New York AG Sues Arbitron

NEW YORK New York attorney general Andrew Cuomo today announced that his office has filed a lawsuit in New York County Supreme Court against Arbitron.

The lawsuit accuses Arbitron of deceptively claiming that its portable people meter (PPM) system is valid, fair, and representative of diverse radio markets. It also charges Arbitron with failing to disclose important flaws in the PPM methodology to broadcasters, advertisers, shareholders and the public, including serious shortcomings in the accuracy of the new system and its inadequate representation of African Americans and Latinos.

“Arbitron’s rush to commercialize the PPM system without curing known flaws in the service distorts the marketplace and threatens to drive minority broadcasters out of business. Arbitron must refrain from using this flawed product in New York until it is truly a reliable and fair service,” Cuomo said in a statement.

According to papers the attorney general filed in court, Arbitron deceived broadcasters, advertisers, shareholders and the public by:

Misrepresenting that PPM is valid, fair and representative of the diversity of the New York radio market; failing to disclose in selling ratings based from PPM that the service has serious methodological flaws; creating the false impression that PPM is generally accredited by the Media Rating Council (MRC), when it was denied MRC accreditation in New York; misrepresenting that PPM methodology in New York meets the MRC’s “minimum standards” for commercial use, when it does not; and misrepresenting that it strictly adheres to the MRC’s voluntary code of conduct, while failing to adhere to important code preferences.

The lawsuit accuses Arbitron of failing to disclose or cure key flaws in its PPM methodology in New York. For example: Arbitron in New York uses as panelists an insufficient number of households that use cell phones instead of land lines and fails to recruit panelists in person, both of which disproportionately exclude African Americans and Latinos; fails to appropriately designate households as Spanish dominant; fails to recruit radio listeners who do not speak English or Spanish; and does not sufficiently inform and remind panelists how to use the PPM to ensure adequate compliance.

The lawsuit also alleges that Arbitron’s executives commercialized PPM before it was ready in order to reap financial benefits without regard for its impact on broadcasters or the public, or for the long-term interests of Arbitron. Although MRC and minority broadcasters repeatedly contacted Arbitron to advise it of the flaws in the PPM methodology and their likely effect on minority broadcasters, Arbitron did not suspend the commercialization schedule and failed to acknowledge the flaws, even after assuring the public that it would use best efforts to obtain MRC accreditation. As a result, minority broadcasters in New York are going to experience an unprecedented drop in advertising revenue, and will potentially go out of business.

In filing the lawsuit, Cuomo seeks to enjoin Arbitron from engaging in deceptive and illegal practices in utilizing and marketing the PPM in New York, to require Arbitron to pay restitution to minority broadcasters who have lost revenue because of PPM, and to adopt measures to cure the flaws in the PPM methodology in New York.

An Arbitron representative declined comment.