Arbitron's PPM challenged in New York

Story from Bloomberg.com

New York to Sue Arbitron Over New Radio Rating Method By Karen Freifeld

Oct. 3 (Bloomberg) -- New York Attorney General Andrew Cuomo said he will sue Arbitron Inc. for fraudulent business practices over the company's new method of rating radio broadcasting, which he said seem unfair to minority stations.

Cuomo sent a letter dated yesterday to New York-based Arbitron saying its electronic ``portable people'' meter system ``appears to contain design flaws that will disproportionately impact minority communities, broadcasters and businesses.'' He accused the company of violating civil rights and business laws.

Arbitron, a provider of radio-station ratings based on audience size, intends to begin using the meter in New York on Oct. 8, Cuomo wrote. The meters are mobile-phone size devices carried by listeners that pick up information identifying radio stations, according to the company Web site.

The new method may not adequately represent young black and Hispanic listeners, mobile-phone-only households which tend to have young and minority-group people, and non-English-speakers, he said. He also said the company doesn't adequately recruit to represent the diversity of minority listeners.

Arbitron ``denies all such allegations and intends to defend itself and its interests vigorously,'' the company said today in a U.S. Securities and Exchange Commission filing.

Arbitron fell $2.22 to $40.33 at 4:15 p.m. in New York Stock Exchange composite trading.
Cuomo and Attorney General Anne Milgram of New Jersey, where Arbitron also intends to introduce the meter, both subpoenaed Arbitron in September over whether the new rating system underrepresents minorities. The current system is based on personal diaries.

`Virtual Monopoly'

``Due to Arbitron's virtual monopoly over ratings in the radio industry, a significant and improper decline in ratings under the PPM system would cause minority stations to suffer drastic reductions in advertising broadcasting in New York,'' Cuomo said in the letter.
The meter, about the size of a mobile phone, transmits information about what stations people are listening to and for how long to data collection centers.

Cuomo claimed in his letter to Arbitron Chairman Stephen B. Morris and chief legal officer Timothy T. Smith that the company may have violated the state's executive and general business laws by misleading people into thinking the methodology is fair, reliable and accredited. Cuomo said the Media Ratings Council Inc., the primary accrediting agency for such services in the U.S., hasn't accredited the meter.

Cuomo also claims Arbitron violated the law by making representations to shareholders about the reliability and scheduled launch of the meter, inflating the price of Arbitron common stock, without disclosing adverse information.

To contact the reporter on this story:
Karen Freifeld in New York State Supreme Court at kfreifeld@bloomberg.net.