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WILL ARBITRON’S PERSONAL PEOPLE METER

SILENCE MINORITY OWNED RADIO STATIONS?

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

DECEMBER 2, 2009

Serial No. 111–48

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

MARCY KAPTUR, Ohio

ELEANOR HOLMES NORTON, District of

Columbia

PATRICK J. KENNEDY, Rhode Island

DANNY K. DAVIS, Illinois

CHRIS VAN HOLLEN, Maryland

HENRY CUELLAR, Texas

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

JACKIE SPEIER, California

STEVE DRIEHAUS, Ohio

JUDY CHU, California

DARRELL E. ISSA, California

DAN BURTON, Indiana

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

BRIAN P. BILBRAY, California

JIM JORDAN, Ohio

JEFF FLAKE, Arizona

JEFF FORTENBERRY, Nebraska

JASON CHAFFETZ, Utah

AARON SCHOCK, Illinois

BLAINE LEUTKEMEYER, Missouri

ANH ‘‘JOSEPH’’ CAO, Louisiana

RON STROMAN, Staff Director

MICHAEL MCCARTHY, Deputy Staff Director

CARLA HULTBERG, Chief Clerk

LARRY BRADY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on December 2, 2009 ........................................................................ 1

Statement of:

Skarzynski, Michael, president and chief executive officer, Arbitron, Inc.;

Ceril Shagrin, executive vice president, Corporate Research Division,

Univision Communications, Inc.; David Honig, president and executive

director, Minority Media and Telecommunications Council; and George

Ivie, chief executive officer, Media Rating Council .................................... 11

Honig, David .............................................................................................. 139

Ivie, George ................................................................................................ 27

Shagrin, Ceril ............................................................................................ 128

Skarzynski, Michael .................................................................................. 11

Warfield, Charles, president and chief operating officer, ICBC Holdings,

Inc.; Jessica Pantanini, chief operating officer, Bromley Communications, Inc.; Frank Flores, chief revenue officer and New York market

manager, Spanish Broadcasting System; and Alfred C. Liggins III,

chief executive officer and president, Radio One, Inc. ............................... 171

Flores, Frank ............................................................................................. 186

Liggins, Alfred C., III, ............................................................................... 190

Pantanini, Jessica ..................................................................................... 179

Warfield, Charles ...................................................................................... 171

Letters, statements, etc., submitted for the record by:

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 208

Flores, Frank, chief revenue officer and New York market manager,

Spanish Broadcasting System, prepared statement of .............................. 187

Honig, David, president and executive director, Minority Media and Telecommunications Council, prepared statement of ....................................... 141

Issa, Hon. Darrell E., a Representative in Congress from the State of

California, prepared statement of ................................................................ 9

Ivie, George, chief executive officer, Media Rating Council, prepared

statement of ................................................................................................... 29

Liggins, Alfred C., III, chief executive officer and president, Radio One,

Inc., prepared statement of .......................................................................... 192

Pantanini, Jessica, chief operating officer, Bromley Communications, Inc.,

prepared statement of ................................................................................... 181

Shagrin, Ceril, executive vice president, Corporate Research Division,

Univision Communications, Inc., prepared statement of .......................... 130

Skarzynski, Michael, president and chief executive officer, Arbitron, Inc.,

prepared statement of ................................................................................... 14

Tierney, Hon. John F., a Representative in Congress from the State

of Massachusetts, chart concerning intab rates ......................................... 168

Towns, Chairman Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 4

Warfield, Charles, president and chief operating officer, ICBC Holdings,

Inc., prepared statement of .......................................................................... 174

(1)

WILL ARBITRON’S PERSONAL PEOPLE METER

SILENCE MINORITY OWNED RADIO STATIONS?

WEDNESDAY, DECEMBER 2, 2009

HOUSE OF REPRESENTATIVES,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The committee met, pursuant to notice, at 10:07 a.m., in room

2157, Rayburn House Office Building, Hon. Edolphus Towns (chairman of the committee), presiding.

Present: Representatives Towns, Cummings, Kucinich, Tierney,

Clay, Watson, Connolly, Norton, Cuellar, Chu, Issa, Jordan, and

Luetkemeyer.

Staff present: Ron Stroman, staff director; Mike McCarthy, deputy staff director; Beverly Britton-Fraser, counsel; Ryshelle

McCadney and Alex Wolf, professional staff members; Carla

Hultberg, chief clerk; Marc Johnson, assistant clerk; Gerri Willis,

special assistant; John Arlington, chief counsel for investigations;

Neema Guliani, investigative counsel; Adam Hodge, deputy press

secretary; Jenny Rosenberg, director of communications; Shrita

Sterlin, deputy director of communications; Leneal Scott, IT specialist; Lawrence Brady, minority staff director; John Cuaderes, minority deputy staff director; Jennifer Safavian, minority chief counsel for oversight and investigations; Adam Fromm, minority chief

clerk and Member liaison; and Mark Marin and John Ohly, minority professional staff members.

Chairman TOWNS. The committee will come to order. Good morning.

Today, the committee will examine the use of Arbitron’s Portable

People Meter, a device that Arbitron claims is revolutionizing radio

audience ratings, but which, instead, may be eliminating diversity

in radio broadcasting.

The last 30 years have been a great American entrepreneurial

story for minority-owned radio stations and minority radio listeners. Where once there were few or no minority radio stations in

most cities, now there are multiple stations competing in all major

metropolitan areas. The existence of this hard-won legacy is now

threatened. Arbitron’s controversial use of PPM is driving away advertisers. Minority radio has been hit by a perfect storm, the economic downturn and PPM.

Most people have probably never even heard of the PPM. The

PPM is a device that looks like a beeper. It is designed to detect

and electronically record the radio stations a person listens to.

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Arbitron is using the PPM to replace the paper diaries that have

been used for decades to find out which who listens to which station. In 2006, Arbitron introduced the PPM in several cities, including New York and Philadelphia. The results were swift. The ratings of minority-owned or minority-targeted radio stations plummeted by as much as 70 percent.

Since then Arbitron has expanded the use of its PPM across the

country in 31 additional markets which has resulted in crippling

minority-owned or targeted radio stations. These ratings have had

a devastating effect on the radio industry. Advertising, profit and

programming choices are all shifting away from the minority communities.

I have no quarrel with a rating system that is accurate, but there

is serious question as to whether the way Arbitron uses PPM produces truly accurate results. I note that I am not alone in the concern. The Media Rating Council is the industry’s self-regulatory

body. Where the Council finds that a measurement service consistently provides fair, accurate and unbiased data, it awards accreditation. Where this is not the case, it denies accreditation.

The MRC has reviewed Arbitron’s use of the PPM and has certified its use in only two markets—Riverside, CA and Houston, TX.

The MRC has withheld accreditation to Arbitron in 31 of the 33

PPM markets. In addition, the attorney general in New York, New

Jersey, Maryland and Florida have all taken actions against

Arbitron, alleging flaws in PPM’s methodology that have resulted

in the under-counting of minority listeners, precipitous drops in

ratings, and loss of advertising revenues. Yet, Arbitron has not

changed and insists on commercialization before it receives proper

accreditation.

Some people may ask how a problem like this could even exist

in this day and age. Well, as the famous expression goes, ‘‘When

the cat’s away, the mice will play.’’ In this case, the cat has not

been seen in years. For many years, our Government has taken a

hands-off approach to oversight or regulation of the radio rating industry. The results are that Arbitron, a monopolistic company, is

not regulated by anyone.

Arbitron argues that the FCC does not have jurisdiction over it

and Arbitron is free to ignore MRC—the so-called industry regulator—because MRC is a purely voluntary organization with a voluntary code of conduct and voluntary participation and ‘‘We do not

have to pay attention to them as well.’’ Can we afford to make the

health of minority radio broadcasting depend on voluntary good behavior on the part of a monopolistic company?

This is not the first time Congress has considered this question.

Back in the 1960’s, the House Interstate and Foreign Commerce

Committee considered regulating radio and television audience rating companies. Back then, Congress opted to let the industry regulate itself based on assurance that it would be done in a rationale

way. In fact, the industry created MRC to carry out that self regulation.

Apparently, this self regulatory system more or less worked for

a number of years. Now, I am not sure. Perhaps we need to take

another look at that basic issue.

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Today, we will have the opportunity to hear from Michael

Skarzynski, the CEO of Arbitron, who can hopefully shed light on

some of these questions. Additionally, we will hear from other

members of the radio industry who have been directly affected by

the PPM. I look forward to hearing their testimonies and then discussing potential solutions to this problem.

At this time, I would like to yield time to the ranking member

of the committee, the gentleman from California, Congressman

Darrell Issa.

[The prepared statement of Chairman Edolphus Towns follows:]

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Mr. ISSA. Thank you, Mr. Chairman.

