Arbitron still fighting legal battles over PPM


It’s been nearly half a year since a lawsuit was filed against Arbitron over alleged flaws in its Portable People Meter (PPM) radio ratings system, but the cases filed by the Attorneys General of four states continue to hang over the company. Also costing Arbitron money is having to repeatedly defend PPM on Capitol Hill and at the FCC.

To date, Arbitron has agreed to settlements with the Attorneys General of New York, New Jersey and Maryland. The New York settlement included a deadline for PPM to win Media Rating Council accreditation by October 15, 2009. That deadline came and went without accreditation. To date, NY AG Andrew Cuomo has not exercised his legal option to void the settlement because of the lack of MRC accreditation and head back to court. His office has not commented on where the matter stands.

The New Jersey settlement has a similar deadline for MRC accreditation of both the New York and Philadelphia markets by the end of this month. Neither is yet accredited.

No firm deadline for accreditation is spelled out in the Maryland settlement, but rather Arbitron must “take all reasonable measures” to win MRC accreditation for the Washington, DC market, which has now had PPM as currency for about a year, and Baltimore, which has been a PPM market for two months. Neither is yet accredited.

Arbitron has not yet filed a response to the lawsuit filed in July by Florida Attorney General Bill McCollum. PPM has been ratings currency in the Miami market since July 14, the day the lawsuit was file.

According to the docket at the Miami-Dade County Courts, a “Request for Production” of materials in the case was filed by the AG’s office in late October. That’s the last activity, but the AG’s office in Tallahassee assured RBR-TVBR that the case is still active. Other than that, they’re not saying anything about where things stand.

Meanwhile, Arbitron is repeatedly having to defend PPM in Washington, where the House Committee on Oversight and Government Reform, chaired by Rep. Edolphus Towns (D-NY), recently held hearings that zeroed in on allegations that PPM undercounts minority audiences. The next step there is likely to be legislation by Towns to regulate the radio ratings business – unless Arbitron can manage to placate its critics.

While Arbitron is very closed mouthed about what it’s doing behind the scenes to head off further lawsuits and congressional action, the company had had to be public about the costs. In its latest quarterly report to the SEC it spelled out what it had spent to date on the PPM battles and a couple of purported shareholder lawsuits.

“During 2008 and the nine months ended September 30, 2009, we incurred approximately $8.6 million in legal costs and expenses in connection with two securities-law civil actions and a governmental interaction that commenced during 2008, relating primarily to the commercialization of our PPM radio ratings service. We believe approximately $6.8 million of the expenses incurred during the nine months ended September 30, 2009, are probable for recovery under our Directors and Officers insurance policy. As of September 30, 2009, $2.0 million in insurance reimbursements related to these legal actions were received. We are also involved in other legal matters for which we do not expect that the legal costs and expenses will be recoverable through insurance. We can provide no assurance that we will not incur significant net legal costs and expenses during the remainder of 2009,” the filing stated.

RBR-TVBR observation: We stand by our view that the lawsuits filed by the various state AGs are bunk and that they lack any jurisdiction under the Constitution of the United States, specifically the First Amendment. That said, fighting them is still costing Arbitron considerable cash. Likewise, the FCC has no jurisdiction and new Chairman Julius Genachowski has pretty much assumed a stance of trying to bring the parties to an agreement without any formal inquiry by the Commission. But the US Congress certainly does have jurisdiction, within the confines of the First Amendment, and Arbitron has thus far not been very successful in placating its critics on Capitol Hill. As we’ve noted before, the best way to do that would be winning MRC accreditation for more PPM markets.