Updated: FCC Opens PPM Inquiry

The Federal Communications Commission Monday (May 18) launched a public inquiry into the potential ratings and financial impact of Arbitron’s portable people meter ratings service on stations that air programming targeting minority audiences.

For several months, minority groups including the National Association of Black Owned Broadcasters and the Spanish Radio Association, have argued to the Feds that the new meters were dramatically undercounting their targeted audiences.

“Because audience ratings affect advertising revenues, undercounting minority audiences could negatively affect the ability of these stations to compete for advertising revenues and to continue to offer local service to minority audiences,” said the FCC in a statement.

Commissioner Jonathan Adelstein called for the Commission to conduct an inquiry into
Arbitron’s PPM during the FCC’s monthly meeting on April 8. The public request came after the Commission’s decision-makers and staff had held numerous meetings with Arbitron executives over the past several months. Arbitron had just received the 21-page FCC document announcing the inquiry and spokesman Thom Mocarsky declined comment until the papers could be reviewed.

The initial complaints to the FCC were made by Jim Winston, a veteran Washington, D.C., communications lawyer and executive director of NABOB, and led to the FCC’s inquiry. Winston could not be reached immediately–the group is currently holding its 33rd annual Spring Broadcast Management Conference through Wednesday at the Sonesta Maho Beach Resort and Spa in St. Maarten.

Turn the page for a followup story by Jeffrey Yorke, which, in part, is Arbitron’s response to the inquiry

“Arbitron welcomes the opportunity to better educate all parties about our Portable People Meter service and its advantages over the diary-based system,” said company spokesman Thom Mocarsky. “The FCC Notice of Inquiry will allow us to further explain why a passive, electronic audience measurement service is a valuable tool that can help the radio broadcast industry compete with the emerging digital media in the 21st century.”

Arbitron had promised new measurement technology for nearly two decades, testing and retesting the metering system long before it was ever launched in the U.S. 18 months ago.
But PPM has seemingly been under siege since its introduction. Major radio group executives have fussed over the costs, sales department managers have wondered how they would sell the research and personalities have worried that, after decades of popularity, they would suddenly be blasted out of their jobs because of low ratings. And now, minority broadcasters have alleged that they aren’t getting a fair shake in the research data. So when the FCC’s Michael Copps had something nice to say about the company, it was welcomed.

“We appreciate that chairman Copps has commended Arbitron for trying to improve our ratings methodology and for committing significant resources to that effort,” Mocarsky said. “We also appreciate that commissioner McDowell has acknowledged that Arbitron and a number of broadcasters have said that our new automated approach to ratings measurement offers significant improvements over the older, manual diary-reporting system.”

And, despite what some trade publications have reported as an “investigation,” Mocarsky wants to set the story straight. “It is important to note that FCC’s Notice of Inquiry regarding PPM is not the same as the formal investigation demanded by the so-called PPM Coalition.”

“The Notice of Inquiry is an open proceeding in which any and all parties may express their views on a wide variety of issues. This is very different from a closed, adversarial proceeding before an administrative law judge,” said the spokesman.

Mocarsky noted that in the ex-parte notices that Arbitron has filed regarding our one-on-one meetings with the FCC, “We have consistently expressed our willingness to participate in a Notice of Inquiry.”

“We have said that an open proceeding can foster dialogue, education and an exchange of ideas among parties holding differing viewpoints, while a closed investigation would likely lead to “freezing” the parties into a litigation-like adversarial postures,” Mocarsky said. “We also said that a closed investigation would divert valuable Arbitron resources away from our continuous improvement initiatives that are enhancing the quality of our PPM services.”

Harry Cole wasn’t as optimistic about the inquiry. The veteran broadcast communications lawyer with Fletcher, Heald & Hildreth, PLC, in Arlington. Va., said the FCC has opened “a huge can of worms.” He acknowledged that the inquiry is a “pet project of Adelstein and Copps but with considerable downside for the FCC.”

Cole, who returned a phone call made to his colleague, attorney Francisco Montero, who represents the Spanish Radio Association, said, “I don’t have a horse in this race but there are a number of people who wanted to see this happen. Some minority groups are cheering for it. I am not sure that anyone will benefit from it.”

Cole, whose law practice focuses on broadcasting, including transactional, regulatory and appellate work, and who has represented clients before the Supreme Court and the FCC, said the inquiry was the only thing the FCC could do and that it is “at least a couple of years away from adopting any rules. The Notice of Inquiry is the first step. They are easily years away from rules if they are so inclined.”

But, he noted, the announcement of a public inquiry could have a psychological impact on Arbitron. “This ratchets up the pressure on Arbitron to make everyone happy.” But Cole admits he’s at a loss for what that could be since Arbitron has apparently gone to great lengths already to smooth out the bumps with minority objections by reaching settlements with the attorneys general in New York, New Jersey and Maryland in January over the PPM.

The FCC may have backed itself into a corner by questioning the quality of the PPM data, he said. “This raises the question of continued legitimacy of all future decisions made by FCC, not just worried about the PPM data but it now also raises questions about the old data,” he theorized. He said, as does the FCC, that the Commission uses Arbitron data to make many of its decisions. While the new PPM data does not recognize a radio stations’ brand loyalty like the old one did, “that effective emission in PPM,” he said sparks a new concern that PPM “could be more accurate and too accurate.” That, in turn, sparks an admission of inaccuracy in the diary process.”

“No one is surprised by this [inquiry], but I am little surprised by how they have approached it and, deep down inside me, I think the best thing that could happen is that it gets stuck deep down inside [the FCC] and nothing happens,” Cole said.

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