UNITED STATES OF AMERICA

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FEDERAL COMMUNICATIONS COMMISSION

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ADVISORY COMMITTEE ON

DIVERSITY FOR COMMUNICATIONS

IN A DIGITAL AGE

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The above entitled meeting was held pursuant to Notice at The James
Room, 4th Floor, Barnard Hall, Barnard College, 3009 Broadway, New York,
New York 10027, on Monday, July 28th at 4:00 p.m.

PRESENT:

HENRY RIVERA,

Chairman, Diversity Advisory Committee

BARBARA KREISMAN,

FCC Designated Federal Official

RODNEY HOOD, Chair, Access to Capital

RUSSELL FRISBY, Chair, New Technologies

DAVID HONIG, Chair,

Task Force on Eligible Entities

JAMES WINSTON

ANNE LUCEY

BOB MENDES

DIANE SUTTER

MARGARET LANCASTER

[P]{.underline} [R]{.underline} [O]{.underline} [C]{.underline}
[E]{.underline} [E]{.underline} [D]{.underline} [I]{.underline}
[N]{.underline} [G]{.underline} [S]{.underline}

(4:00 p.m.)

MS. KREISMAN: This is the base meeting of the Diversity Staffing
Committee. Thank you all for coming. We have a full agenda and, with
that, I\'ll turn it over to Henry.

CHAIRMAN RIVERA: Welcome all. We\'re very glad that you\'re all here.
And before we get into our agenda, I\'d like to recognize the fact that
Commissioner Copps has joined us.

And, Commissioner, would you be so kind as to address the group,
perhaps, and say a few words of welcome?

COMMISSIONER COPPS: All right. Can you all hear me?

I don\'t have any remarks, but I wanted to come by and say thank you all
for coming here. You all know I\'m a big believer in Advisory
Committees, especially this one which has various venues for so long,
sometimes far from the \-- far from recognition as they should be.

So I wanted to thank you for your efforts. I wanted to congratulate you
for pushing the issues along the way you have pushed them along. And I
really think the fact that the Commissioners are all going to be here
tomorrow really gives you a little force and a little momentum that\'s
been lacking for a while, not because of any lack of efforts on your
part, but lack of recognition maybe on our part and at the Commission.

So I\'m delighted we\'re here. I think this conference that\'s going to
take place tomorrow has some promise. It can be, if we go through the
question, it can be \-- and everything remains the same, but I think if
we really grab hold of the blueprint plan that FCC put out, a
wonderfully comprehensive document that\'s getting into all facets of
this, it\'s a real strategy. So now we need to make sure that we can get
a commitment from the Commission that will allow us to implement the
strategies that you folks are talking about.

To my mind, you know, that\'s what kind of perks that commitment. And
then I think the strategy has to address the problems that have got us
into the woeful state of minority ownership that we have in this country
right now and those are two-fold in my mind.

Number one is media consolidation, which I\'m not a fan of. We can have
media consolidation rules in order to enhance diversity, and I think
that\'s the way to go. I think we have to revisit the whole area of
media consolidation going forward, recognizing that it is part and
parcel of the problem that accounts for the fact that here we are in a
country that\'s one-third minority people \--

The second thing we really \--

MS. KREISMAN: Commissioner, could you grab the mike? The Reporter can\'t
hear you.

COMMISSIONER COPPS: I\'m almost finished.

MS. KREISMAN: Okay.

COMMISSIONER COPPS: The second thing we really have to push that thing
is the development of a grace time amenity to get at the stuff. I think
the Commission took some initiatives in December. Some of them were
pretty good. Some of mutual follow up \-- (Inaudible - speaking from
unmiced location) \-- businesses taking advantage of whatever incentive
programs we\'ve got and that\'s not satisfactory.

So we\'ve got to get this Commission facing up to the fact that if
we\'re really going to do something, it\'s not through the councils and
talking. Let\'s just build the record, let\'s get the facts, let\'s get
\-- I think we can do some stuff this year. I hope so. If nothing more,
we can at least lay the basis for what I think will be a better
opportunity in the not too distant future to finally do something about
minority ownership.

So for your role in getting us this far, I applaud you and I beg all of
you to stay engaged to increase the level of commitment. I know it\'s
expensive. I know it\'s inconvenient to come to meetings like this and I
think we\'re at a really critical crossroads right now. So I\'m looking
forward to working with you all to make some good things happen.

CHAIRMAN RIVERA: Thank you. Thank you, Commissioner.

(Applause.)

CHAIRMAN RIVERA: Thank you for those words of encouragement,
Commissioner. We appreciate your being here very, very much.

I\'d also like to introduce, from the Commissioner\'s staff, Rick
Chessen. Would you stand up and say hello to everybody?

(Applause.)

CHAIRMAN RIVERA: From Commissioner Alenstein\'s staff, we have Ria Shay.
Ria, welcome.

(Applause.)

CHAIRMAN RIVERA: Oh, Elizabeth, so sorry. Nice to see you.

(Applause.)

CHAIRMAN RIVERA: Okay. We\'ve got, as Barbara mentioned, quite a full
agenda, but we\'re going to go through the report of all the
subcommittee work and then we\'re going to deal with the Arbitron people
meter resolution, which we did wrong at our last meeting, so we\'re
going to try to rectify that at this meeting.

And we have some folks from Arbitron who want to address the Committee.
Welcome. We\'re glad you\'re here. Thanks for coming. And we\'ve got
some people who want to speak in favor of the resolution, so they\'re
going to divide the time up 20 minutes apiece collectively and they\'ll
use that as they want to use that.

And then the Committee will have deliberations for about 20 minutes, and
then we\'ll vote on that subject. So that\'s the agenda for today.

Is there anyone else on the phone besides Susan and Andy?

MS. LONG: Marie Long.

CHAIRMAN RIVERA: Hi, Marie.

MS. LONG: Hi. Sorry I couldn\'t make it up.

CHAIRMAN RIVERA: Yeah, we are too. We miss you.

MS. McCANN: Esther McCann.

CHAIRMAN RIVERA: Oh, Esther, welcome.

MS. McCANN: Thank you.

CHAIRMAN RIVERA: Anybody else?

(No response.)

CHAIRMAN RIVERA: Okay. With that, I\'m going to ask our stalwart
Chairman of our Access to Capital Committee, Rodney Hood, to give us a
brief report.

MR. HOOD: All right. Well, good afternoon and thank you, Mr. Chairman.

First and foremost, I just would like to thank everyone for coming this
afternoon. So much of the Capital Access Committee\'s intention lately
has been to bringing today\'s event to fruition, so we were delighted to
have such a wonderful turnout and I\'d like to remind everyone that they
all are cordially invited to a reception that will be taking place
downstairs here on the third floor beginning at 6:00 p.m.

It will be a wonderful networking opportunity for you to talk to the
Commission Staff, members of the Diversity Committee, and we look
forward to hearing from you. And I\'d also like to thank the Private
Equity Council for their wonderful support of tonight\'s reception.

In addition to working behind the scenes with our Committee to help
today become possible, it\'s our hope that we can work with you all
after the En Bank. We think that there will be some great ideas
generated tomorrow and we think that upon listening to those ideas, and
reflecting on them, we\'d like to come back to the Committee to see
which of those ideas we can bring forth for discussion and then for
implementation at some point in the future.

So again, we are delighted to be here, but again looking for tomorrow to
come up with ideas we can later generate. So that\'s my activity, Mr.
Chairman.

Thank you.

CHAIRMAN RIVERA: And I think that I agree with you. Tomorrow we should
hopefully get some terrific ideas, if we can bring together as
recommendations and then bring those back to the full Committee. And
then also to the Commission with some solid recommendations.

And on a personal note, thank you very, very much for all the hard work
you put into the reception and this meeting and the En Bank. We\'re all
very, very grateful.

MR. HOOD: You\'re very welcome.

CHAIRMAN RIVERA: And now, I\'ll turn it over to Russ Frisby, who\'s
going to talk about the New Technologies Committee.

Russ.

MR. FRISBY: Yes, thank you, Mr. Chairman.

This is a follow up to our previous report to the full Committee. The
Subcommittee on Emerging Technologies met to consider whether Class A
full powered TV stations should be accorded must carry status.

After considering the issue, we determined that we did not have
sufficient information to make a recommendation. Therefore, we asked the
various subject matter experts and interested parties to respond to a
series of questions, including, for example, under the FCC\'s current
statutory authority could a Class A station receive must carry status
without new legislation?

We sought further information with regard to the number, ownership,
diversity, and language diversity of Class A stations. We\'re also
seeking further information with regard to the extent, origin,
diversity, and diversity of locally originated programming provided by
Class A stations.

We asked the subject matter experts to comment on how the Commission
establishes an LP TV station, as an eligible, as well as what are the
consequences to Class A stations of non-carrier cable.

We asked the extent to which the market has failed and in its failure
prevented meritorious Class A stations, prevented them from having
access to the expanded basic tour \-- tier \-- sorry. We also inquired
as to whether industry practices such as tying arrangements could
inhibit channel availability.