As this committee is well aware, as a result of our oversight of

the census, we will expect and will get a more accurate count, data

that is more reliable. Oddly enough, new technology for the census

was at the core of our hearings and our recognition that the new

technology was not ready for prime time. Today’s hearing similarly

is on whether the accuracy, the total accuracy of PPM is, in fact,

to be acknowledged or if, in fact, more work is to be done.

It seems clear that prior to the introduction of PPM, radio rating

measurement was stuck in the words of one columnist, ‘‘in the

Stone Age.’’ With the use of weekly, handwritten paper diaries, the

issues related to the use of these diaries and fair, simple, easy to

grasp terms was questionable. Attempting to restructure that system, if you will, to make a Franklin day planner of diaries had

been tried many times but, ultimately, it was only as good as the

reporting person and often questions about brand loyalty being

more important when someone was recapturing what they had

done over a week rather than how many minutes they spent on a

specific station.

Notwithstanding that, my district, including one of the two locations in which we have been approved, Riverside, CA, I am acutely

aware that we want to not only get it right, but we want to recognize the real value in a media market of listeners.

I am pleased today to see both the president and CEO of the rating agency and our witnesses, Alfred C. Liggins, chief executive officer and president of Radio One, a person who, in fact, has found

it to be a useful tool.

Mr. Chairman, I am not going to go through my entire opening

statement. I have asked that it be placed in the record.

Chairman TOWNS. Without objection.

[The prepared statement of Hon. Darrell E. Issa follows:]

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Mr. ISSA. I would just close saying that although today the numbers are what we are talking about, from my own background of

purchasing advertising, I can tell you that Black Entertainment

Television, when I was advertising on cable, outperformed in the

actual benefit to our company its rating and was one of the most

cost effective places to advertise my brands. Knowing this, I recognize that even with a rating, it doesn’t state what the value is to

the advertiser.

In closing, Mr. Chairman, it is clear that we have to both look

at accurate numbers and over time, the rating agencies must, I repeat, must modernize to look at intensity of the listener, intensity

of the watcher in the case of television, and weight that.

Today, there is no such thing as a system that properly understands that you may have less or more listeners, they may listen

for less or more time, but they may be much more loyal to the

brands that are advertised on those stations. That technology does

not exist. We will not hear, as far as I know, about it today, but

Mr. Chairman, I appreciate that you are teeing up a matter that

has been for too long not heard in the Energy and Commerce Committee, in this committee, or even next door in the Judiciary Committee. I commend you for holding this hearing and yield back the

balance of my time.

Chairman TOWNS. Thank you very much. I appreciate your testimony and also your kind words.

We will now move to our first panel. It is a longstanding policy

that we swear in all of our witnesses. Please stand and raise your

right hands.

[Witnesses sworn.]

Chairman TOWNS. You may be seated.

Mr. Michael Skarzynski is president and CEO of Arbitron. Prior

to joining Arbitron, Mr. Skarzynski served as president and CEO

at a number of technology companies, including Performance Technology, also with Xebeo, Predictive Network and focused on business and product development.

Mr. Skarzynski also held management positions at Lucent and

under the administration of George H. Bush, Mr. Skarzynski

served as Under-Secretary of Trade Development at the Department of Commerce.

Mr. George Ivie has been the executive director and CEO of the

Media Rating Council since 2000. The Media Rating Council is a

not for profit organization which was created at the request of Congress 44 years ago to ensure high ethical and operational standards

for rating companies. Mr. Ivie’s background includes 25 years of experience in media research, auditing, oversight, and consulting.

Prior to joining the MRC, Mr. Ivie was a partner at Ernst &

Young and their lead representative and advisor to the MRC.

Ms. Ceril Shagrin is the executive vice president of the Corporate

Research Division at Univision Communications, Inc. where she

oversees research for all media divisions. Ms. Shagrin is considered

an expert in the field of audience measurement and is renowned

for her research on sampling methodology.

Prior to joining Univision, Ms. Shagrin was the senior vice president for marketing development at Nielsen’s Media Research. During her 27 years at Nielsen, she developed new systems of data colVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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lection and was also the principal developer of Nielsen’s Hispanic

service which she managed for 10 years. Welcome.

Mr. David Honig is the co-founder, current president and executive director of the Minority Media and Telecommunications Council [MMTC]. He also serves as general counsel to the Broadband

Opportunity Coalition. The MMTC represented over 70 minority,

civil rights, and religious national organizations in selected proceedings before the FCC and other agencies.

Mr. Honig has practiced communications and civil rights law

since 1983, specializing in electronic redlining and race discrimination cases.

Why don’t we start with you, Mr. Skarzynski. Give us your statement. You have 5 minutes. The way it works here is that when you

start out, the light is on green. A minute before it ends, it turns

to yellow, and then a minute later, it turns to red. Red throughout

the United States of America means stop.

Mr. Skarzynski, please.

STATEMENTS OF MICHAEL SKARZYNSKI, PRESIDENT AND

CHIEF EXECUTIVE OFFICER, ARBITRON, INC.; CERIL

SHAGRIN, EXECUTIVE VICE PRESIDENT, CORPORATE RESEARCH DIVISION, UNIVISION COMMUNICATIONS, INC.;

DAVID HONIG, PRESIDENT AND EXECUTIVE DIRECTOR, MINORITY MEDIA AND TELECOMMUNICATIONS COUNCIL; AND

GEORGE IVIE, CHIEF EXECUTIVE OFFICER, MEDIA RATING

COUNCIL

STATEMENT OF MICHAEL SKARZYNSKI

Mr. SKARZYNSKI. Good morning, Mr. Chairman, Ranking Member

Issa and members of the committee.

I am Michael Skarzynski, chief executive officer of Arbitron.

On behalf of Arbitron’s 1,300 employees who work in 27 States,

I am proud to appear before this committee today. For more than

6 years, Arbitron has been dedicated to advancing the interest of

the radio industry. We provide the quality data that allows radio

broadcasters to make programming decisions and advertisers to

make their media buying decisions.

Today’s hearing is focused on Arbitron’s Portable People Meter

and its impact on minority radio stations. We share the concern regarding the health of this important voice of the broadcasting community. We are, however, confident that PPM is not the cause of

the challenges faced by minority broadcasters.

It is encouraging to note that urban adult contemporary is the

most listened to format in the top 16 PPM markets. This was reported just 2 days ago by an important trade publication, Inside

Radio. We believe that the Inside Radio report is another strong indication that PPM continues to reflect reliably the listenership of

all formats, including Urban and Hispanic.

Arbitron has worked to implement the PPM service responsibly

and fairly and we have always been sensitive and responsive to

customer concerns raised about PPM.

Arbitron launched its innovative rating service to help support

the entire radio industry’s objective to have relevant, reliable data

that enables it to compete against television, Internet and other

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media for advertising revenue. While PPM represents a significant

advance, it cannot do everything. It cannot solve the severe economic challenges that the radio industry has confronted for the last

2 years. We have all felt the impact of a recession that has caused

a drastic and, in some cases, devastating decline in radio advertising with resulting significant decline in radio revenue. Further,

PPM cannot address the high debt burdens faced by many radio

broadcasters, including minority broadcasters.

Our radio broadcast customers asked Arbitron to develop an electronic measurement service that helps them showcase the value of

radio. Our advertising agency customers asked us to provide them

with a service that more accurately reflects exposure to radio. We

responded.

The development of PPM is a reflection of our commitment to improving radio. Arbitron spent more than $100 million over 10 years

developing this solution. We incorporated input from industry players and the technology has been thoroughly tested over time. The

PPM technology and methodology are solid. PPM was honored by

Time Magazine as one of the best inventions of 2007.

PPM methodology was built on the MRC Accredited Diary Methodology and produces valid and reliable audience estimates. In fact,

PPM has been the audience measurement tool of choice for several

years in a number of European countries as well as Canada and

Singapore. Overall, we have received a great deal of positive customer feedback about PPM.

Broadcasters are telling Arbitron that PPM provides reliable,

timely and granular data. Providing our broadcast customers more

timely PPM data has helped guide mid-course directions and programming adjustments to advance their business.

For example, California radio station KJLH, owned by Stevie

Wonder, added the Steve Harvey Show on August 10, 2009. Current PPM data shows that KJLH, between September and October

2009, experienced a 60 percent increase in morning drive share for

persons 18 to 34.

When I joined Arbitron in January of this year, I made it my priority to visit customers personally. I learned from customers that

there are powerful and constructive ideas about how we can improve our PPM service. In fact, listening to our customers has

helped us craft continuous improvement programs as we strive to

improve our PPM service and make it a valuable asset for the industry.

