Arbitron PPM Rollout Will Bankrupt Minority-Owned Stations, NABOB Panelists Say

Many stations have seen drops in ratings -- and therefore sales -- as PPM rolls out, said Frank Flores, vice president and New York market manager for Spanish Broadcasting Systems. Top stations in a market will be able to survive those drops, which have been has high as 82 percent in so-called pre-currency markets, he said. But for stations that already have low ratings, “most likely it will mean that some of these stations will be forced out of business,” Flores said.

“Radio stations that serve our communities will be bankrupt,” Flores said. “They will go away. We are not Chicken Littles up here, we are looking at the numbers,” he said. At one of Flores’ New York stations, implementing PPM will mean spots that sold for $1,500 under Arbitron’s diary system will sell for $500 with PPM ratings, he said. If that picture turns out to be accurate, it’s not an acceptable outcome, said FCC Commissioner Michael Copps after speaking to NABOB members. “Just because we don’t directly regulate Arbitron doesn’t mean we don’t have a serious interest in this issue,” Copps said. But the FCC can’t act before building a record, he said. “I understand the sense of urgency, but before the FCC can do something it first has to be able to justify it.”

Minority broadcasters could ask the FCC to ban stations from encoding their signals so they can be measured by Arbitron’s PPM devices until MRC accredits PPM ratings, some NABOB attendees proposed. That idea would get around issues of commission authority, which Arbitron raised in comments filed this week in response to a petition for an FCC investigation into PPM. The commission has used that type of obligation on licensees before, for instance in its requirement for stations to certify they don’t deal with advertisers who discriminate against minority programming, said MMTC Executive Director David Honig. “Using exactly that model, the commission could simply say a broadcaster may not enter into a ratings contract with an unaccredited organization,” he said.

Arbitron is meeting the minimum voluntary requirements laid out by MRC, Morris said. “We believe we are in compliance with the standards,” he said. “We're doing what we're required to do.” MRC’s minimum requirements do not include accreditation, but call for the company to submit to an audit by an independent party, he said. Moreover, Arbitron is under pressure from marketers to speed PPM rollout, Morris said. They're demanding more accountable ratings than the paper diaries and waiting will mean more marketing money will leave radio for media such as the Internet that advertisers deem more accountable, he said. “As we speak money is flowing from radio to the Internet.”

PPM fatigue seems to be setting in on both sides of the issue. Arbitron has dealt with many of the concerns raised by NABOB and others as they have come up, said John Snyder, Arbitron vice president of sales. “To me it appears every time we answer a question, another question comes up and the target moves,” he said. For Deon Livingston, vice president of Inner City Broadcast the issue has been all-consuming, he said. “My job is to run radio stations and I spend so much with PPM, I'm just PPM tired.” -- Josh Wein

NABOB Notebook…

The FCC and broadcasters could find middle ground on some FCC localism proposals, Commissioner Michael Copps told NABOB. Minority broadcasters and general market station owners have complained that mandates about their main studio locations and overnight staffing could cause some to fold. During emergencies, no matter the hour, stations need to be able to get information out quickly, and that was the aim of the around-the-clock staffing plan, Copps said. Instead, stations might be able to coordinate with local public safety so they won’t miss out on emergencies, Copps said. “Broadcasters could then certify with the FCC that this kind of coordination has been done,” he said.

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Proponents of restoring a tax credit for minority broadcast ownership hope the next Congress will act on their proposal. “We're looking for the next Congress to have some sort of action,” said an aide to Sen. Robert Menendez, D-N.J. “We feel as though we have a broad base of critical support to start from,” he said.

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Don’t expect congressional action on minority broadcasters’ PPM concerns, even if the legislature reconvenes in a lame-duck session, attorney Antoinette Bush said. “Given the current financial crisis, it’s going to be hard to get Congress to focus on these issues,” she said. Even though Congress will technically remain in session to avoid recess appointments, “I would not hold out a lot of hope for activity until the next Congress,” she said.