December 2, 2009: Arbitron came in for some sharp criticism at today’s hearing by the House Committee on Oversight and Government Reform, and was defended by both its own president and CEO, Michael Skarzynski, and, later in the day, Radio One President/CEO Alfred Liggins.
Committee Chairman Edolphus Towns (D-NY) began by saying that the last 30 years have been “revolutionary” for minority radio, but that the “controversial use of the PPM is driving away advertisers.” Towns said he has “no quarrel with a ratings system that is accurate, but there is serious question as to whether the Arbitron PPM system produces accurate results.”
Towns also called Arbitron a “monopolistic company” that believes it can “ignore” the Media Rating Council. He said the government has taken a hands-off approach to radio ratings and added, “Can we afford to let radio ratings depend on good behavior by a monopolistic company?”
The first witness up was Arbitron President/CEO Michael Skarzynski, who said his company is “dedicated to advancing the interests of the radio industry.” He said about minority radio, “We share the concern regarding the health of this important voice of the broadcasting community. We are however, confident that PPM is not the cause of the challenges faced by minority broadcasters.” He also said Arbitron has “always been sensitive and responsive to customer concerns raised about PPM.”
After giving some background on the PPM development, Skarzynski pointed to the company’s ongoing improvement efforts, including increased cellphone-only sampling and more training and coaching for panelists. He also said Arbitron is working on developing an “engagement index” metric that “complements existing data and reflects an audiences’ involvement and loyalty to a particular station.”
‘The PPM Cannot Do Everything’
But, Skarzynski said, the PPM “cannot do everything.” He said, “it cannot solve the severe economic challenges radio has faced for the past two years,” or the debt faced by many broadcasters.
Media Rating Council CEO George Ivie began his testimony with some history of the organization, and said that there are “two distinct issues.” First, he said, is whether the PPM is more accurate than the diary. Ivie said that “there is little doubt” that the PPM can be an improvement “when implemented diligently.” But Ivie said Arbitron has failed to demonstrate that it can sustain adequate samples in some mostly younger demos and that the company and the MRC has “ongoing concerned and dialogue around several measurement issues.” He showed charts showing response rates that are “considered low by the committee” but acknowledged that Arbitron is working to stem the decline in in-tab rates.
Ivie said, “Arbitron has been participating in the accreditation process fully,” but said the company’s research and development process is continuing after commercialization.
‘Figuring Out What To Do’
Later, responding to questions from the committee, Ivie was surprisingly critical of Arbitron. About the Riverside market, where Arbitron’s phone-based “Radio Only” methodology has been accredited, he said that, in the beginning, the market showed responses that were “among the highest rates we have ever seen.” But since accreditation, he said, Arbitron’s performance has “fallen way down” in Riverside.
Though Ivie said some of the dropoff may be due to seasonal issues, he said the MRC is “trying to figure out what to do in Riverside.”
Univision EVP/Corporate Research Ceril Shagrin was sharply critical of Arbitron, saying it has “serious flaws.” She said, “I’m concerned that the radio ratings system is facing a crisis that threatens to undermine the goal of a diverse marketplace.”
Shagrin pointed repeatedly to what she sees as sample problems with the PPM, saying that is the only explanation for “erratic ratings swings” seen by minority broadcasters under the PPM. Shagrin said Arbitron “recruits from the wrong sample frame,” with cellphone-only households and those with no phones “excluded from the main sample frame.”
Shagrin contended that African Americans and Hispanics are underrepresented in the panels and that even when the sample is large enough, the panelists are “not representative” and inadequately trained. But, she said, “Every single one of these issues is entirely fixable.” Shagrin believes Arbitron should use address-based sampling as it does in the accredited Houston ratings, and run diary and PPM ratings side-by-side until the technology is accredited.
Honig Encourages Investigation
Minority Media and Telecommunications Council David Honig said in his opening testimony that the PPM undercounts minority listeners, and that “when minority audiences are undercounted, advertising revenues drop, or disappear altogether.” He said, “The obvious solution is for Arbitron to repair its broken methodology and deliver the accurate data radio and advertisers have a right to expect.”
Unsurprisingly, Honig said the committee should encourage the FCC to launch a full investigation of the PPM.
‘We’re Following The Rules’
Asked by Towns whether he believes MRC accreditation ensures fair and reliable ratings, Skarzynski agreed that it does. Towns said, “Then why continue to roll out, if you respect that process and fell that it’s important.”
Skarzynski said Arbitron “follows the rules of the MRC process,” which doesn’t require that a methodology be accredited before it rolls out commercially. He said, “We’re following the rules.”
Skarzynski continued, “The audit process is a very lengthy, thorough, and detailed process, and I can assure you, Mr. Chairman, if there was show-stopper that came up in the context of the [MRC] audit, that we could not commercialize a market.”
Ivie said that the MRC has no authority to stop a commercial enterprise from rolling at a product, but noted that the MRC’s voluntary code of conduct says the audit is a minimum, and that the group would prefer that a product not be implemented until it is accredited, and that an accredited service not be discontinued until its replacement has the MRC’s OK. But, he reiterated, the MRC can’t enforce that.
Asked by Rep. Gerry Connolly (D-VA) why the MRC denied accreditation to the PPM in New York and Philadelphia, Ivie cited low response rates in the initial sample; non-compliance and low in-tab rates among panelists, which he said are a “major concern”; and the fact that “people who don’t cooperate don’t cooperate differentially,” with as many as 40 percent of young African American adults not in-tab on an average day.
Ivie also disputed a point Skarzynski made more than once, when Skarzynski said he believes Arbitron has “earned” the right to accreditation in nine other PPM markets. Ivie said accreditation isn’t “earned” until the MRC grants it.
Honig said later that he is “disturbed and disappointed” that Arbitron didn’t consider significant ratings declines to be that “show-stopper,” calling that fact a “scandal.” About the planned “engagement index,” he said he appreciates Arbitron’s good intentions, but that the MMTC has been waiting for three years to see that implemented. “It’s not that difficult,” Honig said.
The focus of the first panel session was nearly all on Arbitron’s methodology, and not the meters themselves; when the panel was asked by ranking committee member Darrell Issa (R-CA) whether anyone had objection to the meter itself, nobody raised a hand — though Honig and Shagrin later qualified their lack of response.
It’s not in my nature to rejoice in the misfortune of others. The bankruptcy at Citadel Broadcasting is unfortunate for all the good people who’ve lost their investment and for all the good people who’ve lost their jobs over the past couple of years, and for those who perhaps still will. Sadly, the bankruptcy court may have been sold a bill of goods when the judge was told Citadel will be through its bankruptcy within 300 days. 