Every technology requires improvements and we believe we have

been both proactive and responsive to making improvements. This

year, we have expanded cell phone only sampling to a national average of 15 percent and we expect to increase to 20 percent by

year-end 2010.

We have instituted country of origin reporting, we have expanded

extensive training, in-person coaching and enhanced incentives to

encourage greater survey participation. Additionally, we are working with customers and other industry leaders to develop an engagement index. As envisioned, the engagement index would be a

metric that compliments existing data and reflects an audience involvement and loyalty to a particular station. This cooperative

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work will help all broadcasters, advertising agencies and advertisers have a balanced impact on radio ad planning and bonding.

We have been working tirelessly with members of the minority

broadcasting community and we believe that with your leadership

and continued dialog, we can make progress toward common

ground.

Mr. Chairman, Arbitron welcomes the opportunity to work with

you and members of the committee to address the challenges of minority radio broadcasters. I look forward to your questions.

Thank you very much.

[The prepared statement of Mr. Skarzynski follows:]

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Chairman TOWNS. Thank you very much.

Mr. Ivie.

STATEMENT OF GEORGE IVIE

Mr. IVIE. Chairman Towns, Ranking Member Issa and members

of the committee, my name is George Ivie.

For the last 10 years, I have served as the executive director and

CEO of the Media Rating Council.

I would like to thank Chairman Towns, Ranking Member Issa

and the committee for the opportunity to testify this morning on

Arbitron’s Portable People Meter Rating Service.

Before joining the MRC, I worked with Ernst & Young as lead

partner on all MRC audits. Including my 10 years as executive director, I have over 25 years experience in auditing rating service

methodologies and I have presided over and conducted many hundreds of these audits.

Forty-five years ago, Congress addressed the same issue this

committee faces today, namely the accuracy and reliability of audience research. At that time, after extensive testimony and careful

consideration, Congress reached three basic conclusions.

First, there was a need for professional, independent review of

audience rating services. Second, that industry self regulation rather than the hand of direct government regulation was the best

means of assuring quality and accuracy of audience rating data.

Third, through Federal laws regulating any competitive conduct

and deceptive practices, the Federal Government retained the

means to deal with serious consumer impacting abuses. The MRC

ultimately emerged based on the suggestions received during these

congressional deliberations.

Just as Congress envisioned, our only business is to review and

accredit audience rating services through rigorous, independent,

and objective audits. One of the hallmarks of our auditing procedures is that participating research organizations must be totally

transparent to us, driving our confidentiality requirements which

were originally recommended by Congress.

We are independent of the rating services we review. The only

funds we accept from rating services are the payments for their

CPA audits which are passed through in full to the CPA firms we

engage. As described in my written testimony, the MRC has adopted stringent safeguards to assure that accreditation decisions are

based only on the merits.

We appreciate the committee’s interest in the merits of the PPM

services and of particular importance, its concern that PPM services may fail to accurately represent the listening preferences of

minority audiences. Through cooperation with the committee’s subpoena, we have made audits and our related correspondence available for your review. We hope our diligence, expertise, and due

process is apparent from this documentation.

From the standpoint of the MRC’s role and mission and what we

are qualified to observe, I see two distinct issues: first, whether the

PPM technology itself is an improvement in terms of measurement

accuracy; and, second, how this technology is being implemented by

Arbitron in the markets of interest. Let me quickly address the

first issue.

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There is little doubt and, in fact, there exists a broad industry

consensus that electronic measurement such as Arbitron’s PPM

technology can represent an improvement over existing non-electronic audience measurement when implemented diligently.

In the second area, the implementation details, the MRC has ongoing concerns. Perhaps most important, in our opinion, Arbitron

has failed to demonstrate that the PPM services can attain sufficient performance metrics among certain mostly younger panelists

across most markets on a sustained basis. The company continues

to introduce numerous new PPM markets without having solved

this issue. We have ongoing concerns and dialog surrounding several measurement issues. Despite efforts to improve an extensive

cooperation from Arbitron with the MRC, these issues remain a

concern today.

Attached to our written testimony, reference Attachment F, is a

series of key performance indicator charts that illustrate a decline

in tabulation rates among young adult panelists during the period

from January 2009 to September 2009. This was considered by our

committee in the last audit review meeting of the PPM services.

In almost all cases, young adult, African-American panelists

show even worse performance than these general charts indicate.

These charts also show response rates referred to as SPI for the

market, some of which are considered low by the committee.

Arbitron is in the process of adding significant staff and implementing other improvements intended to stem the tabulation

rights declines. In Attachment G of our written testimony, you can

see the results of that for a short period in October.

Arbitron has been participating in the accreditation process fully.

However, the fact remains that Arbitron’s R&D process for the improvements required by the MRC have been ongoing, post commercialization for over 20 unaccredited markets. We have several recommendations on record with Arbitron to address these matters.

In closing, the MRC has strived for four decades to be faithful

to the mission Congress suggested for us. We hope the committee

agrees that Arbitron should remain committed to the MRC process,

maintain focus on the audit and methodological issues we raise,

and ultimately focus on gaining the marketplace assurance of MRC

accreditation of its PPM services as soon as possible.

Thank you.

[The prepared statement of Mr. Ivie follows:]

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Chairman TOWNS. Thank you very much.

Ms. Shagrin.

STATEMENT OF CERIL SHAGRIN

Ms. SHAGRIN. Chairman Towns, Ranking Member Issa, members

of the committee, my name is Ceril Shagrin and I am executive

vice president, Corporate Research Division, Univision Communications, Inc., which owns and operates 68 local Spanish language

radio stations across the country.

The focus of my testimony today is the serious flaws in Arbitron’s

Personal People Meter radio ratings measurement system and the

adverse effects of those flaws on minority broadcasters and listeners. I appreciate the opportunity to speak to you today.

I have worked in the media ratings industry for over 30 years.

I am here today because I am concerned that the radio ratings system is facing a crisis that threatens to undermine the goal of the

diverse radio marketplace.

In 2007, Arbitron began rolling out its currency, its PPM system

and methodology. From the outset, Arbitron promoted the PPM

system as a technological advance from the older paper diary system, a 21st century ratings technology.

While the PPM technology may be 21st century, the underlying

research methodologies upon which the system is based is still very

much stuck in the 20th century, are badly flawed and are creating

havoc in the radio marketplace. From the outset, the data provided

under the PPM system evidenced erratic rating swings for which

there is no plausible explanation other than the quality and reliability of the sample.

For example, Univision’s Los Angeles-based KLVE saw its ratings plummet 54 percent from first quarter 2008 to first quarter

2009. As Arbitron introduced the PPM system into over 30 markets

nationwide, it submitted the system to the Media Ratings Council

for accreditation. To date, the MRC, the independent industry body

established by Congress to oversee media ratings services, has

failed to credit the PPM in all but two markets.

The MRC’s decision to withhold accreditation is not arbitrary.

While MRC proceedings are confidential, the PPM system’s flaws

have been well documented in public sources and can be assumed

to factor heavily in MRC’s accreditation decisions.

First, Arbitron recruits from the wrong sample frame. Arbitron’s

primary sample frame includes only households with land line telephone numbers. Households with no telephones and cell phone only

households are excluded from the main sample frame. Minorities

are present in these excluded categories at a much higher rate

than other groups.

Second, Arbitron includes cell phone only households via a separate sample with very low response rates that is controlled to contribute 10 to 15 percent of the households in each market, but cell

phone only households are disproportionately young and minority.

Twenty-five percent of Hispanics live in cell phone only households

as do 21.4 percent of African-Americans and 41.5 percent of those

aged 25 to 29. Of course the number of cell phone only households

continues to grow month after month.

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Third, African-American and Hispanic listeners are under-represented in the sample panels. Arbitron has proved unable to meet

its own internal metrics for minority participation in its sample

panels. Even when there are enough, they are not representative.

Fourth, Arbitron panels are too small. For example, in Atlanta,

each African-American panelist is assumed to represent 10,000 others.

Fifth, PPM panelists do not receive training or support they need

to use the devices properly.

Every single one of these issues is entirely fixable. All that is required is for Arbitron to apply the same commitment that it has

shown to using 21st century ratings technology to implement 21st

century research methodology. That means recognizing that in the

21st century, wireless America, an address-based sample is preferable to a land line-based sample. It means recognizing that in

21st century diverse America, in-person recruiting, bigger more

representative samples and robust participant training are not luxuries. They are necessities.

Creating the kind of 21st century methodology is entirely possible. We know these things are possible because Arbitron has already done them in Houston. In Houston, Arbitron made the needed investment in an address-based sample frame and in-person recruitment and as a result, the PPM system was given MRC accreditation.

What is good enough for Houston, should be good enough for the

rest of America. Arbitron must reaffirm its genuine commitment to

the MRC process, not simply going through the motions of the

audit. Arbitron should agree that it will not make new ratings systems currency in markets until the MRC has accredited them.