We asked whether FCC intervention was necessary, or were State and local
franchise authorities able to cure the problem. We asked whether public
disclosure of carriage arrangements would be desirable, or would
disclosure have unintended market consequences.

We asked if a subset of Class A stations were chosen for must carry, how
should that subset be defined. We finally asked whether the impact of
the DTV transition would have an impact on the potential implementation
of a Class A must carry.

Responses are due from the commenting experts on August 29th. We delayed
the comments until August 29th in light of the fact that comments on the
diversity third MPRM are due on July 30th. And we, after reviewing the
comments, we plan to get back to the full Committee with
recommendations.

Mr. Chairman, that concludes our report.

CHAIRMAN RIVERA: Terrific. Any questions for Russ? Anyone?

(No response.)

CHAIRMAN RIVERA: Thank you very much.

MR. FRISBY: Sure.

CHAIRMAN RIVERA: We look forward to the recommendations.

MR. FRISBY: Thank you.

CHAIRMAN RIVERA: All right. Moving on to the Task Force on Eligible
Entities, just to remind everybody, in December the Commission voted on
an eligible \-- well, to refer to the Diversity Committee for some
guidance the definition of eligible entity because a lot of the
initiatives that the Commission adopted in the diversity order are based
on a definition of eligible entity.

And the Commission asked, as I said earlier, the Diversity Committee to
look into that and give it some guidance. And so we commissioned a Task
Force. David Honig chairs that Task Force. They\'ve been working quite
hard at trying to come up with some recommendations and David is going
to give us a summary of the interim report.

So, David, you have the floor.

MR. HONIG: Thank you very much.

We actually have a written interim report and there are extra copies, if
someone would like to pass them around. And if everyone here has them
\-- oh, thank you.

The Eligible Entities Subcommittee \-- first I\'d like to acknowledge
and recognize and thank the members who worked very hard on this.

Maria Brennan; Sylvia Strobel, who represented her; Margaret Lancaster;
Ann Lucey, who also hosted our meetings and provided us with nourishment
to get the job done; Ambassador McCann; Robert Mendez; Andy Schwartzman;
Diane Sutter; Tara Sweeney; and Jim Winston.

Our rapporteur was Jocelyn James of MMTC, without whose very copious
notes we couldn\'t have presented this report.

The Subcommittee was charged with the task of developing a
Constitutionally defensible definition of an eligible entity, which
would also have the advantage, unlike the small business definition in
at least some context, of being able to be applied to new rules and
policies in a manner which would likely have a substantial positive
impact on minority, women, and new entrepreneurship.

The trigger for the group was defining in diversity order of this past,
or when it was released this past December, that for commercial
full-power radio, 7.78 percent according to Free Press statistics whose
admission statistics weren\'t useful, 7.78 percent of all of those
stations were minority owned.

However, only 8.5 percent of the subset of those, which are small
business owned were minority owned.

What this means literally is that in the very improbable event that
every single station owned by a large business was somehow, overnight,
sold to a small business, minority ownership would go up all of
seven-tenths of one percent. The definition is almost meaningless.

It is a place holder, at least hopefully it\'s just a place holder,
because we can and have to do better. But the question of crafting the
right definition is not a simple task. There have been a number of
efforts to do this.

After the [Adarand]{.underline} decision in 1995, Chairman Kennard
authorized the undertaking of five studies colloquially called the
[Adarand]{.underline} Studies, or the Section 257 Studies. Those were
released in December 2000. And there on the shelf they have sat. Those
studies were necessary in order to show disparity and to show the impact
of the Commission\'s policies on minority ownership and female ownership
specifically. They probably, had the Commission tried to follow up, that
would have been about 80 percent of the task done right there.

Since the data was 1996 or 1997 date, much of it is now stale. The
Commission refreshed the record with a Notice of Inquiry on 257, the
Market Entry Barriers proceeding in 2004. That data has sat there.

So now, really, it\'s going to be necessary to almost start over if
there was to be a raised conscious definition, which I think some of us
who work with these issues really feel is probably, ultimately going to
have to be at least considered if we\'re to make a serious effort to do
as Commission Copps said in opening us today, to do something
substantial about this scandalous level of under-representation in
industries that are affected with the public interest.

So what we started to do was to interview subject matter experts who
have used these definitions in other context, or who certainly know
about the impediments to getting them validated Constitutionally.

We had four meetings and interviewed seven witnesses. They\'re
identified in the report. We interviewed two Constitutional scholars,
one being Matthew Berry, who as we know, is the FCC\'s General Counsel.
The other was Tom Henderson, who is the former Director of Litigation
for the Lawyers Committee for Civil Rights.

We also interviewed Kent Lollis, of the law school Admissions Council;
and Camille de Jorna of the ABA. They helped us work through how law
schools and Universities have addressed this question, particularly in
circumstances where resolutions and initiatives at various States have
banned what\'s called affirmative action in some of the States, and the
Universities didn\'t want to cause \-- have this result in the
re-segregation of their student bodies and were interested in promoting
diversity of backgrounds at close correlative course to diversity of
viewpoints in the mass media context.

Then we focused on what would happen if we came up with a definition and
then it becomes the Commission\'s job to implement it, and we want to be
sure that the Commission does it in a manner which is efficient,
inexpensive, doesn\'t put too much of a drag on the Commissioner\'s
time, is comprehensible to the users, user friendly, and above all,
fair.

And so we interviewed three long-time FCC veterans who know how the
industry interacts with the agency and how the agency works, Henry
Geller, a former General Counsel; Ken Robinson, a former Senior Policy
Advisor to Chairman Sykes; and Jane Mago, a former General Counsel, who
also was the DFO for three years of this Committee.

So we concluded all the interviews. We\'ve collected a great amount of
data, and we\'re now drafting a final report. We are at the stage where
we felt we should provide you with this interim report, setting out in
some detail what we preliminarily think can be said.

There are some holes in it, of course, and in the hope that the members,
as well as those in attendance, and those in the line, would, in the
next few weeks, provide us with feedback and input as we move toward
developing a final report, which would ultimately be filed with the
Commission in the Docket and presented to the Chair as our Charter
requires.

To just take you through it briefly, the eligible energy definition is
really applicable to two situations. One of those is where someone is
applying for a benefit and they\'re the only applicant. They\'re trying
to get a waiver of a rule; there is no one else that wants to get that
waiver. It\'s not what we call an Ashbacker situation.

The other one is where there are a number of competing applicants
playing, in effect, musical chairs for scarce resources, and the
question becomes which one is going to be preferred comparatively.

And among the 25 proposals that were considered and either adopted or
put out for comment in the Diversity Notice of Proposed Rulemaking that
came out in December, six of them are expressly premised on the
development of an eligible entity definition, and presently the default
is small business. So that in some of the very large ones, the incubator
proposal, especially, is dependent upon having an effective and
non-dilute definition. Otherwise, you get in exactly the situation that
Commissioner Copps spoke to, which is that it could be \-- an incubator
program could be used in a way that doesn\'t do much for diversity of
viewpoints, but does do some harm to diversity of ownership and
consolidation, and no one wants that.

The interest that we mostly focused on is diversity of viewpoints. The
Commission, of course, doesn\'t get involved directly in diversity of
content. This means that mostly we\'ll be, at this stage, really focused
on the mass media industry since telecomm, of course, common carriers
diversity is not at interest.

There are other interests we\'re going to be addressing, not in this
report, but we\'ll be talking about in the final one that are potential
compelling Government interests within the meaning of
[Adaran]{.underline}, that could apply to telecomm. One of those is
preventing discrimination which, of course, across the board the
Commission has found with respect to EEO is a compelling Government
interest and the Courts agree.

The second is remedying the present effects of past discrimination. To
the extent the Government was a passive participant, that\'s the issue
that came up, of course, in the [Adarand]{.underline} case itself, and
promoting competition, which in the fascinating that Chairman Martin
made when he was a Commissioner voting in the EEO rules, he thought that
was the best justification for having rules to promote equal opportunity
was that labor is an input to production for most competition.

There are a number of ways to go about this. One of them is the use of
the small business definition. We looked, of course, at whether you
could have an express minority set aside. It\'s difficult because
there\'s only one Supreme Court case affirming one in the last
generation, and that was the [Alambama State Police
Department]{.underline}, where the only way you could ever desegregate
it was to impose a quota. That\'s hard to do.

A paradigm that has often been used since, in the cases following
[Adaran]{.underline} the Courts have approved this in some context, is
the so-called SDB, or socially and economically disadvantaged business
paradigm, under which race is one factor of social disadvantage if it\'s
been proven up on a record, on a research record, which we don\'t yet
have from the Commission, but we think we could get if the Commission
puts some resources into updating the research.

Another approach we used is what is sometimes called direct measures and
is commonly called full file review. This is what\'s used by
Universities when they are subject to affirmative action prevention
initiatives, as a means of making sure that the University isn\'t
re-segregated.

