Arbitrons' Portable People Meter ("PPM") Criticized

Early indicators of the PPM system are that Urban music formats' ratings are down in participating markets (with the exception of Houston), and 'general market' Music and News stations' ratings are flat or up. National Association of Black Owned Broadcaster's ("NABOB") Executive Director Jim Winston illustrates both the radio stations' ratings advances and declines in his "June 29th FCC testimony" and Winston's testimony to the Telecommunications Subcommittee in the links below (listed as "June 29th, 2008").

December 5th, 2007: Testimony by NABOB's Jim Winston to the Subcommittee on Telecommunications and the Internet of the Committee on Energy and Commerce of the United States House of Representatives. http://energycommerce.house.gov/cmte_mtgs/110-ti-hrg.120507.Winston-testimony.pdf

July 29th, 2008: Testimony of the National Association of Black-Owned Broadcasters (NABOB) Executive Director Attorney Jim Winston to the Federal Communications Committee (FCC) regarding Portable People Meter (PPM) research methodology...in the link below.
http://www.fcc.gov/ownership/enbanc072908_docs/winston.pdf

In the Washington DC market, insofar as morning/afternoon drive time shows are concerned, I have noticed that the quicker paced shows' ratings hosted by career radio broadcasters are stronger; while the slower-paced, talkative, and non-broadcasters' radio programs' ratings are declining. A good example is WKYS's Air Personalities EZ Street and Russ Parr are #1 (double digit numbers) and #3 respectively in their target 18-34 demo for the Fall Quarter. Having worked with them both, their most telling story is that their show preparation is excellent. EZ and Russ's show elements are up-to-date, entertaining, and interactive with their listeners.

In Atlanta, Tom Joyner is far and above the most listened-to program with double-digit numbers in the most sought after 25-54 demo with an 11.4 ratings share. I have not worked directly with Tom, but have worked with many on his staff that research and prepare for his show daily. All I can say is that they are professional, involved, and tenatious.

The News format, as opposed to the talk format or news-talk format, with their popular "You give us 20 minutes and we'll give you the word" decades old formula, which CBS and Bonneville specializes in, are doing extremely well in "every" major market. The News format is 12-plus number one 12-plus in DC and Atlanta, #2 in Chicago and Philadelphia, #3 in New York, and number four in San Francisco. Major market News formats have the resources, stingers, field reporters, local news emphasis, national news feed, area's traffic/weather -- every ten minutes, quality News anchors, predictable benchmarks, and stress consistent television, newpaper, and billboard advertising.

PPM's are rated 'weekly' so Programmers can adjust quickly. Some Programmers are witnessing that their ratings' advance, outside of drive time, when they program "less talk and more music." The early ratings success of true Radio Broadcasters on the music-formatted stations, and Broadcast Journalist on the News side, so far have proven that their future demand should increase. News may make a comeback on Music stations. Seques 'without an ID in between every song' could also re-appear, since stations are encoded.

While PPM is being evaluated by Management, a New York attorney named Cuomo, disputes the PPM ratings system in New York City.

September 10th, 2008
New York Attorney General Andrew Cuomo fights New York's PPM system (link below)
http://www.adweek.com/aw/content_display/news/e3i232ec0fada51eae75e443ee4b82bf96d

After hearing both NABOB's Jim Winston's statements, and further legal actions against Arbitron's New York PPM ratings system by Attorney General Andrew Cuomo, the FCC is seriously considering an investigation regarding the validity of the PPM ratings systems' methodology. Arbitron's PPM system has Mega-Radio Companies, like Clear Channel Communications and Cumulus Communications, concerned enough to switch their small and medium market radio stations from the Arbitron PPM ratings service over to Neilsen's PPM system mid-year.

Arbitron and Neilson partnered to set up the PPM system in Houston, which was accredited by the Media Rating Council ("MRC"). The two ratings companies though split company after Houston. Arbitron subsequently re-arranged the PPM ratings methodlogy in New York and Philadelphia. The newer Arbitron PPM ratings system (different from Houston's) in New York and Philadelphia was "NOT" accreditted by Media Rating Council. The "not" accredited Arbitron PPM service continues its' roll out in other major cities as we read, with Arbitron defying both the FCC and the Media Ratings Council saying that they do not have authority to stop their right to research.

Question: Why does a non-accredited ratings service (PPM) exist at all?

One of the differences in methodlogy that Neilsen promises to use in the future is utilizing a larger sample size. A primary complaint about Arbitrons' PPM system -- including from NABOB's Jim Winston -- is that the sample size is smaller than the previous diary ratings system. In Washington DC, Arbitron's PPM sample size is 1300 people as compared to the previous sample size of 4300 people in Arbitron's previous diary ratings research methodology, which is a whopping seventy percent drop in the sample size for a metro area with a population of over 4.5 million people.

Radio Industry leaders letters' conclusion to Arbitron:

Justification:

The industry is not asking for every market to gain accreditation prior to currency – only that the Radio First PPM system gains accreditation ONE TIME before currency implementation. Also, the diary and Houston PPM methodologies have accreditation; all radio markets should be using an accredited product. This is a reasonable expectation given the critical importance of the data to our underlying business and the substantial increases in rates that accompanied the rollout of PPM. Finally, the MRC code of conduct doesn’t require accreditation prior to currency, but does prefer it - "The MRC prefers that a Participating Measurement Service seeking to replace an accredited currency measurement product with a new currency measurement product (both products provided by the same Participating Measurement Service) uses best efforts to obtain accreditation of the new product prior to its commercialization."