Meanwhile, Arbitron should agree to maintain the previous

diary-based system in parallel to the new electronic system until

MRC provides accreditation. Maintaining the diary system service

is the only alternative that allows buyers and sellers to have usable

measurements during the time it takes Arbitron to address the

flaws in the PPM service. These changes must be made in haste.

Every day that passes, the ability of minority broadcasters to continue meeting the needs of our communities is threatened. The

time for action is now.

Mr. Chairman, I appreciate the opportunity to share these views

with you today and I would be pleased to answer any questions you

or members of the committee may have.

[The prepared statement of Ms. Shagrin follows:]

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Chairman TOWNS. Thank you very much for your testimony.

Mr. Honig.

STATEMENT OF DAVID HONIG

Mr. HONIG. Chairman Towns, Ranking Member Issa and members of the committee, my name is David Honig. I am the president

and executive director of the Minority Media and Telecommunications Council [MMTC].

MMTC is a member of the PPM Coalition which consists of the

Spanish Radio Association, Univision Communications, Inc., Spanish Broadcasting System, Untravision Communications Corp., the

National Association of Black-Owned Broadcasters, ICBC Broadcast Holdings, Border Media Partners, the Association of Hispanic

Advertising Agencies, KJLH Los Angeles and of course, MMTC. I

appreciate this opportunity to address the committee as it considers the effects of Arbitron’s PPM on diversity in radio broadcasting.

The Supreme Court has noted that ‘‘It has long been a basic

tenet of national communications policy that the widest dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.’’ Diversity means acknowledging,

understanding, accepting, valuing, and celebrating differences

among people with respect to age, class, ethnicity, gender, and

race.

True diversity in broadcast ownership will result in more diverse

speech, more choices for listeners, and more owners who are responsive to their local communities and serve the public interest.

Adequate representation of minority viewpoints in programming

serves not only the needs and interests of the minority community,

but also enriches and educates the non-minority audience. It enhances the diversified programming which is a key objective of the

Communications Act and the first amendment.

For example, two studies have clearly demonstrated that minority-oriented media produce a positive and measurable impact on

the communities they serve. A 2005 study found that Black-targeted newspapers and radio stations function as mobilizing channels for political participation among Black voters. Controlling for

the size of the Black population in the market, the availability of

Black-targeted media had an elevating effect on Black voter participation.

A 2006 study determined that voter turnout among Hispanic voters was 5 to 10 percentage points higher in areas with Spanish language local news than in areas without that service. Thus, communications services to diverse audiences benefit our democracy as a

whole in our continuing quest for opportunity and equality.

The U.S. Court of Appeals for the D.C. Circuit has recognized

that public policy places primary reliance with respect to diversification of content on media ownership, which has historically

proven to be significantly influential with respect to editorial comment and the presentation of the news.

This has proven to be true in recent months as minority audiences have been under-counted by PPM rating services. All commercial broadcasters depend upon advertising for their livelihood

and audience ratings are the sole method of determining the size

of audiences that are available to listen to radio advertising mesVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00143 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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sages. In the top 50 markets, Arbitron is the monopoly provider of

radio audience measurement services. When minority audiences

are under-counted, advertising dollars shrink or disappear altogether for those minority-targeted stations.

The simplest solution for a standard, profit-driven broadcaster

would be to switch to a mainstream, cookie-cutter format to program for the ratings. It has been the minority-owned broadcasters

who have valiantly held to the task of serving their local minority

communities with targeted formats.

True dedication alone will not pay the electric bill and make payroll. Without sure and quick relief, even the minority-owned stations will struggle to survive. Every time any one of these extraordinary radio voices fails, the fabric of our society becomes a bit

more tattered.

The obvious solution is for Arbitron to repair its broken methodology and provide the accurate survey data that the broadcasting

and advertising industries have a right to expect. If Arbitron is not

providing a product that meets legitimate expectations for accuracy

and reliability, then the company should not be in the position to

bind minority-targeted radio stations to grossly expensive contracts

for years in the future.

At the very least, these broadcasters should have the freedom to

explore other options and seek a more responsible audience measurement service that cares about its mission. In the absence of this

minimal level of relief, the committee should encourage the Federal

Communications Commission to exercise its authority under Section 403 of the Communications Act and institute a full inquiry

into Arbitron’s practices and their impact on diversity and public

welfare.

Thank you very much.

[The prepared statement of Mr. Honig follows:]

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Chairman TOWNS. Thank you very much.

Before we start our questioning, I would like to recognize in the

audience, Commissioner Clyburn of the FCC. Thank you so much

for coming.

Let me begin with you, Mr. Skarzynski. In a letter to this committee in October, Arbitron represented that it is committed to the

Media Rating Council accreditation process. Do you agree that the

MRC standards and its codes of conduct ensure fair, accurate, and

reliable rating data? Is it fair and reliable rating data?

Mr. SKARZYNSKI. Mr. Chairman, Arbitron is committed to the

MRC process and we believe that the MRC process does yield the

results that you have just described.

Chairman TOWNS. If that is the case, why is it that you have

only been approved in 2 out of the 33? Why would you continue to

roll out if you really respect that process and feel that it is important? Why would you continue to do that?

Mr. SKARZYNSKI. Mr. Chairman, Arbitron follows the rules of the

MRC process. The MRC process does not require that an audience

measurement service provider obtain accreditation prior to commercialization. The process to obtain accreditation can take many,

many years and this is the industry practice that audience measurement service providers not only in radio, but in television, Internet, cable TV, and print, while striving to get accreditation, can

commercialize a market and a service. We are following the rules.

The important step before commercialization is that an audit is

conducted, as Mr. Ivie has described, by a third party. In the case

of Arbitron, Ernst & Young is the third-party auditor who audits

our markets prior to commercialization, and the audit process is a

very lengthy, thorough, and detailed process.

I can assure you, Mr. Chairman, that as CEO of Arbitron, if

there was a show stopper that came up in the context of the audit,

we would not commercialize a market. We are following the rules.

Accreditation can take many, many years.

Nielsen, in its TV audience measurement, launched electronic

measurement in 2002 and they have obtained probably 10 or 11 accredited markets at this point in time and are still seeking accreditation. So this is the industry practice.

Chairman TOWNS. Mr. Skarzynski, let’s face it, we are talking

about 33 markets and you only have approval in 2. I could see may

be one or two over and you are still working on it, but to me that

seems like you are just totally ignoring and just doing whatever

you want to do. There is a clear indication here.

Let me ask you, Mr. Ivie, what are the main reasons that the

MRC has not granted accreditation to Arbitron in these 31 markets?

Mr. IVIE. What are the reasons, is that the question, Mr. Chairman?

Chairman TOWNS. Yes, that is the question.

Mr. IVIE. First of all, if I could spend a second because Mr.

Skarzynski raised a rather complex issue, it is true that the MRC

is not a government organization. We have no authority and we

were not designed to prevent a commercial enterprise from rolling

out a product. We do not have that type of authority.

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However, we do have a voluntary code of conduct. That voluntary

code of conduct says that at minimum, a ratings service should

have an audit before it commercializes a product and have that exposed to our Audit Committee so that we can decide whether it

should be accredited or not because that is what the marketplace

relies on.

However, the voluntary code of conduct goes on to make other

recommendations. The voluntary code of conduct says that we

would prefer that a ratings service does not implement a product

until it is accredited. We also say that we would prefer that a ratings service does not discontinue an accredited service before they

get accreditation of a new product. Those preferences are stated,

but you should know that because of the way we are structured as

an organization, we do not enforce that and we have been reviewed

by the Department of Justice and the FTC.

Mr. Skarzynski referenced Nielsen. They were rolling out products without getting accreditation. That led to two Senate hearings

on the matter similar to this where customers were saying, ‘‘why

is Nielsen rolling out these products,’’ ‘‘why didn’t the MRC accredit it’’ and Senate hearings happened.

This causes controversy. That is why we have those recommendations in our voluntary code, but we cannot enforce that

because we are not a government organization. I am not asking you

to set that power to us but I am trying to explain the facts. We

state our preferences, we believe very strongly that an audit needs

to be conducted and a marketplace should know whether accreditation is granted or not for those 30 markets so that they can either

rely on that or not.

Many, many customers look to accreditation as kind of like the

‘‘Good Housekeeping seal.’’ When that is not present, they know it

is not present for a reason. As Ms. Shagrin said, we don’t do that

arbitrarily.

We have made numerous recommendations to Arbitron.

Chairman TOWNS. What was their response?