And these measures basically take into account not just the question of
what was your test score, what were your grades, did your parents go
here, how well can you play sports, but they also take into account the
personal attributes of the individual that may add diversity of
viewpoints, recognizing fully that viewpoints are not assumed to be
equal and this could be the same throughout one group.

Rather, it\'s a determination going to that individual. What efforts
have they made to overcome disadvantages that they have? How have they
succeeded in the face of disadvantages which they have?

One of those disadvantages, among many, many others that can be
considered is disadvantages that are the consequence of racial
discrimination.

And these rules are designed by Universities to be very sure that they
don\'t inadvertently misapply this, so that really it becomes a proxy
just for face which, of course, you can\'t do, but rather is surgically
focused as a couple of, as Justice Stephens said, and we cite him here,
on a way to really look at the attributes of the individual that are
affected by discrimination, rather than just a blanket assuming that
everyone that applies of one race has encountered it and will have the
viewpoints that one often derives by being affected by it.

There are other types of full file review factors that the FCC can take
note of, one of them being the applicant\'s intention to meet unmet
needs to provide service to communities however defined, for instance,
by language, by geographic area, by social characteristics, that are
under-served.

And we\'re looking at all of those factors to kind of see what\'s the
right mix and what would be most effective. A very important point made
to us by Mr. Berry was that the Commission shouldn\'t assume that one\'s
tenacity and one\'s overcoming a disadvantage automatically translates
to racial diversity, and that\'s something that needs to be researched
and nailed down so that we don\'t think intuitively that we\'re
developing a good definition, turns out we\'re not.

Finally, just to conclude, attached to the report are a number of \--
are all of the questions that we\'re looking at in granular detail. We
suggested some ways in which the Commission could implement this,
including interviews.

We certainly don\'t want any program that has \-- that benefit some more
than others for any reason to be accused of being implemented in a way
that can be gained or exploited. This has sometimes happened. It\'s
horrible. We certainly don\'t want it to happen here.

And there are ways to do that. Basically, the primary one among several,
but I\'ll just mention one, is by having Commission Staff, basically
application examiners, interview applicants in person to have them
substantiate and validate their claims, observe their demeanor, and make
sure that they really are who they say they are, and they\'re going to
perform as they really say they\'re going to perform.

And then follow that up with audits and the constant review to be sure
that the program continues to be necessary and serves its objectives.

So thanks for giving me all that time, and thanks for hearing this out.
It\'s the product of a great deal of work by our members, which we
appreciate, and we look forward to your input.

CHAIRMAN RIVERA: Anyone? Yes.

MR. FRISBY: David, first of all, let me say job well done. This is a
very comprehensive analysis and I understand the whole problem with
regard to telecomm and the FPC case.

But I would suggest that you may want to reach out to NOROC, as well as
the California Commission and the Maryland Commission, because they have
a very \-- both of those Commissions have very active reporting
programs.

And I think some of the telecomm companies actually report I know with
regard to minority contracting, and perhaps on some other things to
those Commissions. So the States have figured out a way to at least get
into the date, so you might want to find out exactly how they\'re doing
it.

CHAIRMAN RIVERA: That\'s very useful. Thanks. Anybody else have
anything?

Yes, Commissioner.

COMMISSIONER COPPS: I\'ll just ask David a question.

When you talk about full file \--

MR. HONIG: That\'s absolutely right. And just by way of illustration, in
California, for example, at some of the State law schools, when race was
considered as a factor, representation and then it was taken out as a
factor, minority inclusion in entering classes dropped virtually to
almost zero.

After full file review was put in place, it recovered to about
two-thirds of its previous level. So we do view this as a place holder
while the Commission undertakes the task, which could take a few years
of coming up with a better definition, if one can be conceived. If it
can\'t, then at least we have this.

CHAIRMAN RIVERA: Thank you. This is a terribly important initiative by
the Committee and if any of you have any input on this interim report,
please give it to David. Ultimately, what we will do is submit comments
or report. I\'m not quite sure how that\'s going to play out into the
record.

I think that\'s what the Commission wanted us to do. So please, if you
haven\'t had a chance to look at this, do look at it and give David some
help on this. And I want to add my thanks to the Task Force. You guys
have done a great job. Thanks so much.

Okay. We\'re going to make up some time here because Vicki Klein is
unable to join us, so we\'re going to skip her report. And I wanted to
mention, call everybody\'s attention to the fact that the Commission is
having an En Bank on access to capital tomorrow. It will be held where?

MS. KREISMAN: At 1:00 o\'clock at the Chambourg Center at the Langston
Mews Auditorium. It\'s at 135th/Malcolm X Avenue. It\'s 515 Malcolm X
Boulevard at 135th Street, New York. It\'s called the \-- the formal
title is the Chambourg Center for Research and Black Culture. It\'s the
Langston Mews Auditorium. You\'ll see some signs.

It starts at 1:00 o\'clock and should go to about 5:00 with panels, but
thereafter, and I don\'t know if anyone in the room is affected, we\'re
going to have a networking session for potential entrepreneurs to
actually talk and meet and get some advice and maybe make additional
contacts with some of the money providers.

CHAIRMAN RIVERA: The Commission again, in its Diversity Order,
formulated plans for this, or made a recommendation that it have this
conference and asked the Diversity Committee for help organizing that.
So we\'ve been working very hard doing that.

But nobody\'s been working harder than Barbara Kreisman and she has done
a magnificent job of pulling it together and we\'re all very pleased
with that because it\'s a very important conference for the Commission.
So join me in thanking her.

(Applause.)

MS. KREISMAN: And I can tell you, Henry has been fantastic, Diane
Sutter, David Honig, among others, have really, really plunged in there,
Rodney Hood, have tried to make this event tomorrow a success.

The input of this Committee has been invaluable identifying important
money players and important people in the minority community who have
been successful and who \-- and some of them are in this room now. And
we thank you for taking your time to share your experiences and advice
with others tomorrow, and also to be here today.

Thank you.

CHAIRMAN RIVERA: All right. We\'re going to move into consideration of
the people meter resolution. And so I would ask Grif if you want to have
your first speaker up. We\'re going to ask them to sit in this chair
because the Court Reporter can then get their remarks.

MS. KREISMAN: What\'s important, anyone from the audience, you have to
grab a mike because the Reporter just can\'t get it and we\'re missing
some really, really good comments here.

CHAIRMAN RIVERA: So how much time do you want to reserve, Grif?

MR. GRIF: Mr. Chairman, we will have four speakers. Mr. Steve Morris,
our Chairman and CEO and President will speak first. He\'ll be followed
by Owen Charlebois, who\'s our President for Technology, Research and
Development. After Owen, we will have John Snyder, who is Vice President
for PPM Implementation, and then we\'ll finish with Clara Carnera, who
is Vice President for Minority, for the Office of Minority.

CHAIRMAN RIVERA: And of your 20 minutes, how much do you want to
reserve?

MR. GRIF: We think 17 would be our opening and we\'d like to reserve
three for our closing.

CHAIRMAN RIVERA: All right. Mr. Morris, welcome, sir. You have the
floor.

MR. MORRIS: Good afternoon. I am Steve Morris, the Chairman, President,
CEO of Arbitron. Thank you, Chairman Rivera, for inviting us to this
meeting at the FCC\'s Federal Advisory Committee on Diversity,
Communications, and the Digital Age.

I think I\'m also very pleased that Commissioner Copps is with us, along
with the other representatives of the FCC, and he will be present at the
affair tomorrow afternoon as well.

I am pleased to appear before you today along with several of our senior
executives to present Arbitron\'s views on why the success of the
portable people meter is critical to the future of all radio
broadcasters, advertisers who use radio, and listeners. We\'ll also
respond to the concerns that our critics have expressed regarding the
impact of adoption of the PPM and the minority broadcasting community,
and minority audience.

The PPM is a passive, completely objective technology for audience
surveys that replaces the subjective, recollection dependent diary
method that\'s been used for decades. Arbitron\'s mission is to provide
broadcasters and advertisers with the most reliable data that the
science in this field can produce.

The PPM \-- we are answering the call from more granular, more timely,
and more accountable measurement. We spent enormous human and tactical
resources over a 16-year period to develop, test, and refine PPM. We\'re
pleased that the PPM has been accredited in Houston, and we are
committed to earning accreditation in all of our markets.

We\'re commercializing PPM in careful compliance with the Media Rating
Council\'s minimum standards as laid out in their voluntary code of
conduct following an accreditation path blazed by other ratings
companies in the history over the last 40 years.

Arbitron recognizes that the PPM, like any new technology, is
disruptive. We believe that it\'s our responsibility to enable a
community that uses and is affected by this new and vastly superior
technology to make the transition with as little disruption as
practicable, yet without sacrificing the progress that PPM represents.

As we\'re an independent research company that strives to serve the
needs of all stakeholders, including among others, the advertising
community and the radio broadcast industry, we must be careful to
maintain our objectivity and our strict adherance to the principles to
neutral scientific measurement of radio consumer behavior.

