After months of tense negotiations, Arbitron Inc., the research company that provides the ratings on which most U.S. radio-advertising rates are based, said it will provide radio ratings through 2004 to Clear Channel Radio, the nation’s most powerful radio company and a unit of Clear Channel Communications Inc.
The companies didn’t disclose terms of the deal. As part of the agreement, Arbitron (ARB) said that beginning in 2002, the company will offer individual radio companies greater flexibility in how their own advertising markets are defined, a change that industry watchers said could significantly increase revenue potential for some station groups.
San Antonio-based Clear Channel (CCU) — by far the biggest radio company in the U.S., with about 1,200 stations — in April announced that it would not license Arbitron’s surveys in 130 markets. Clear Channel represents 22% of Arbitron’s total revenue.
Many believed, however, that both companies had too much at stake to let that happen. Arbitron is in the midst of developing expensive new technology to measure ratings, and needs its biggest customer. Clear Channel would have difficulty negotiating favorable rates with advertisers without Arbitron’s numbers. Since July, Clear Channel hasn’t received ratings for some markets that have come up for renewal.
The move to a more flexible measurement system will resolve a big issue for Clear Channel, analysts said. The radio company sought to broaden the way many of its largest markets were measured to include smaller stations in outlying areas. That should allow Clear Channel to better sell lucrative national and regional advertising packages that include more stations, analysts said.
Arbitron said it will continue to offer its ratings using existing definitions of each metropolitan market. But it hopes that the additional measurements will allow radio companies to further define their markets by, say, retailer, type of consumer, county or region. “We’ve always wanted to do something like this, and Clear Channel brought us a welcome impetus to allow us to pursue it,” said Thom Mocarsky, an Arbitron spokesman.
Although some media buyers said that radio companies potentially could increase revenue to smaller outlying stations, “whether that’s accepted by the ad community remains to be seen,” said Amy Nizich, executive vice president, director of local broadcast negotiations, at Initiative Media, the largest independent media-buying company in the world.
Richard Cotter, senior partner and regional broadcast manager for MindShare, the media-buying unit of WPP Group PLC, said the added flexibility could work to certain advertisers’ advantage.
But because radio consolidation has left much of the industry’s power in fewer hands, “it could lead to some very murky waters in terms of who is making the decisions about how a market is defined,” he said.
Copyright (c) 2001 Dow Jones & Company, Inc. All Rights Reserved.
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