Mr. IVIE. Arbitron has implemented numerous recommendations,

we still have some on the table. We are kind of getting to a stage

where some of these recommendations are very tough. If you put

yourself, Mr. Chairman, in the position of the panelists for PPM,

you have to wear this PPM device. You not only have to wear it

when you are here, but you have to wear it at home, you have to

wear it when you wake up in the morning, you have to carry it

with you when you go to the bathroom, when you take a shower.

When you come home from work, you carry that methodology with

you, the meter with you. Those are human conditions and human

cooperation that are difficult to gather.

We made a lot of recommendations to Arbitron. We have pages

and pages of recommendations in a letter. Arbitron has implemented many of those. Some of them have worked, some of them

have not worked, and some of the more expensive ones like sending

people out to train householders on a wider basis, in person, on

how to use the meter—having in person contact to explain to people why it is important—are very costly.

Arbitron is trying to balance the cost implications and the improvement implications in these services. I cannot speak for

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Arbitron on the matter, but I can tell you it is a very complex situation. We think we know a lot about what it takes to improve and

those recommendations are on the table. They are about in-person

contact, more intense installation and training for the panelists,

making sure that geographically the panel is representative.

There are a lot of issues on the table with us and Arbitron. You

have subpoenaed our records and you have a lot of that information. Some of them are very confidential. I do not know because of

the trade aspects whether we should go into that much detail. I

hope I answered your question.

Chairman TOWNS. Mr. Skarzynski, why are you sort of resisting

the suggestions and recommendations and instead of making the

changes, you’d rather roll out? I am afraid you are going to kill

some of these radio stations if you continue to do this and not respond. Some of them will be gone by the time many of these things

might be dealt with at all.

Mr. SKARZYNSKI. Mr. Chairman, we have a very active program

to improve our service based on the recommendations that we have

received not only from our customers but also from Mr. Ivie and

the MRC staff. We do not feel that the service is flawed. We actually feel that for nine markets, including the New York market, our

performance in 2009 is very, very strong and we feel we are performing at a level that deserves MRC accreditation.

I believe we have supplied to the committee the actual reports

that we submitted to the MRC last month to comment on our performance and to show the trends and where we are in particular

markets, including New York.

We welcome the suggestions for improvements. We are making

these improvements. Mr. Ivie commented on the training activities.

We have a very extensive training program to bring in and orient

new panelists. We have local market coaches who go out into the

field and help with panelists. As a matter of fact, two Saturdays

ago, I spent the afternoon with one of our local market coaches in

Prince Georges County here in Maryland and worked with the panelists, this particular household to help them through the process.

We are very active in trying to get all of our panelists to participate at a performance level and we feel, certainly in the case of

New York and these eight other markets, that we are performing

at a level that would earn us MRC accreditation.

Chairman TOWNS. Let me tell you what my problem is. My problem is I see some of these recommendations were made 2 years

ago. I am also looking at the fact there was one station in New

York in particular that was rated No. 1 and now that station is No.

15, without moving anyplace, going anyplace, doing anything.

Doesn’t that bother you? You would rather continue to roll out with

the fact you have not moved to correct some of these recommendations over the past 2 years?

Mr. SKARZYNSKI. With all due respect, Mr. Chairman, we have

implemented many of these recommendations. We have a program

of over 60 initiatives that we have worked on and employed across

all of our PPM markets, so I do not think it is correct to say that

we are not acting on these recommendations, that we are not making these improvements. I would beg to differ, sir.

Chairman TOWNS. Mr. Honig.

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Mr. HONIG. Mr. Chairman, I am little disturbed and disappointed

by the things that Mr. Skarzynski has said that I think cut right

to the heart of what this is about.

One was that if there were some problems identified before going

to currency, that was a showstopper—the company would not go to

currency. Let us look at what the problem was that was not enough

to go to currency—30, 40, 50, 60 percent declines in ratings for

some stations. If there had been a new technology that had that

impact on voter participation, on school segregation, on equal employment, on fair housing, or on environmental protection, that

would be a showstopper by any standard. It would be a national

scandal. Because this affects democracy so deeply, it is just as

much of a scandal.

The other thing that disturbed me, and I appreciate the good intentions, is that the company is going to begin to develop an engagement index. The difficulty is that has been a recommendation

we have been awaiting for 3 years and it is not that difficult. There

comes a time when you cannot rely alone on promises and have to

begin to undertake some oversight based on past history.

Chairman TOWNS. Thank you.

Ms. Shagrin.

Ms. SHAGRIN. I want to reinforce what Mr. Honig said in terms

of showstoppers. I think a major issue here is the fact that most

of the problems we are seeing today we saw in the early audits, in

the markets that were originally rolled out. We brought those both

as individual customers and through the MRC to Arbitron and said

you have some basic problems, we have some basic concerns. Had

they stopped then and addressed those, we probably would not

have 33 markets out there that have identical flaws.

The problem today is now there are 33 that need fixing or 31

that need fixing and it gets much, much more difficult and more

costly to fix. Unless there is some way, some stoppage and some

way to go back and fix the basic flaws, we will continue to live with

this until there is no diversity in radio.

Chairman TOWNS. The gentlewoman from California?

Ms. CHU. Thank you, Mr. Chairman.

Mr. Skarzynski, according to the PPM Coalition, Arbitron’s

flawed methodology and the PPM has been an issue for the past

6 years. In the meantime, minority radio stations are experiencing

a precipitous drop in their ratings and a corresponding loss in advertising revenues.

I have learned that companies like Univision, whose main market is the Spanish-speaking population, has decided to opt out of

the PPM measurement system because it no longer makes business

sense and as a result, there is no other measurement options.

There are other drastic situations such as the 70 percent decline

in radio station ratings for certain stations and one station going

from a ranking of 1 to 21. In fact, that station no longer exists on

the air waves. This seems to me like a very drastic situation and

it has been going on for at least 6 years. Yet, from what I hear

from you, it seems you see this as no problem. You see the situation as not a problem.

I want to know do you even think of this as a problem and if so,

is your company taking any steps to rectify the situation?

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Mr. SKARZYNSKI. Congresswoman, we began the roll out of PPM

just a few years ago, not 6 years ago. The transition from the pen

and paper diary—I am holding up a copy of the diary—to the electronic form of measurement was something that was desired by the

radio industry. We worked with the radio industry to develop the

PPM technology. We are very sensitive to the concerns of our customers.

The issue of a loss in ratings is something that has occurred in

the transition from the pen and paper diary to the PPM. It has affected many broadcasters, not simply urban or Hispanic broadcasters because we learned in going from diary to PPM, diaries

based on a recall factor. I fill out this diary once a week, perhaps

I do it at the end of the week, and I try to recall what stations I

listened to. I have a chart that captures listening. I do not know

if it is possible to put the PPM captures listening exposure chart

on the screen.

In this example, a Black male filled out the diary and said here

are the two radio stations that I listen to, I listened to these two

stations and listened to them for 8 hours a day. Once the PPM audience measurement service had been established, it was found this

listener did listen to those two stations but actually listened to four

or five other stations and did not listen to radio 8 hours a day.

What we do is measure exposure to radio and the fact that in the

diary, because of the great loyalty of radio listeners, the diary keeper was saying I listened to just these two but in fact you see a very

different result. That is a true measure of how the listener is exposed to radio as opposed to just a recall factor.

I think this is an important point to make, that it has affected

a variety of different broadcasters and a variety of different formats—talk radio, Christian radio, Hispanic radio, urban radio. The

talk radio host, Sean Hannity had a 60 percent decline when we

moved from diary to PPM and it was in this experience that while

there is a loyal base of listeners that the listeners were doing more

than listening just to Sean Hannity.

In the exposure to radio that you get in PPM, you see there is

a greater selection, a greater number of radio stations that a listener is covering and that they are actually not listening to radio

8 hours a day.

Ms. CHU. So I presume you are saying there is no problem?

Mr. SKARZYNSKI. We do not believe that our methodology or our

technology has flaws. We think we have a solid methodology and

a solid technology. We think that even as you look at the performance of panelists by different demographics, that the performance

of panelists—urban, African-American and Hispanic panelists—is

at the same level in our panel as those of any other demographic.

Ms. CHU. Actually, I do see one big problem which has to do with

the lack of Spanish-speaking participants in your PPM ratings panels. In fact, I have a very large Hispanic population in my district

in California and I think this is a very serious deficit. What efforts

have you made to ensure that there are more Spanish-speaking

participants so that there is a more accurate rating?

Mr. SKARZYNSKI. Congresswoman, we take great care in standing

up a panel that matches the demographics of the market. We start

with the census data that are updated every year by a firm called

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Claritas, and every year in the month of October we are updating

the panel to reflect any changes in the demographics.