We\'ve heard the concerns raised by minority broadcasters regarding PPM
and we are sensitive to these issues, and we wish to continue to work
collaboratively with those broadcasters to address those concerns.

After years of testing and third party verification, we are confident
that PPM is designed to and does record exposure on the part of PPM
participants to radio signals in a manner that is completely objective
and non-discriminatory. And that is what the industry has asked us to
do.

In just a few minutes, Own Charlebois, President for Technology,
Research and Development will touch on some of the salient aspects of
the science of PPM. John Snyder will follow Owen and describe how
minority formatted stations have successfully used PPM date to succeed
in the marketplace. And finally, Clara Carnera will describe initiates
Arbitron has undertaken to assist in minority and ethnic broadcasters
with the transition to PPM.

We\'ve been engaged in a dialogue with minority broadcasters regarding
their concerns over various aspects surrounding the introduction and
operation of PPM. With good will, continuing dialogue, and a commitment
to work together, we have successfully addressed these concerns in the
past.

For example, concerns were raised recently regarding PPM sample size and
last week we announced our intention to increase sample size at no cost
to the industry. The path to real progress lies through cooperation, not
confrontation and through hard collaborative work, not Governmental
investigations.

This Committee is going to be asked to vote on a resolution recommending
that the FCC launch an investigation into PPM. We respectfully submit
that that would be a mistake. In the first instance, the FCC does not
have jurisdiction over our service.

Our voluntary cooperation and forums, such as this one, to explain how
PPM works and to offer to work with our critics to find solutions,
should not be misinterpreted as our submitting to the FCC\'s authority.
In addition, the FCC has no specific expertise in the science of
measuring consumer behavior.

Diverting the time and attention of the interested parties to an
investigatory proceeding on the part of a Federal agency that lacks both
jurisdiction and specialized knowledge, is not the best use of our
resources, which we believe should be directed toward working
constructively with our clients in the radio industry to address
specific diary to PPM transition issues.

Thank you for your time and attention. I\'m going to pass the baton to
Owen.

CHAIRMAN RIVERA: Thank you, Mr. Morris.

Mr. Charlebois, welcome.

MR. CHARLEBOIS: Good afternoon, Mr. Chairman. Thank you.

My name is Owen Charlebois. I\'m President of Technology, Research and
Development at Arbitron. And thank you for the opportunity to explain
the PPM methodology and to talk to you about how PPM is advancing the
science of radio audience measurement.

My first point is that minorities are well represented in PPM samples.
And some have argued that PPM samples under-count minorities, that the
samples are not representative of the community. The facts simply don\'t
bear that out. In our most recent PPM survey of June 2008 across ten
markets, PPM panels are example Black sample targets by 10 percent,
Hispanic sample targets by 17 percent, and dominant Hispanic targets by
30 percent.

In terms of sample proportionality, equality matrix that indexes the
percentage of sample against the percent of the population, PPM panels
are actually delivering higher levels of representation of minority
audiences than the diary service to these same markets.

Across ten PPM markets, Hispanic proportionality in PPM averages 105
percent versus 91 percent in the diary. Spanish dominant proportionality
in PPM, 119 percent versus 100 percent in the dairy. In Black
proportionality is 97 percent versus 91 percent in the diary.

PPM is a superior measurement instrument. Like the diary, PPM is
designed to collect fact-based information about a person\'s actual
exposure to radio, not simply their opinions, preferences, and favorite
stations. But because PPM is electronic, it does a much better job of
objectively measuring the radio stations that people are actually
exposed to.

The meter is passive. All panels have to do is remember to wear or carry
the meter. The meter does the rest. PPM is the most accountable radio
measurement system in the world. PPM employs motion detection
technology. It\'s built into the meter to unambiguously determine
whether a panelist is carrying the meter the required number of hours
per day.

Our motion detection technology is backed by a sophisticated panel
management software system that monitors the compliance of every
panelist in every market on every day in order to determine whether they
should be included in tabulations. No other media system in the world
today provides such a complete view of the daily compliance of its
respondents as PPM.

PPM sample sizes deliver reliable data. The reliability of radio ratings
is primarily driven by two things, by the number of different persons
measured, and by the number of days of data collected from each person.
While the diary samples include more persons measures, PPM panels
provide far more days of measurement from each person. The net of those
two, PPM delivers equal or better statistical reliability relative to
the diary. Incidental exposures in PPM do not explain the drop in
minority station shares. We\'ve heard the theory that incidental
exposures, exposures to stations that PPM respondents do not choose,
lead to a bias against minority radio. If this theory is true, it
suggests that minority stations out of home ratings will be more
effective in PPM than in home ratings where panelists have more control
over the stations they hear.

In fact, the actual data based on listening locations does not support
this theory. Among African American and Hispanic panelists, the decline
in ratings from diary to PPM is not occurring in out of home situations.

In fact, the dairy and PPM out of home exposures are quite similar
during the day and on weekends. The most significant decline in
exposures, PPM versus the diary, occurs at home where African American
and Hispanic panelists have the most control over the radio station
choices.

Finally, the Philadelphia methodology produces high quality data at a
cost affordable to radio. Some of the radio industry have expressed
concern about the PPM commercialization methodology deployed in
Philadelphia, New York, and other markets.

The reality is that the methodologies in Houston and Philadelphia are
actually much more similar than they are different. And in terms of
research quality, the Houston and Philadelphia methodologies produce
near identical levels of quality. In fact, in some dimensions, the
Philadelphia matrices are better.

Introducing in person recruitment into Philadelphia in the other radio
commercialization markets would come at great added expense to the radio
industry with little, if any, added research quality. On balance, it
just doesn\'t make any sense.

Thank you.

CHAIRMAN RIVERA: Thank you. John.

MR. SNYDER: Good afternoon. My name is John Snyder. I\'ve been asked to
speak on the data being produced by PPM. Let me give you some facts
regarding the PPM estimates.

In four major markets that we currently measure with a sizeable Hispanic
population, Los Angeles, Houston, New York, and Chicago, Spanish
speaking Hispanics have the highest listening level in three of those
four markets. In New York and Philadelphia, African American
participants have the highest listening levels.

In the smaller markets we measured, Nassau, Suffolk, Riverside,
Middlesex, PPM shows that either African Americans or Hispanic
respondents have the highest listening levels. In summary, in every
market we currently measure with PPM, the highest listening levels were
for African Americans or Hispanics.

A measuring system that is consistently producing the highest listening
estimates in top ranked positions among Hispanics and African American
respondents is not inherently biased. The only way the data produced by
PPM could be considered biased against minorities is to compare it to
the paper and pencil diary method that we currently employ.

For example, Mr. Frank Flores, GM at WSKQ in New York, asked Arbitron at
the FCC Offices last week, how can two different methodologies produce
such different results? I believe I have the answer right here.

These are the actual diaries filled out by WSKQ\'s heaviest listeners in
the latest Spring survey. They represent only 68 diaries of the 700 that
were filled out for WSKQ, but they represent over 40 percent of the
total listening. For all intents and purposes, this is the difference
between the diary and the PPM estimate.

I invite the Committee to review these diaries and ascertain for
themselves the limitations of recall and the potential for overstating
listening that is associated with any self-reporting study.

So why is the difference between diary and PPM the greatest for minority
stations? In an analysis that Nielson Media Research did, comparing
their local people meter to diaries in New York, they concluded that the
high element of affinity for programming that features minority talent
was one of the differences between the results of the meter and their
paper diary.

It would make sense at urban and Spanish language radio stations that
spend the majority of their time serving their local community would
develop a special bond and affinity with their listeners. And it\'s not
just urban and Spanish language stations that are impacted by this
affinity for a station or personality.

KLFX, a top station in Los Angeles, which features such talent as Adam
Corolla and Tom Leykis, has an audience which is 76 percent others,
meaning they\'re not Black or Hispanic. The ratings of the station
decreased by 50 percent and now ranks 30th in the PPM system.

Why? Because the station or personalities that create a special bond
with their listeners are subject to a greater degree of over-reporting
in the diary system. And declining ratings going from diary to PPM is
not about race or ethnicity, it\'s about a connection between the
stations and its listeners.

Arbitron respects and supports the role that urban and Spanish language
stations serve in the communities. We stand ready to continue to work
with minority broadcasters to tell the story to advertisers. It\'s an
important story and one that needs to be told.

However, as an independent research company, Arbitron\'s role is to
provide stations and advertisers with data that measures actual exposure
to radio. This is what PPM accomplishes.

Thank you.

CHAIRMAN RIVERA: Thank you, John.

Welcome.

MS. CARNERA: Thank you. Good afternoon. My name is Clara Carnera. I\'m
Vice President of the Office of Multi Cultural Business Affairs at
Arbitron. And today what I would like to do is run quickly through the
programs that we have put in place to help Hispanic and African American
stations with the transition to PPM.

Working to address client needs is at the heart of Arbitron\'s goals.
Often, this is represented action on the part of \-- on our side from
the product\'s perspective, when we have modified deliverables. For
instance, currently we have a product underway for the identification of
country of origin and Hispanic samples.

