CL King analyst Jim Boyle says the dominoes appear to be falling faster than expected, since long-time holdout Cox Radio signed its deal for PPM (5/24/07 RBR #102). He's urging clients to buy the stock now and don't wait for PPM to become the ratings currency in a second market, Houston, next month.
"We believe there should be faster-than-expected Portable People Meter (PPM) signups, as well as higher pricing than we had previously assumed for group to a la carte deals (65%-85% for PPM rather than 50%-65% compared to the old paper diary). That should bode very well for ARB's stock price and estimate upside in the near term before the start of the Houston PPM on July 18," Boyle said in a research note. He cites anecdotal comments from industry sources that groups are not going to wait until the last minute to sign up as PPM becomes currency in their first market. "By October and November, ARB might have signed up nine of the top 10 groups, in our opinion. Presently, ARB has six of the top 10 groups," he noted. The analyst indicated that three or four more radio groups might sign PPM deals either group-wide, or at least for Houston, in the next couple of weeks.
The folks at The Media Audit/Ipsos would obviously disagree, but Boyle thinks the competition is all but over for passive electronic radio ratings. "Secretariat's 30 horse-length lead in the home-stretch of the Belmont comes to mind," the analyst said in describing the lead PPM has over its challenger, which is still in the testing phase.
