ve done it in Houston, which is one of only three markets where they’ve been accredited by MRC” – out of 33 now in operation – “so they know how to do it. It’s more expense than they want to incur, and from our point of view, they need to make the right business decision as the monopolist supplier of radio research to produce intellectually honest ratings.”
“Right,” agreed Uva.
Asked whether his stations can sell without ratings, Uva said it is something that Univision Radio has been doing. “We have the benefit of knowing that direct response advertisement is still seeing results when they use us in markets where there are no ratings because we’re not encoding,” the CEO said, and noted that such qualitative and anecdotal information is being used to convince other advertisers.
Despite the ratings methodology battle, Univision is sticking with the radio business. “We believe in radio as a media platform, particularly we think it’s going to play a very significant role as we start to come out of the depths on the local market, particularly as it relates to promotional campaigns. Radio is still capable of delivering very localized messages to valuable targets and it allows for a number of advertisers who may not be able to, on a local market basis, to afford television, to advertise in the broadcast medium. So we remain positive on radio going forward,” Uva said.