At the suggestion of a client, for instance, we also engaged in outside
communications firm, Equal Communications, which is a minority owned
business specializing in multi cultural messaging and strategic
targeting of younger populations.

And they\'re completing a review \-- they have completed a review of all
the materials that are aimed at African American and Hispanic
households. They\'re sent through our survey process. We expect and
incorporate many of their suggestions as part of our ongoing process of
the PPM improvement and enhancement plan.

We have a dedicated team of training resources that are tasked with
developing programs and materials that help in the transition for it to
be efficient and as smooth as possible. The programs are varied in form
and in scope to accommodate the unique needs of urban and Hispanic
customers and to highlight the vast accountability that PPM offers over
the diary service.

We commissioned a third party study, The Power of Urban Radio in the PPM
World, which has been widely quoted in the trade press and has been used
extensively by our customers. We also commissioned studies by Arizona
State University and Howard University, addressing how to adapt PPM into
the Hispanic and African American communities.

We\'ve also made specialized seminars available, which offer a forum for
discussion and an exchange of ideas. Facilitated by our Director of
Urban Business Affairs, the PPM Urban Programming Seminar was
successfully sponsored in our Columbia facilities in Maryland this past
Spring.

In addition, a PPM Urban Sales Clinic is schedule for October, and
parallel Hispanic programs are in development at our client\'s request,
and with their input. There are many items of feedback from our clients
on how the use of our training programs and their deep dive into PPM
data has produced positive results for them.

Finally, for our communication initiatives, we have interwoven the
message that the power of urban and Hispanic radio represents in our
communication programs. Whether it\'s through the market launch press
releases, or on our monthly client briefing calls, or at the pre-launch
PPM breakfast we conduct, PPM confirms the strength and the unique value
of Hispanic and urban radio in serving the communities that they are
targeting, and we are committed to telling that story.

We welcome continued dialogue and ideas from our customers to continue
to serve them better in this transition process.

Thank you very much.

CHAIRMAN RIVERA: Thank you.

MS. CARNERA: We\'ll answer any questions and answers, I think.

CHAIRMAN RIVERA: Yes, after we complete all the remarks on the rebuttal.

Grif, I\'m giving you back two minutes, so you\'ll have five for
rebuttal. All right?

MR. GRIF: Thank you.

CHAIRMAN RIVERA: Thank you for sticking to the time, gentlemen and
Clara.

Okay. Now we\'ll hear from Mr. Charles Warfield is here and Mr. Frank
Flores is here and Ceril Shagrin. Ceril is here? Okay, good. Thanks.

And how do you want to divide your time?

MR. WARFIELD: I will probably not use more than the five to seven
minutes. CHAIRMAN RIVERA: Are you going to save any time for rebuttal?

MR. WARFIELD: Yes, we will.

CHAIRMAN RIVERA: All right.

MR. WARFIELD: Mr. Chairman, I appreciate the invitation here today. My
name is Charles Warfield and I\'m the President and Chief Operating
Office for ICBC Broadcast Holdings, Inc. We own 17 radio stations in
four markets, primarily serving the African American communities in New
York City, San Francisco, Jackson, Mississippi, and Columbia, South
Carolina.

I\'ve been involved in discussions with Arbitron of concerns of minority
broadcasters with PPM methodology approximately four years now. And I
will acknowledge, as I indicated, Arbitron, they certainly have been
willing to dialogue with us.

We\'ve had regular meetings with them and yet I sit here today
representing those concerns for minority \-- Black broadcasters,
primarily, because we are still very much concerned. I\'ve indicated to
Arbitron in the past many times that for our company, for many of these
broadcasters that we represent, this is really \-- it is really a civil
rights issue for us because this is about survival.

It is about the ability of our owners to service our debt, to repay our
debt, to employ our staffs, and the ability to represent the audiences
who we\'re licensed to represent. It is very simply about survival.

We\'ve had many conversations with Arbitron and I want to use this term
as they use it, the preferred provider of this research for our
industry, it\'s a monopoly. It is the only provider of this information
for our community, so either you utilize them, or you do not have a
report card about the performance of your radio station in a market, be
it good or bad.

So we have been in communication and dialogue with them, many of these
individuals in this room on a regular ongoing basis. Some of our
concerns, no MRC accreditation. We have asked for this from day one.
They are accredited in Houston. We simply want nothing less than that
accreditation in New York City, Philadelphia, and any subsequent market
that they intend to commercialize PPM data.

We asked them repeatedly, over the last two years, to delay the roll-out
of PPM methodology in any subsequent market outside of Houston, where
they do not have accreditation and where the issues that have been
raised, not only by minority broadcasters, but by general market
broadcasters, have been resolved.

We talk about and make the comment about survival for our industry and I
just want to talk about a couple of markets very quickly, Philadelphia
and New York, in particular the reality between diary data in these
markets, the last diary book, and PPM data, the immediately following
period for the survey.

And I\'m going to talk about what has happened to some of the urban
stations in these markets. WDAS-FM, the number one radio station in that
market, had a 12 plus decline of 44 percent in its PPM average quarter
hour ratings versus the same rating in the diary.

In a money demo, which we call a 25 to 54 with an urban adult
contemporary radio station, their audience decline was 57 percent
between the Spring \-- excuse me \-- the Fall Arbitron diary period and
the release of PPM data in March, a 57 percent decline in audience.

Some of the other urban stations in that market, PPZ, which is a gospel
station, had a decline of 50 percent. RNB, another urban station, a
decline of 50 percent. When we talk about some of the general market
radio stations, one, the market leader, had a decline of 17 percent. So
this does effect all radio stations in the market.

But there was one particular radio station, WMMR, which went up 22
percent at a time that a competitor, WDAS, went down 57 percent.

Here in New York City, where obviously we are most concerned as ICBC
Broadcast Holdings, WBLS, between \-- had PPM been commercialized in
this market last October, the radio station would have suffered a
decline of 62.5 percent in its audience, its average quarter hour rating
in that rating period.

Arbitron made a decision to delay the roll-out of PPM in this market.
When that happened, the rating were released based on the diary. WBLS
was the number one radio station in this market 25 to 54. So we would
have gone from number one in the diary methodology to number 17 or worse
in PPM.

And yet, as we\'ve just heard, and as we go through with Arbitron every
month with a PPM report to the industry, if you read this you would
think that everything is fine between minority broadcasters and what is
being reflected in PPM.

The reality of the \-- the economic reality of our industry is this is
what matters. This is the report card. These are the ratings that we get
to sell in this multi billion dollar industry. A 62 and a half percent
decline, you can quantify that and say that our revenues would have
declined to that degree.

And I would sit here today and say to you, as a minority broadcaster for
31 years, had PPM been allowed to be commercialized in New York City a
year ago, I would be sitting here, represent a totally different
company. And that\'s why I sit here today before this group to support
the resolution because this is about survival for many Black
broadcasters.

And as I get up, the last \-- when last week one radio station owned by
Stevie Wonder in Los Angeles suffered an 84 percent decline in its
audience in the first release of PPM data. If you don\'t get it right
out of the box, we\'re in the hole trying to climb out from that point
forward.

Because an industry looking towards diversity as an issue that\'s been
stated here today, where we own three percent, that number will decline
precipitously if PPM is allowed to just roll out in these individual
markets.

And I thank you for your time.

CHAIRMAN RIVERA: Thank you.

Mr. Flores.

MR. FLORES: Thank you for having me here. My name is Frank Flores. I\'m
VP SBS, New York market manager.

I\'m going to echo a lot of the things that Charles said with regard to
what I believe the ramifications that PPM shouldn\'t roll out in the
months ahead.

Average quarter hour rating is something that generally Arbitron will
not talk about, it certainly has not talked about in the meetings that
we have had with them. That is a function of a couple of different
things. And one of those things is a thing called time spent listening.

When you look at time spent listening, when you look at the diary versus
the PPM, time spent listening for the urban and Hispanic stations are
down anywhere from 70 to 80 to 90 percent, which basically says that the
time reported in the diary that was listened to are Spanish language
radio stations have declined by that much, according to the PPM.

PPM, again, measures exposure to a radio station, not listening to a
radio station. We have the unusual peculiarity of being one of the first
broadcast station, or companies should I say, to sign up for PPM. And
when I started going over the immediate results of the pre-currency
period in October with my CEO, he looked at me and he said, we made a
mistake.

We\'re not talking about getting better ratings. What we\'re talking
about is having a ratings company that is sensitive to the broadcast
community that we serve. We don\'t believe that we\'re getting a fair
share.

We believe that at the end of the day, when you look at some of these
numbers there will be not five radio stations in the New York
marketplace that support the Hispanic community, but you\'ll be looking
at two. It\'s a dollars and sense issue. It is a matter of survival for
us.

We had an agency that asked us, and I\'ll tell you who the client is.
The client was New York State Broadcasting, New York State Lottery. They
asked us to look at PPM in the fourth quarter, which they believe will
become a reality and measure it to the ratings result that we had in the
Spring block.

