N.Y. Attorney General Andrew Cuomo says Arbitron PPM case resolved

NEW YORK (Reuters) - Media ratings service Arbitron Inc will pay hundreds of thousands of dollars to resolve claims that it undercounted minority radio listeners, the New York Attorney General's office said on Wednesday.

Arbitron, whose shares rose more than 19 percent, will pay $260,000 to resolve claims of fraud and illegality. It also will pay $100,000 to the National Association of Black Owned Broadcasters and the Spanish Radio Association to support minority radio, state Attorney General Andrew Cuomo said in a statement.

The agreement resolves a lawsuit that the office filed in New York Supreme Court against Arbitron in October. The suit accused the company of failing to disclose flaws in its Portable People Meter system, used to compile radio station audience size estimates.

A federal judge in October dismissed a lawsuit by Arbitron against Cuomo over his attempt to stop the ratings system.

In the Supreme Court lawsuit, Cuomo said the PPM system could cut advertising revenue for black and Hispanic broadcasters.

As part of the settlement, Arbitron also will pay at least $25,000 to support an advertising campaign that will promote minority radio, Cuomo's statement said. The $100,000 for the associations will be split evenly between the two, a spokeswoman in the office said.

The settlement also requires Arbitron to improve the PPM's methodology, including increasing the recruitment of people who only use mobile phones, the attorney general's statement said, adding that a disproportionate percentage of those people are racial minorities.

The agreement also requires Arbitron to ensure that a higher proportion of panelists across racial demographics operate the ratings system, and to fund a study that would determine and cure measurable bias in the system, the statement said. The attorney general's office would oversee the study.

"These initiatives are sure to increase the accountability of radio to the benefit of all New York radio broadcasters and their advertisers," Arbitron Chief Executive Steve Morris said in a statement.

Broadcasters, agencies and advertisers in New York can continue using PPM to measure radio audiences, he added.

Arbitron shares rose $2.73, or 19.2 percent, to $16.97 on the New York Stock Exchange.
(Reporting by Robert MacMillan, editing by Maureen Bavdek and Lisa Von Ahn)