Arbitron to ‘Protect’ Measurement Business

In a tense 25 minutes conference call, Arbitron executives told analysts Tuesday evening (Nov. 18) that the move by Cumulus and Clear Channel away from its long-established radio measuring company to the freshly launched Nielsen Radio Research would cost it nearly $10 million in revenue during the first year.

Sounding like leaders under siege Arbitron said it would dig in and protect the business in the 50 small and mid-size markets that they lost to Nielsen and continue to deliver audience ratings in those markets twice a year.

“Radio audio measurement is our core business, and we are aggressively going to protect it,” said Steve Morris, president, CEO and chairman of Arbitron. “We have no intention of exiting these markets.”

Losing clients Cumulus and Clear Channel will have an immediate financial impact on Arbitron’s business. “Clearly, this will have a negative impact on our revenue in those markets,” said Morris, who estimated that the immediate cost would be about $7 million in revenue and that the total impact over the next year would be $10 million and quite possibly more.

Morris also aimed strong criticism at Nielsen’s service, which only delivers ratings once a year, calling it a “step backward.” “Advertisers want to know more information about radio audiences. An eight-week, once-a-year survey is dangerously vulnerable to hyping,” Morris said.

The announcement by Cumulus and Clear Channel at 7 a.m. ET Tuesday was the radio-research equivalent of Japanese Zeros blackening the morning sky over Pearl Harbor. Nielsen and Arbitron have been friendly competitors for years and are joint venture partners in Scarborough Research, an in-depth, lifestyle research company that measures media consumption habits.

“We still need to evaluate what impact this will have on our relationship with Scarborough,” said Morris.

As part of its defense, Arbitron is about to launch new and improved data collection methods, including adding cell-phone numbers and larger market measurements, all part of its ongoing, overall improvement of its service.

Meanwhile, Eastlan Resources, the privately held Sammamish, Wash.-based operation that has been slowly building a radio research empire by snagging radio groups and operators disenfranchised by the cost of Arbitron’s service, also criticized Nielsen’s radio service.

“Today’s news is akin to GM announcing it has improved the Hummer. While we welcome any service that gives small- and medium-market broadcasters more choice, expensive, once-a-year sticker-book diaries are not the answer,” said Mike Gould, president of Eastlan.