The cost per point, which is our report card, it\'s the way people buy
the radio station, increased from about \$680, which is very much within
the market norms, to about 13 or \$1,400. Two things would happen.
Either that agency would ask us to reduce our rates accordingly, by
about 40 or 60 percent, or we wouldn\'t get the business. And that\'s
going to happen across the board.

And all we\'re asking for is for Arbitron to give us the means, the
wherefore for us to fight that, and we\'re not getting it. We\'ve had a
number of different conversations with the people from Arbitron. We have
formed a Spanish radio association, which is the people from Univision,
Spanish Broadcasting, Pantravision, and Border Media.

In these meetings, up until the last couple of weeks, all of a sudden
we\'re starting to hear they\'re looking at country of origin, they\'re
looking at increasing sample size, they\'re looking at the problems that
they might have with language waiting.

But every time, it\'s in 2009 we\'ll do this. And I think we\'ll be able
to get this done because it takes so long to do these things in 2010.
And I \-- we don\'t have that time. And it\'s as simple as that. This
comes out in October 2008. The two radio stations that I represent will
probably lose four or \$5 million in revenue and that is real.

And I think what will happen is that a few radio stations will just go
dark. And what you\'re going to end up happening is that you\'re going
to have a landscape of a lot of radio stations that appeal to 18 to 54
year old white males, which goes against everything that we\'re trying
to do in terms of minority broadcasting and in terms of minority
representation.

That\'s why I believe that you should go forward with the resolution.
Thank you.

CHAIRMAN RIVERA: Ceril. Your colleagues have left you about four
minutes.

MS. SHAGRIN: Okay. Then I\'ll have to talk really fast.

CHAIRMAN RIVERA: Yes, ma\'am.

MS. SHAGRIN: I\'m Ceril Shagrin and I\'m with Univision Communications,
but I\'m really representing the Spanish Radio Association. And I want
to start out by saying that Spanish radio is incredibly important to
Hispanics.

It\'s not only entertainment, it\'s information. And if this new
measurement puts us off the air, there are a whole lot of Hispanics that
will be disserviced, and we don\'t want to see that happen. We also
don\'t have a problem with the measurement tool. I think electronic
measurement is great.

We have a significant problem with the sample, with the methodology,
with the maintenance of that sample. I\'m a researcher. I don\'t look at
numbers, I look at sample. When I see numbers change, I look at the
sample to see what\'s wrong. Cell phone homes very much under
represented in these markets.

Cell phone homes were the most homes that are cell phone only. Young
households. What is the Hispanic universe and the Black universe? More
young households. They\'re not being representative. They have unique
listening preferences.

You know, format\'s so important. Country of origin is important because
of the format. I believe Arbitron set their goals and their targets way
too low. When Arbitron says that for the first two years, 18 to 34, if
we get 60 percent of those in the sample to provide us with usable data
then we\'re meeting our target.

That\'s not our target in terms of meeting our needs of Hispanics who
are watching \-- who are listening to radio and deserve better. As was
previously said, there are a lot of initiatives underway, but we can\'t
wait two years for them. And if it\'s going to take two years, then
don\'t change the currency until they\'re fixed.

If we don\'t get reliable data, we will make decisions on programming
based on the numbers instead of what our audience deserves to get and
deserves to hear. So what \-- I applaud your efforts and I think that
whatever it takes to make sure that we continue to provide what
Hispanics and African Americans need to get in terms of entertainment
and information, is made available to them.

CHAIRMAN RIVERA: Thank you very much.

Tony, I\'m giving the group a minute back, so you\'ll have six for
rebuttal. Grif, how do you want to handle the rebuttal? You have five
minutes?

MR. GRIF: Mr. Morris will speak to that.

CHAIRMAN RIVERA: All right.

MR. MORRIS: There are a lot of points that are up in the air and all of
which need to be discussed in a lot of depth and I\'m not going to try
to do that in three minutes. I just want to make a couple of kind of
overall comments.

I understand the intensity of this issue and Arbitron is a company that
very much recognizes and respects the importance of Black radio and
Spanish language radio in the industry and in the country, and we\'ve
had these conversations with many of the people n this room.

We really would see our mission as helping those stations not just
survive, but triumph. Our role in life is to be an enabler in the
industry. We\'re not in the business of trying to discriminate, or to
hurt, or in any way disadvantage anybody.

We\'re trying to do what it is that we are charged by all of these
constituents that we have around us to do, which is to be objective, and
even handed, and neutral, and science based. And, you know, you get the
kinds of comparisons between the diary numbers and the PPM numbers, you
have to say, as a research person looking at that, is it the PPM that\'s
the issue, or is it the diary that\'s the issue.

And I think, as we were trying to point out before, it looks very much
as though it\'s the diary that\'s the issue. And for a great many years,
we have operated with this fundamental over-statement in the diary that
has caused the kinds of disruption now as we change methodologies.

There are issues that are all around this and many of them need to be
explored thoroughly. Some of them are science related and some of them
are social related, but our job is to serve all of our stakeholders with
reliable, usable data.

We are tremendously charged with providing the industry with the
accountability that it has lacked. The radio industry now I\'m talking
about in total. Money is flowing away from radio to more accountable
media.

One of the major things that advertisers talk to us about is that the
diary is not an accountable device and they need to move on to something
that they believe in, and they believe in the objectivity of electronic
measurement.

And so there\'s a tremendous amount of urging us forward coming from the
industry, which sees this loss of revenue due to accountability, and
very much from the buyers who are making this same kind of statement.

But we are as a company and individually, I think, very much committed
to the success of minority radio. We believe in its importance in the
industry. We would love to be helpful in that, but our first
responsibility as a company is to be that impartial, neutral, evenhanded
provider of data.

Thank you.

CHAIRMAN RIVERA: Thank you.

Tony, how do you want to handle rebuttal? You have six minutes.

MR. WARFIELD: It\'s never been said by our group, and I\'ve worked as
part of Inner City Broadcasting Corporation and also as part of the
Naybob Group, and at no point did we indicate that the intent of
Arbitron is to discriminate.

However, as I shared with you, the reality of the Arbitron change in
methodology would be the elimination of many minority stations as we
know it today. One week after the introduction of PPM in Philadelphia,
WDAS AM, which had served the African American community in that market,
a radio station that I managed for five years when I moved to
Philadelphia, switched formats, is no longer serving the African
American community. One week after the introduction of PPM data.

We are very smart broadcasters, and not all broadcasters are going to
stand here with us today and fight this issue. A year ago though, when
Arbitron decided and stated that they were going to delay the roll-out
because of concerns of the competence level of our industry was down.

General Market Broadcasters, in looking at PPM, realized that their
audiences went down 30 percent on average, 30 percent. And Arbitron came
up with a nice catch phrase to sell to the buying community, that under
PPM 70 equals 100. Where we had \-- 100 was what we had, the new
methodology, 70 is now equal to 100, and we can go on and we can sell
that to the buying community.

Well, as Frank indicated, there\'s a cost per point requirement here
that will require us, in most cases, to reduce the value of our
inventory in a radio station. Except General Market was down 30. We, as
a group, were down 50 percent or more.

As I indicated, a radio station in LA went from a rating to no rating
when this data was released. GCI FM in Chicago went from the number one
radio station, or number two radio station in Chicago, with the first
release of PPM a week ago, to Number 11 in the market.

This is about economics. This is not about what the intent may have been
in a room devising this methodology. And we\'re not opposed to
electronic measurement. We\'re not trying to hold back progress here. We
also, though, would like to be around to be the beneficiaries of it when
they get it right.

And if this is allowed to roll out the way that it is right now,
unfortunately, that will not be the reality. The reality here is that
this certainly will benefit the stock price of Arbitron, as evidenced by
how it was impacted when the delay was announced a year ago. Our
industry can\'t afford that though.

Our industry has nowhere \-- not much further to go down in this tough
economic times. And that is the reality that we\'re here supporting this
resolution as we are in other debates with other groups about what is
going on here with our industry. Sample size is a concern.

What Arbitron has established as their benchmarks, as their targets,
it\'s not the industry targets, that\'s theirs. There\'s an economic
factor there. We understand that, but that\'s theirs. We didn\'t debate
with them when they came to us and said it\'s going to cost you 65
percent more for this methodology.

Cost of doing business? We get that. But a 65 percent additional cost
for this service, when I\'m going to lose 50, 65 percent of my audience,
how do we overcome that? You don\'t have to be an economics major to
understand this is about economics survival for our industry, Black and
Hispanic in particular.

And I just sit here seeking your support in this critical time for our
format and for the audiences that we represent.

Thank you.

CHAIRMAN RIVERA: Thank you.

I want to thank both sides for discussing this as dispationately and
calmly as you could. I think this is, obviously, a very emotional issue
for both sides and I think you added to the discourse today, and think
the Committee appreciates that very much.

So I now want to open it up to the Committee to ask questions. And if
those responding could come again here so that the Court Reporter can
pick up your responses, that would be very good.