February 28th, 2008
Media Rating Council denies PPM accreditation to Philadelphia and New York:
http://www.mediaratingcouncil.org/0208MRC%20PPM%20Statement.pdf

June 13th, 2008
Arbitron decides to resume its' PPM ratings service without MRC's accreditation:
http://harkerresearch.typepad.com/radioinsights/2008/06/arbitron-makes-it-official-ppm-roll-out-to-resume.html

June 20, 2008
Letter from Radio Companies to Arbitron Re: PPM's roll out without accreditation:
http://ftp.media.radcity.net/ZMST/industryletter.pdf

July 29th, 2008
Statement to FCC from MRC's Executive Director and CEO George Ivie:
http://www.fcc.gov/ownership/enbanc072908_docs/ivie.pdf

After the Radio Industry expressed concern about PPM, FCC's Jonathan Adelstein sends letter to FCC's chariman demanding that the FCC investigate Arbitron's PPM non-accreditted Ratings Research Methodology

(Associate Press article below)

FCC member seeks probe into radio ratings system
November 18, 2008 - 9:42pm
By JOELLE TESSLER AP Technology Writer

WASHINGTON (AP) - One of the two Democrats on the Federal Communications Commission is calling on the agency to investigate whether a new electronic measurement system used by Arbitron Inc. to track radio station listenership is unfairly harming minority broadcasters.

FCC Commissioner Jonathan Adelstein sent a letter Tuesday to FCC Chairman Kevin Martin urging the agency to open a formal investigation into Arbitron's "Portable People Meter" rating service. The new system relies on a pager-like device that automatically records what radio stations a person is listening to in order to measure radio station audiences.

Arbitron's station ratings play a crucial role in determining radio advertising rates.
The company argues that the Portable People Meter is more accurate and reliable than the paper diaries it has historically used to track radio listenership. Arbitron launched the system in Philadelphia in April 2007 and has since rolled it out in New York, Los Angeles, Chicago, Houston and San Francisco.

But so far, the service has been accredited by the Media Ratings Council, an industry group, for use only in Houston.

And it has set off alarm bells among minority-owned radio stations and their supporters, who approached the FCC in September about launching a formal investigation. They argue that system has resulted in far lower ratings for many minority broadcasters and pushed down the advertising rates they rely on to stay on the air.

James L. Winston, executive director and general counsel of the National Association of Black Owned Broadcasters, said the fundamental problem is that Arbitron has scaled back the number of listeners it tracks as it has begun using Portable People Meters _ resulting in unrepresentative samples that do not adequately reflect audience sizes for many minority-owned stations.

"It's very easy to get big distortions when you use such small samples," Winston explained.
And this, Adelstein said, poses a major threat to the tiny number of minority-owned stations operating in the United States and the diversity they bring to American airwaves.

According to Free Press, a public interest group, racial and ethnic minorities currently own only 7.7 percent of full-power radio stations nationwide.

The Portable People Meter, Adelstein said, "constitutes a clear and present danger to media diversity."

In a statement Tuesday, Arbitron said the FCC lacks authority to regulate audience ratings, adding that "the reliability and methodologies of audience ratings services are best left to private industry groups such as the Media Rating Council."

Arbitron is already locked in legal battles over the Portable People Meter ratings system with the states of New Jersey and New York, which are seeking court orders to stop the rollout of the service.

The company also faces other concerns among radio broadcasters about the quality of its data and methodology.

Separately Tuesday, radio station owner Cumulus Media Inc. said it will begin using audience measurement and radio ratings services provided by Nielsen Co. instead of Arbitron in 50 small to mid-sized markets beginning in the third quarter of 2009. Arbitron uses its diary system to track listenership in those markets, just as Nielsen is planning to do.

Among other things, the Nielsen service will rely on "large samples to reduce relative error and bounce," the companies said in a press release. Cumulus Chief Executive Lew Dickey added that the company is making the switch after completing a search for a new measurement service "to improve the quality and value of radio ratings."

Clear Channel Radio will also subscribe to the Nielsen service in 17 of those markets.

Both companies subscribe to Arbitron's Portable People Meter radio ratings service in larger markets. Clear Channel will have to negotiate for Arbitron's diary ratings in smaller markets not covered by the Nielsen service.

NOVEMBER 19, 2008
Wall Street Journal

FCC Member Adds Pressure On Arbitron

By AMY SCHATZ (Amy.Schatz@wsj.com)

A Democratic Federal Communications Commission member called Tuesday for the agency to launch a formal investigation of Arbitron Inc.'s new electronic radio-ratings system, raising the odds that the agency will look into the matter this year or early next year.

An FCC investigation would add significant pressure on Arbitron, which is already being investigated by the attorneys general in New York and New Jersey about the ratings system.
Minority broadcasters and interest groups say Arbitron's Portable People Meter system significantly undercounts minority listenership.

Jonathan Adelstein, a Democratic FCC commissioner, asked current FCC Chairman Kevin Martin to open a formal investigation into the Arbitron system. "We have heard from numerous broadcasters and advocates for diversity that the continued deployment of [Arbitron's new system] in new markets without accreditation from Media Ratings Council constitutes a clear and present danger to media diversity," Mr. Adelstein wrote in a letter released Tuesday afternoon.

A spokeswoman for Mr. Martin said he had no comment on the request.

"Arbitron does not believe that the FCC has jurisdiction over the company," a company spokesman said. The commission "lacks the authority to launch an investigation."

Arbitron says it developed the new system in consultation with the radio industry and the ratings-measurement company delayed rolling out the system in nine markets to address concerns.