That is to say for a given market, we would have as many males

percentage-wise as females as there are in the census data updated

annually by Claritas, as many white, African-American, and Hispanic listeners percentage-wise as there are in the market and

then we look at it in several age groups—6 to 17, 18 to 34, 35 to

44, 45 to 55, 55 and older. We do our work very, very carefully to

select a panel that is representative of the market that we are

serving.

In terms of recruitment of Hispanic panelists or prospective Hispanic panelists, this was an improvement recommendation that actually came from our customers and also from the MRC, we are recruiting the Hispanic panelist prospect with a Spanish speaker.

Chairman TOWNS. I yield 1 additional minute so that Mr. Ivie

can respond. I give the Gentlewoman an additional minute.

Mr. IVIE. I referred in my oral testimony to some charts that

were attached to our written testimony and Scott made some copies

of them to put on an overhead. Exhibit F, if you pull up Atlanta,

which is the first market, I know the chart is small but basically,

people have been talking about specifics, what specifically are the

issues. This is an illustration of one issue.

This shows young panelists, panelists 18 to 34 year-olds in Atlanta, and how they cooperated with the PPM device over time. On

the average day, how many young panelists carried and had their

data accepted by Arbitron for processing in the rating. As you see

in January, that number was around 70 for the red line which is

females and a little above 70 for the blue line which was males.

We look at those and say those are nearing reasonableness. Keep

in mind that means 30 percent almost of the people do not carry

their PPM or do not have their data processed.

One of the things we noticed during 2009 was that rate went

down. You can see the decline in that chart. Scott, if you would put

up the next market in alphabetical order which is Austin, you see

those numbers declined. By September those were at 65 which

means 35 percent of the panelists of that age group do not comply

with that methodology on the average day and so on.

If Scott could put up Chicago, the next chart. Take a look at the

trend in Chicago and then further into the packet is New York, you

could look at New York and see that the trend at the end of New

York is not going down, it is going up, an important point.

Arbitron took some action and put in more procedures to interact

with panelists in New York during that timeframe where those

numbers are going up, more in-person interaction, we believe.

Those are parts of the recommendations that the MRC is trying to

push Arbitron to make. They did not make that improvement in

the other markets.

I attached Exhibit G to the testimony. They started to make

some of those improvements in October. Scott, if you put up Atlanta for October, remember that chart was all the way down by

September. You see that now the end of that chart is going up, so

more panelists are beginning to comply.

This is a very complex issue. We are trying to improve the performance of this service and Arbitron is trying to cooperate and

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they are implementing some of our recommendations and some of

them they are looking at and saying they are too expensive or

whatever and they are trying to make improvements.

The MRC is not going to accredit this methodology until issues

like this reach a level that we believe, with a collective voting of

the MRC membership, are appropriate. We do not have written

standards for what that is because every meter technology is different and the diary is different. This issue is very visible. This is

just males 18 to 34 and females 18 to 34; there are other things

that are more granular about the technology and things where we

are in dialog with Arbitron but this is an illustration of a key issue.

You wanted specifics. This is very specific. You saw declines during 2009 which cause us pause when we are going to accredit this

service. How do we know what people do when they do not carry

the PPM? What do they do? What do they listen to on the radio?

Are they exposed to radio, are they not? Are they exposed the same

as when they do carry the PPM? Arbitron has even done studies

of that but they are very small. We are wrestling with these issues.

Chairman TOWNS. Thank you.

Mr. SKARZYNSKI. Mr. Chairman, may I make a comment on Mr.

Ivie’s charts?

Chairman TOWNS. Let me yield to the gentlewoman from Washington, DC.

Ms. NORTON. Thank you, Mr. Chairman. I thank you for this

hearing.

Because causality is always a difficult issue under the best of circumstances, I take it the panel would agree that with the growth

in people of color in our country, that radio should see a growth

overall in listeners from people of color. Could we agree on that?

Mr. SKARZYNSKI. Yes, I would, Congresswoman.

Ms. NORTON. Mr. Skarzynski, I have to tell you I am erudite and

I understand what you are trying to do. Indeed, I was impressed

with the series of graphs involving one man. I should have thought

that anybody getting back a diary that said they did anything 8

hours a day would have understood that meant they were not

doing that continually.

I am impressed by the difference in what you capture. I would

be much more impressed with seeing that captured with a sample

rather than one man. I can pick out one man any day of the week

and prove anything you would like. I understand what you are getting at but until you show me a sample that shows that kind of

pattern, I am not sure I am convinced.

What is at issue here may be the life and death of one of the

most viable industries for people of color. Obviously, there are

going to be some concerns in the Congress about that, particularly

about these fluctuations.

I am super sensitive to what is happening to every business of

every kind in the United States today. The only entity able to write

a check today is the U.S. Government and that is because we do

not have to have the money in the bank.

I understand that every industry is affected and yet it would

seem to me that there is an obligation on the part of the Congress

to try to ask the question that I asked of you, Mr. Skarzynski. Can

you say with any certainty that PPM is not a significant ingredient

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in what is happening to minority-owned stations and that the rest

of it must be something else like the recession? Can you say that

with any certainty?

Mr. SKARZYNSKI. Congresswoman, we do not believe that PPM is

the root cause.

Ms. NORTON. In what is that belief grounded? On what is it

based?

Mr. SKARZYNSKI. The radio industry is suffering right now, as

you noted, Congresswoman, with the general economy. There has

been a decline in revenue for all broadcasters.

Ms. NORTON. Are you seeing these declines equally among stations that service majority populations and minority populations,

no difference whatsoever?

Mr. SKARZYNSKI. There have been, in terms of revenue declines,

the same revenue declines percentage-wise for the general market

as has been the case for Hispanic and urban broadcasters.

Ms. NORTON. Would you submit whatever you are basing that

on? You say the general market? That would include minority stations. I am asking about stations. I can name some in the District

of Columbia that target certain areas which we know to be largely

white as opposed to stations which target areas where the population is minority. Have you that kind of research on which you

would base what you have just said to this committee?

Mr. SKARZYNSKI. We do, Congresswoman. When I was referring

to the general market, that is a term in the radio industry, general

meaning not stations that are targeted at an urban or Hispanic

broadcaster. I believe Mr. Liggins of Radio One is going to speak

in the next segment of the panel and he can share with you the

specific details.

Ms. NORTON. I have read Mr. Liggins’ testimony. I know him and

I respect him. Indeed, Radio One is located in my district and

therefore, I was very, very interested in his testimony. Of course

Mr. Liggins sits at the helm of an empire, not simply a station. I

admire what he and Kathy Hughes have done, love them dearly.

Are you, in fact, telling this committee, that all the other minority stations have to do is do what Radio One did, alter their programming and they will increase their PPM ratings? Is that your

advice to stations not a part of an empire which may have been

able more easily to make this change? Just do what Radio One did

and you fellows are going to be all right.

Mr. SKARZYNSKI. Congresswoman, we are not in the business of

advising radio broadcasters what to do and of course, the programming decisions are the decisions made by the individual broadcaster. I cited in my oral testimony that Stevie Wonder’s station,

KJLH in the Los Angeles area, in this particular case, the programming director of that station looked at the PPM data, which

is very granular data, and made a decision to switch over to the

Steve Harvey program.

Ms. NORTON. What would keep a station from simply incorporating what you say these successful stations have done? What would

make a station not want to do that?

Mr. SKARZYNSKI. I am sorry, I did not hear the first part.

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Ms. NORTON. What would keep a minority-owned station from

doing what Radio One and the station you have just cited did?

What keeps them from doing it, in your view?

Mr. SKARZYNSKI. There would be no obstacle in having them

make that change.

Ms. NORTON. Do you have an answer to that, Ms. Shagrin?

Ms. SHAGRIN. I would love to answer that.

I think what keeps us from doing that is if we thought these

were reliable and accurate estimates, then we would do what we

do with other audience estimates and use it to make programming

decisions, but given the inaccuracy of the sample and the fact that

the people providing that information are not representative of Hispanics or African-Americans, we cannot make programming decisions.

When I started out in this business and I tried to explain to

someone at an English language broadcast network that the differences he was seeing was because the universe was changing, he

said to me, I do not care if it is right or wrong, I just want to program to the sample.

We do not believe that at Univision. We believe that we have an

obligation to the 15 million Spanish radio listeners to provide them

with entertainment and with information they need. We are not

going to change our programming until we have samples that are

representative of those listeners and then we can use that information to improve. We are not going to do it based on bad information.

Ms. NORTON. Mr. Honig, do you have a response?

Mr. HONIG. I want to cut right to this question of causation. Mr.

Skarzynski correctly recognizes that this is not the only problem,

the only burden facing minority radio. Those stations also are burdened by lack of access to capital, by weaker signals historically,

by outdated engineering rules, by EEO non-enforcement, and by

advertisers that will not consider advertising on them simply because of the race of members of the audience.