MR. FRISBY: I\'ll kick it off, Mr. Chairman. I was intrigued by, I
think, one of the comments you made and I\'d like to get a further
response.

If you look at the recent financial reports of both AT&T and Verizon,
there\'s been a dramatic decrease in wire line subscribership, and a
dramatic increase in wireless subscribership. And if you talk to \-- in
fact, I know very few young people who are not living at home, who
actually have wire line phones.

And if you talk to polling experts, there\'s some concerns now about
polling generally because of under-representation of cell phones. So I
would like to get a response to \-- I think you made the point that one
of the fundamental problems, as you saw it, was that the sample
under-represented cell phones, so I\'d like to hear more about that from
both sides.

MS. SHAGRIN: The Arbitron sample in Houston is an addressed-based sample
and would include all types of homes, whether or not they would have a
land line or a cell phone. All of the other markets are the radio only
markets, and they are based on a telephone sample.

And Arbitron\'s sample includes \-- they arbitrarily said we\'re going
to add 7.6 percent, or seven percent cell phone only homes in these
markets.

Well, first of all, we know that the penetration of cell phone only is
significantly higher than seven percent. We also know, and the data\'s
there, the Center for Disease Control does the best job in terms of
providing us with cell phone only home estimates.

We also know that the penetration of cell phone only homes varies
considerably by age and by ethnic background, somewhat by sex as well.
So if you have seven percent, right away it\'s understating. And then,
on top of that, it is grossly understating the young Hispanics, the
young African Americans, most of whom are small household sizes, and
they have different needs in terms of radio entertainment. They\'re
absolutely not being represented.

CHAIRMAN RIVERA: Thank you.

Arbitron, do you want to respond?

UNIDENTIFIED VOICE: Yes, Mr. Chairman. We will respond through our
Senior Vice President and Chief Research Officer, Mr. Bob Thatcher.

MR. THATCHER: Thank you, Mr. Chairman.

The issue of cell phone only is a very important issue. The reality is
the diary service today does not include cell phone only at all. PPM, as
Ceril noted, does include cell phone only households.

Therefore, if we\'re comparing diary estimates of audience to PPM
estimates of audience, the cell phone only factor is not an explanation
for those differences. It doesn\'t exist today in the diary service.
Having said that, we agree that representation of cell phone only sample
in all surveys is critical. Arbitron has been a leader in this area.

We\'ve done much more than most other survey companies have done in this
area, and the introduction of cell phone only samples into the PPM
samples has definitely improved the representation of the groups that
we\'re discussing here, particularly younger ethnic households as
compared to what we\'re able to provide in the diary service today.

So on a net/net basis, PPM has a net improvement in the representation
of people who live in cell phone only households.

CHAIRMAN RIVERA: Oh, yes.

MS. SUTTER: i\'d like to, if I could, just understand why it is given
that accreditation is such an important piece of this puzzle, that
Arbitron would want to move ahead without accreditation, given the need
for accuracy, the clear importance to the industry as well as to
Arbitron, and what they\'re doing to get that accreditation without
asking for proprietary details?

What is it that\'s preventing that accreditation and what is Arbitron
doing?

MR. THATCHER: The main point about accreditation is in two parts. The
first is Arbitron did decide to not begin commercialization until one
market had been accredited. That market was Houston. It took over two
years for Houston to be accredited.

And in that accreditation process, everything about the system was
scrutinized, the hardware, the software, the meter itself, the encoders,
the edit walls, in addition to the sample and the recruitment
procedures, and so forth. Everything about the system was covered in
that accreditation process.

Most of the methodology from Houston is the same in Philadelphia and the
other markets. The only difference is that in Houston, we used in person
recruitment as a final step for some households that we were unable to
reach by phone.

In Philadelphia \-- in Houston, we made three attempts to reach a
household going door-to-door. In Philadelphia, we made 25 attempts per
household by telephone. We believe that differential has more than
offset any of the change in the methodology.

Now, in terms of the MRC accreditation process, it is a process. It\'s
something in which questions are raised, questions are addressed. Those
answers are considered. There\'s another round of questions and
typically, another round of questions. That\'s how the process works.
That\'s how it\'s always worked.

The reason we decided to go forward with commercialization of the
remaining markets is that we follow the rules that are set forth by the
MRC itself, which say that it\'s important to audit a new market and
have that audit submitted to the scrutiny of the MRC prior to
commercialization. It is not necessary, under the MRC guidelines, to
wait for accreditation in order to commercialize.

And we believe the rational for that is innovation needs to go forward.
Waiting for accreditation, if we\'re not careful, could slow down that
process. So the audit sheds light on the markets that are being
commercialized.

Then the accreditation process goes forward from there, but it\'s not
necessary to wait for accreditation before commercializing.

MS. KREISMAN: I certainly appreciate that, but I guess my question would
be isn\'t the fact that you have such disparity between what the
broadcasters are seeing and the advertisers, and the importance of that
data if accreditation isn\'t going to be something you\'re waiting for
and if the disparity exists, then how do we use those numbers and know
which is right and which isn\'t?

Given that if the numbers were right before and they are so dramatically
different now, it begs the question of how can one be right and not the
other. I mean they can\'t both be right.

So if they\'re not getting accreditation, and the Commission uses, FCC
uses numbers that are on radio and sample sizes for different stations
when they\'re deciding about approving licenses, when we\'re talking
about clusters, and who can own what, this is important data for the
broadcasters, as well as the Commission, as well as the community we all
serve.

And I guess I\'m unsure why accreditation wouldn\'t be a critical
factor, given that we have such disparity in these numbers. It has to
raise questions for all of us about the accuracy of them.

MS. SCHWARTZMAN: This is Andy Schwartzman. Can I make a comment?

CHAIRMAN RIVERA: Just a minute, Andy. I want to let Arbitron respond to
that and then I\'ll come back to you. Okay?

UNIDENTIFIED SPEAKER: I think your question had a couple of different
parts to it, but let me try to answer it as succinctly as I can.

If you look at the difference between PPM and diary ratings in Houston
and Philadelphia and New York, what you\'ll see is a very consistent
pattern. I\'m not suggesting that the differences are exactly the same
in every market, but the direction and the order of magnitude of those
differences are very consistent. Houston is accredited. Philadelphia
isn\'t, but we\'re in the process of seeking accreditation.

The other thing I would point you to is that if you look at the research
quality matrices, as a research organization we try not to look at the
ratings that come out of the system. We are focused on the integrity and
the science of the measurement process.

And so our evaluation, going forward with Philadelphia, is based on a
belief, strong belief in the quality of the sample. And if you look at
the sample matrices that I talked about in my remarks, and you go down
the list, you will see that we are delivering a lot of research quality
in Philadelphia that is consistent with Houston.

Thank you.

CHAIRMAN RIVERA: Andy.

MS. SCHWARTZMAN: Yeah, thank you, Henry.

I would make the observation that the question before the Advisory
Committee is whether the FCC \-- whether to recommend that the FCC
conduct an investigation. First point.

I believe the matrix discussion today has created enough doubt and
uncertainty to justify saying this bears looking into. We don\'t need to
answer these questions and decide today who\'s right and who\'s wrong,
but certainly what I\'ve heard bears further investigation.

Second, with respect to Arbitron\'s assertions that the FCC lacks
jurisdiction. The FCC does not need \-- first of all, I believe it has
jurisdiction over Arbitron. Second, the FCC does not need jurisdiction
over Arbitron to investigate. As has just been explained, Arbitron
ratings, over my objection, I might point out, are integrated into the
FCC\'s regulations.

They\'re used for defining markets and for various measures, in terms of
how the FCC implements its ownership rules. And for that reason alone,
where questions are being raised, that will go to the integrity of the
FCC\'s implementation of its ownership rules, it is extremely important
that the FCC investigate.

If Arbitron chooses not to cooperate, people can draw their own
conclusions. So this ought not to be viewed in terms of jurisdiction
over Arbitron, this ought to be viewed as a threat to the FCC\'s
integrity or the FCC\'s regulatory policies.

Thank you.

CHAIRMAN RIVERA: Thank you.

Any other questions? Yes, David.

MR. HONIG: I\'d like to first associate myself with the remarks that
Andy Schwartzman has just made. What\'s being proposed here needs to be
put in the context of the way the FCC looks at science. I seconded this
resolution, and so I\'m, but

\-- so I\'m just going to speak for myself as a member.

I did that because I believed that what was being asked was what
Congress had in mind when it adopted Section 403 was to conduct an
inquiry, not an inquisition, but a neutral and impartial and protective
way to get the facts and assist the Commissioners in doing their jobs
and standing on the mountain and looking at very big issues.

And the issue that has been put on the table is the survival of
ownership diversity, the subject with which we have been convened. You
know all of the members of this body, and you know that we strive very
hard to be fair.

And the type of proceeding which the resolution proposes is one that
would be designed to make sure that any due process rights that a party
\-- into which inquiry of its scientific methods is being made would be
protected. And I\'d hope that if this resolution passes, Arbitron would
embrace it.

The reason is that \-- and there are two Administrative Law Judges at
the Commission. I\'ve lost cases before both of them. They are very
sharp. They understand science. They have great expertise. They\'re
unpredictable and they\'re very sensitive to the need to protect
sensitive information.

They\'re going to be very aware of the need to issue protective orders,
to review documents in camera, and not to have, in effect, something
that would be misconstrued as a public trial, because that\'s not the
spirit in which any of us offered this. I felt that needed to be said
just so that it could be understood that what is being proposed is
neutral fact finding.

Now, this is a scenario further where if Arbitron\'s set of facts is
correct, no harm is done. In fact, greater confidence would come from
the report of a finder of fact because then someone with no axe to grind
will have looked at it and found that it\'s the case. That would be to
your benefit and to everyone\'s benefit.

If, however, it should turn out that on at least some of these several
material issues that have been addressed, you\'re wrong and the minority
broadcasters that have appeared before us are right, first, that could
prevent something which no one wants, and I know you don\'t want it
either, which is a disaster from which it would be very difficult to
recover.

Some of us are old enough to basically be institutional people. We love
the FCC and we\'ve been around it for 30, 40 years, and we know that
sometimes a big hit is taken and it takes years to back out of it. Many
of us were here and worked on getting the tax certificate adopted, and
saw what happened to the industry when we lost it, and we\'re still
digging out.

A back of the envelope calculation that I did seemed to suggest that if
the facts described just as to Philadelphia were extrapolated to
minority broadcasters generally, the impact of that would be more than
twice the potential impositive impact of all 12 of the new proactive
policies that the FCC just adopted.

And, therefore, in that spirit, and without turning to \-- because
unless the Chair would like me to go into some of the scientific
questions, I think that just the fact that the substantial questions of
fact have been raised, that these allegations have been made responsibly
by people of great integrity and great research skill, that the way to
get at whatever the truth is, is to approve the resolution and have the
Commission, in a dignified and expeditious way, go about this inquiry
and then look at what it finds.

CHAIRMAN RIVERA: Thank you, David.

Any other questions, remarks from the members of the Committee?

MS. LUCEY: I just want to say I don\'t think it\'s about impugning
anyone\'s integrity from our point of view. It\'s we have problems with
Arbitron\'s sample size in the old diary method and the electronic
method. To us, this is just a jurisdictional problem.

First, a subcommittee, probably, should have explored this a while ago,
or now, or something, and I know time is of the essence. But to have the
FCC investigate, inquire, whatever the word is, this service just \-- an
entity that is not regulated by the FCC even though it may be used by
the FCC, I guess there are other ways, maybe, of overcoming that by
presumptions, or something the FCC\'s built into its rules before in
these kinds of data, it\'s just \-- it\'s inappropriate.

MR. FRISBY: Now, with regard to the jurisdiction issue, first of all
I\'d like to associate myself with Andy\'s remarks, but two thoughts
with regard to jurisdiction.

First of all, there appears to be a significant question and that\'s one
of the reasons you do have investigations. Also, in the past, in other
matters where the FCC felt it needed jurisdiction, but didn\'t have
jurisdiction, it\'s reached out to Congress most recently with regard to
911 and Congress granted the FCC jurisdiction.

So I\'m less persuaded by the jurisdictional issue, given that we\'re
only talking about an investigation.

CHAIRMAN RIVERA: James.

MR. WINSTON: Going to the jurisdictional issue, the Commission routinely
asks organizations for information that are not regulated entities. Most
notably in the investigation of the potential migration of sports
programming from free television to pay television, the FCC contacted
the NFL, the NBA, NCAA, professional hockey, professional baseball.

Got information from them on their contracts with television networks
and paid programmers. So \-- and the FCC never suggested that it had
regulatory authority over any of them. None of them was harmed by being
asked that information, or providing it.

So I don\'t think that, you know, asking an entity that\'s not regulated
for information is any usurpation of the jurisdiction the Commission
doesn\'t have. It simply requested information.

And as Andy pointed out, if Arbitron chooses not to participate in
delivering that information, people can draw their own conclusions about
that as well, and the Commission can decide whether or not it wants to
take any special measures to obtain that information.

Second, I was just struck in our exchange here, Diane asked about why
not wait for accreditation. And I was surprised that in answering,
Arbitron didn\'t point out that they had been denied accreditation in
Philadelphia and New York for this new methodology that\'s different
from what they\'ve done with Houston.

So, you know, and I only put that on the table because I think it says
something about the need for information. And, you know, I hope that,
obviously, having propounded the resolution, that people will consider
that as they vote upon it.

CHAIRMAN RIVERA: Any other? I see the Chair of our Outreach Committee
has been able to join us. Becky, would you come and join us here at the
table? Thank you for making it.

All right, then, I think we\'re going to go ahead, Jim and ask you to
move the resolution again, just so we do this all according to Hoyle.

MR. WATSON: So moved.

CHAIRMAN RIVERA: Is there a second?

MR. HONIG: Second.

CHAIRMAN RIVERA: All right. It\'s on the table.

Are you ready for the question, Committee?

How do you want to vote? Do you want to vote by voice or a roll call
vote? Roll call vote? It\'s a roll call vote.

MS. KREISMAN: Okay. We\'ll call the names on the Committee.

Mr. Klein or Lucey?

MS. LUCEY: No, for the jurisdictional reasons stated an the accompanying
statement.

MS. KREISMAN: Brennan or Locks? Is anybody here?

(No response.)

MS. KREISMAN: Amy? Okay, no.

Why don\'t you go through them.

CHAIRMAN RIVERA: Lugera? Not here.

Guzman?

(No response.)

CHAIRMAN RIVERA: David?

MR. HONIG: Yes.

CHAIRMAN RIVERA: Robin?

ROBIN: No for the jurisdiction issues that were raised.

CHAIRMAN RIVERA: Paul Jones?

Becky?

MS. KLEIN: No for the jurisdictional issues.

CHAIRMAN RIVERA: Art Lampkin?

Marie Long?

MS. LONG: No.

CHAIRMAN RIVERA: Ambassador McCann?

AMBASSADOR McCANN: Yes.

MS. LONG: Was that a vote, or was that \--

CHAIRMAN RIVERA: Yeah, that\'s a vote.

MS. LONG: Oh, I\'m sorry. I\'m sorry, I thought it was a question.

CHAIRMAN RIVERA: Okay. So that was Marie?

MS. LONG: Yes.

MR. HONIG: How did Marie vote?

CHAIRMAN RIVERA: Marie voted no.

MS. LONG: No, no, that\'s what I was saying. I thought it was no further
questions I was saying no to.

CHAIRMAN RIVERA: All right. No, we past that. We\'re now voting on the
resolution.

MS. LONG: And that\'s a yes.

CHAIRMAN RIVERA: So Marie is voting yes.

And Ambassador McCann has voted yes.

AMBASSADOR McCANN: Correct.

CHAIRMAN RIVERA: Okay. Rob Mendes.

MR. MENDES: Abstain.

CHAIRMAN RIVERA: Abstains.

Max Navarro is not here.

Andy?

MS. SCHWARTZMAN: Yes.

CHAIRMAN RIVERA: Tara Sweeney is not here.

Kay Twist? Not here.

Margaret Wilder? Not here.

Jim?

MR. WINSTON: Yes.

CHAIRMAN RIVERA: Margaret Lancaster?

MS. LANCASTER: Yes.

CHAIRMAN RIVERA: Diane?

MS. SUTTER: Abstain.

CHAIRMAN RIVERA: Abstain.

Russ?

MR. FRISBY: Yes.

CHAIRMAN RIVERA: Chairman votes yes.

Barbara, you need to count the votes.

MS. KREISMAN: One, two, three, four, five, six, seven, eight yes\', and
one, two, three, four no\'s and two abstentions.

CHAIRMAN RIVERA: Grif, Tony, did you have a different count?

MR. GRIF: I had eight/three.

MR. HONIG: I had eight/three also. I had eight/three/two.

CHAIRMAN RIVERA: Eight/three/ two?

MS. KREISMAN: Eight/three?

One, two \-- go ahead.

MR. GRIF: Honig, Long, McCann, Schwartzman, Winston, Lancaster, Frisby
and Rivera.

MS. KREISMAN: Okay.

MR. GRIF: The no\'s, Lucey voting Klein. The abstains Mendes and Sutter.

MS. KREISMAN: Okay, fine.

CHAIRMAN RIVERA: The motion carries. Thank you, Committee.

Is there any new business to come before the Committee?

(No response.)

CHAIRMAN RIVERA: No? If not, then Rodney, you want to repeat your
invitation?

MR. HOOD: Yes. All of our guests this afternoon, please know that there
is a reception taking place downstairs beginning at 6:00 p.m. in the
Sulzberger Parlor.

You all are cordially invited. We look forward to seeing you.

CHAIRMAN RIVERA: Thanks everyone for coming to the meeting.

(Whereupon, the meeting was concluded.)