Those problems have existed for years. Notwithstanding them, as

horrible as they are, stations continue to perform well in those formats until they get disrupted by PPM. You see the numbers collapse in the markets where currency has been granted and only in

those markets over the last 2 years have the numbers collapsed.

That is about as clear a case of causation as you can see.

It certainly is no justification for this kind of practice that there

are other deficiencies. It was no justification for school segregation

that there was housing segregation, for example. Nor is it an answer to say that there are some broadcasters that have managed

to overcome or adjust. No one should have to adjust the heart of

their business because of a flawed technology.

Chairman TOWNS. The gentlewoman’s time has expired.

Let me say before I move to the gentlewoman from California, a

comment was made that indicated that the majority of minority decline has been basically the same. It is my understanding that is

not true. Mr. Skarzynski indicated it is basically the same when he

responded to the gentlewoman from Washington, DC. Is that true?

Ms. SHAGRIN. Based on the last time I saw ratings data, that is

not true. There have been declines across English language staVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00157 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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tions, urban stations, and Spanish stations but the decline for minority stations has been significantly larger than it has been for

the other stations.

Ms. NORTON. Mr. Chairman, could I ask that the data Mr.

Skarzynski was relying on be submitted to the chairman so that

the committee can evaluate that data for itself?

Mr. SKARZYNSKI. Yes, I would be happy to provide the data.

Chairman TOWNS. Without objection, we will receive it.

The gentlewoman from California.

Ms. WATSON. Thank you, Mr. Chairman, for holding this hearing.

Just an observation—where is the other side of this committee?

Chairman TOWNS. Good observation.

Ms. WATSON. The subject matter probably is of little interest.

Just an observation.

I am listening very intently because I represent the area where

KJLH’s listeners are. That is Stevie Wonder’s station. Mr.

Skarzynski, I understand that you look at census data to weigh

your numbers to account for any under- or over-represented demographic groups. My problem is that the census has a historical

tendency to under-count youth, low-income, and minority households. I sit on the Census Subcommittee and one of the things I

brought to the attention of the director of the census is that in certain areas, there is always an under-count. Because of that undercount, we are denied the funds that should come based on certain

demographics.

Do you account for this historical under-count of the census when

compiling and analyzing your data? If so, how do you do it?

Mr. SKARZYNSKI. Congresswoman, we look at census data and

then we update it each year during the month of October with data

from Claritas. The way that we would focus on the total market to

get a representative sample would be to use both the census data

and the Claritas data.

Ms. WATSON. What is the difference?

Mr. SKARZYNSKI. The census data you know about since you care

for it here in the Congress. The Claritas data is an update from

a third party, private firm, not the Government, that looks at census data and any possible shifts that occur within a given year.

To go after a representative sample and to care for particularly

African-American and Hispanic listeners, we focus on what we call

high-density areas and try to get as representative a group of African-American and Hispanic listeners for the total market within

certain high-density areas.

Ms. WATSON. Let me just say this. That is one of the problems.

Yes, there is high density but they don’t get counted. I am a witness of that. I live in the community and I can tell you that because of the fear some of our non-English speaking citizens or people have, they don’t give an accurate count, so I usually call in the

census people and tell them how to go about the count. You go out

on a Sunday after church services. You go to the parks, you go to

the parking lot, you go above the liquor stores and cleaners, and

you can get a better indication. We are historically under-counted

and it hurts us.

You mentioned KJLH as a success story. It is not. I was so disappointed that the people I usually interview with are now gone

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and they have gone to syndication. So we are not really getting

that information to this broad listening audience out of the community that KJLH served. It is syndicated, so the little peculiarities

that exist in the community are not really identified through interviews from the representatives such as those people at the county

level, at the city level, at the State level, and at the Federal level.

That is one of my problems.

I don’t want to be that critical of the use of the PPM and we find

it is not focused on the underlying technology but on the method

used to recruit the people who have their radio habits measured.

You stated that Arbitron plans to increase the sample size by 10

percent beginning in 2010, but I worry this is insufficient because

since the introduction of the PPM, the panels have become 66 percent smaller.

My question is, why did Arbitron reduce their panel size by 66

percent with the introduction of the PPM?

Mr. SKARZYNSKI. Congresswoman, when we moved from the

diary to the PPM, we had, in any given market, a paper and pen

diary and we would issue this for 2 weeks in the year or 4 weeks

in the year, so in the larger markets, 4 weeks a year of data were

the data for the diary keepers.

When we moved to PPM, we have 365 days a year, 52 weeks a

year, of data and the data that we would have accumulated from

the diary versus the PPM is a multiplier of probably eight, an increase of eight to get the data and the timely and granular data

minute by minute what are you listening to as between PPM and

diary.

In making that migration or transition from the pen and paper

diary to PPM, we reduced our panel size on a ratio of 3 to 1 and

we did that and studied what Nielsen had done when they went

from their pen and paper television diary to their electronic form

of measurement. They actually went from 4 to 1 in terms of reduction. So we made this reduction and we did it because we were trying to maximize the use of days of an individual person that we

are recording for 52 weeks a year.

Ms. WATSON. Mr. Chairman, if you could yield 1 more minute,

I just wanted to see what some of the other panelists might be able

to suggest as to how we can balance the need to cut costs with the

responsibility to provide a sample size that is statistically reliable.

Maybe some of the rest of you can give some input to this.

Chairman TOWNS. The gentlelady is yielded 1 additional minute.

Ms. WATSON. Thank you.

Ms. SHAGRIN. First of all, I would like to comment on your earlier comments about representative samples because my concern

and what I believe is part of the problem and why we are here is

that we, the customers, have talked, have sat in meetings and we

have talked to Mr. Skarzynski and other folks at Arbitron but they

aren’t listening.

The root cause and the main problem that you touched on is that

the samples they are using are not representative. They may tell

you, yes, they have enough PPM carriers in your district, but are

those carriers representative of the people who actually live in your

district because how many of the people you know live in your disVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00159 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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trict would accept carrying a meter for 2 years on the basis of getting a telephone call asking them to do so.

The people who live in your area, the people who are listening

to urban radio, who are listening to Spanish radio, are among the

groups that are the hardest to get to cooperate. Because they are

so hard to get to cooperate, you can’t just call them on the phone

and ask them to do it. You might be able to call them and ask

them to fill this out for a week. You can’t call them and ask them

to carry this around for 2 years. It is a very different task.

The people who do agree to do it are less representative and not

representative of those listeners that are listening to urban radio

and listening to Spanish radio. Therefore, they are not represented.

You get the older members of those minority groups; you don’t get

the younger members of those minority groups. All the waiting in

the world can’t adjust for a bad sample.

Ms. WATSON. I just have to comment and I will yield back that

minute, part of it, but our kids are going around with their iPhones

and their cell phones and so on. They are certainly not going to

carry that meter when they could be looking at their other pieces

of equipment. It creates a problem for us in the community.

I thank you for yielding me extra time.

Chairman TOWNS. Thank you.

Now we yield 5 minutes to the gentleman from Virginia, Congressman Connolly.

Mr. CONNOLLY. I thank the chairman and thank the panel for

being here.

Ms. Shagrin and perhaps others on the panel, to what extent are

some of the problems caused here by the fact that, for good or ill,

Arbitron is a monopoly?

Ms. SHAGRIN. I think there are a lot of people who would make

other choices. I think there are other people who aren’t in this

room or represented by anyone on any of the panels that would

make other choices. We are not the only ones that are aware of the

failings of the current ratings system. Again, it is not the technology I am talking about. It is sample. It is getting them to agree

to be in the sample and then provide usable data on a regular

basis.

Mr. CONNOLLY. So the technology is fine?

Ms. SHAGRIN. I don’t know. I haven’t seen you work with a good

sample but I am assuming that it does measure radio.

Mr. CONNOLLY. OK, it is the sample.

Mr. Ivie, would you concur?

Mr. IVIE. I would phrase that a little differently. I think what is

important to remember, and Ms. Shagrin said it initially, is when

you approach someone to carry this device, a certain amount of

them agree to carry it and a certain amount of them don’t. The

more that agree to carry it out of the original sample, the better

the sample.

Mr. CONNOLLY. Let me ask you a question about that, following

up on the comments you and Ms. Shagrin have made. What percentage of people who agree initially actually end up dropping out?

Mr. IVIE. If you look at a response rate for the service which is:

I approached 1,000 people to carry this device, how many of them

actually agreed.

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Mr. CONNOLLY. No, I am not asking that question. Of those who

agreed, what is the drop-out rate?

Mr. IVIE. In general, across the population, it is about 25 percent.

Mr. SKARZYNSKI. Congressman, if I could answer the question.

Mr. CONNOLLY. Please, I have a limited amount of time. I was

going to turn to you in a second.

Twenty-five percent is your estimate of the people on PPM who

drop out?

Mr. IVIE. Right, but that is differential among different groups

of the population. Younger people drop out more than older people.

Mr. CONNOLLY. Got it.

I am sorry, Mr. Skarzynski. You wanted to comment?

Mr. SKARZYNSKI. We stand up a panel for a 2-year period in a

given PPM market. A panelist can serve, on average, for 12, 13, 14

months. When that panelist leaves, we replace that panelist with

someone who is identical in demographic to that panelist.

Mr. CONNOLLY. Is the drop-out rate for PPM higher than the previous drop-out rate for the diary?

Mr. IVIE. We are mixing two issues.

Mr. SKARZYNSKI. It is a different methodology. The diary is only

for 1 week. If you serve for the week, then you are done.

Mr. CONNOLLY. So, you are not concerned with the drop out rate

being a problem?

Mr. SKARZYNSKI. We don’t, in our methodology, think that figure

is a bad figure.

Mr. CONNOLLY. I understand, but you have heard testimony here

from your fellow panelists that part of the problem may be less the

technology and more the size of the sample. If the sample size itself

is too small and unrepresentative and then a fairly significant

chunk of that sample drops out, your sample is even smaller and

less representative is sort of where I am going.

Mr. Ivie, did you want to comment?

Mr. SKARZYNSKI. The comment I was making, Congressman, was

if Ms. Shagrin was in the panel and she drops out, we are not saying that panelist goes away. We fill that seat with someone from

a comparable, identical demographic.

Mr. CONNOLLY. So, you think the drop out problem is non-existent?

Mr. SKARZYNSKI. Because of the way we would make a replacement, it is not the issue.

Mr. CONNOLLY. Ms. Shagrin.

Ms. SHAGRIN. First of all, African-Americans and Hispanics drop

out more than non-minority panelists. Certainly the kids and teens

are so bad, I don’t even want to get into that. Heaven help you if

that is who you are programming to or that is who you are trying

to advertise to.

The point is that if I were on the panel and I drop out, he might

try to get someone else but all he knows is a phone number and

some general characteristics of the household. The last time I read

an audit report, you were not doing quota sampling, but you are

getting close.

The point is the person they get may be female, may live in a

household where they are the only person as I do, but what they

choose to listen to may be completely different than what I choose

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to listen to because of my ethnic background, because of my professional background. There have been extensive studies done now on

non-response. The people who agree are not necessarily representative of the people who don’t agree which is why I am such a strong

proponent of in-person recruiting.

Mr. CONNOLLY. Mr. Ivie.

Mr. IVIE. I am just concerned that we might be mixing terminology. You can drop out of the sample permanently. In other words,

you could call Arbitron and say, I no longer want to participate permanently. They call that a drop out.

What I was quoting, the 25 percent, are failures of people to

carry the PPM on the average day, so they remain on the panel

and then if they don’t carry it today, they are still on the panel tomorrow and can either carry it or not. That is about 25 percent.

That is not a drop out. That is just a failure that day to tabulate.

That varies a lot of demography. Younger people drop out more

than older. Young Blacks especially, young African-Americans,

drop out of this panel much more than other young people.

Mr. CONNOLLY. I am going to have time for one more question

if the Chair will indulge me and then I have to go.

I will start with you, Mr. Ivie. The MRC has not accredited

Arbitron’s PPM service in New York, Philadelphia and Houston.

Why is that and could whatever problems are reflected in those

markets possibly be affecting the market here in Washington, DC,

which, after all, the city itself is a majority minority population

surrounded with huge minority populations and intuitively it just

seems hard to believe that a lot of those minority-owned broadcasting radio stations are precipitously declining?

Mr. IVIE. First of all, a clarification. We have accredited Houston

and we have accredited Riverside. All the other markets are not accredited.

There are three principal reasons why the unaccredited markets

aren’t accredited. The first is the response rates to the service are

lower than we would expect. Earlier I mentioned the 1,000 people

you approach, how many people eventually say they will cooperate.

The lower that proportion is, the less likely that sample is to be

representative of the population, even if you replace them because

you might replace them with other people you think look alike but

might behave differently. It is nuance. Response rates to these

services and they are in exhibits F and G of my written testimony,

are lower than we would like.

The second issue is non-compliance or non-tabulation rates in

general. The 25 percent rate I quoted generally had been worse

than that. Arbitron has been making improvements. Those rates

are still a major concern of ours that overall not enough people are

having data gathered from the service.

The third, and perhaps most important, I mentioned that people

who don’t cooperate, don’t cooperate differentially. Young, AfricanAmerican adults, for example, while I showed the chart in Atlanta

and Boston that showed how they look, if you looked at that chart

for young African-Americans, those numbers would be even lower.

Sometimes they are 60, sometimes they are 65 percent. That

means that 40 percent of the people don’t carry their PPM on an

average day.

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Automatically you have heard talk about sample sizes and how

Arbitron—and this is legitimate—reduced the overall sample size

from the diary because you get a lot of measurement from people

so you are allowed to do that, but then if 40 percent of young African-Americans fall out of tabulation because they don’t carry it,

that puts even more stress on your sample. If you are relying on

that target, then you are relying on only that reporting sample.

That is a smaller group.

I have explained three principal issues. Those are the three key

issues we are focused on getting Arbitron to improve. They are very

critical. We are not going to accredit until we believe those have

been improved to a sufficient degree and those samples report in

a representative manner across various types of demography. We

are not going to accredit until that happens.

Mr. CONNOLLY. Thank you very much.

Mr. Chairman, my time is up and I thank you for your indulgence.

I do want to say that representing the local area in the National

Capital Region, Mr. Ivie has just put his finger, with the best of

intentions, on the methodology can lead to results that have devastating impacts on minority-owned broadcasters and radio stations. We have already seen that here in the National Capital Region.

I thank you for holding this hearing and I look forward to working with Arbitron and others to see if we can’t make sure that we

are all at a certain comfort level with the data and what it means.

Thank you.

Chairman TOWNS. I thank the gentleman for his statement.

I yield 5 minutes to the gentleman from California, Ranking

Member Issa.

Mr. ISSA. I thank the chairman and I apologize for having to go

back and forth. We have a markup in Judiciary next door. As you

know, as important as hearings are, markups are recorded.

The questions that I have I think are going to deal with accuracy

but maybe with some rhetorical questions.

Ms. Shagrin, you were with Nielsen for 25 years, right?

Ms. SHAGRIN. Twenty-seven.

Mr. ISSA. Were you perfectly accurate? Were there complaints by

TV stations that your ratings were skewed, inaccurate, not what

they wanted? In other words, if you didn’t give them the number

they wanted, did they complain?

Ms. SHAGRIN. Not so much. For a long period of time, Arbitron

and Nielsen were both measuring local television.

Mr. ISSA. Let us followup on that question a little bit. You called

yourself a customer. Aren’t you really an audited firm, not a customer in the true sense? When you choose to buy the results, you

are somewhat of a customer, but realistically, aren’t you simply

being audited for honesty and integrity a little like a public SEC

company? They pay PriceWaterhouseCoopers but in a sense,

PriceWaterhouseCoopers’ allegiance is to the truth, isn’t that true?

Ms. SHAGRIN. That is true, but I am a customer. I work for

Univision and I am a customer.

Mr. ISSA. Right, but Enron was a customer of their accounting

firm and we had a national scandal because Enron got the accountVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00163 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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ing it wanted. Are you entitled to the accounting you want or are

you entitled to the best accounting available and that’s what you

have to ask for, the best and most accurate numbers available?

Which is it?

Ms. SHAGRIN. The best accounting available. However, sometimes

there is no best accounting.

Mr. ISSA. Very true and that is exactly the followup that I want.

Mr. Skarzynski, you are not perfect, your numbers aren’t perfectly accurate, isn’t that true?

Mr. SKARZYNSKI. Absolutely true. I am not perfect and my numbers aren’t perfect. It is a random sample.

Mr. ISSA. Even though I understand you don’t release the exact

amounts, you pay Blacks, Hispanics, and young people more money

to carry these PPMs than you do overall. In other words, there is

a skew toward the ‘‘hard to get to carry’’ groups, is that true?

Mr. SKARZYNSKI. We do pay a differential incentive in some markets if we are having problems getting that analyst.

Mr. ISSA. ‘‘Differential’’ is the term for more?

Mr. SKARZYNSKI. Correct.

Mr. ISSA. So you pay more when you believe you are not getting

the level of carry that you need to get the accuracy you need, right?

Mr. SKARZYNSKI. We do on some occasions, yes.

Mr. ISSA. Was that tendency as evident when you were doing

paper diaries as it is when they are carrying a completely accurate

electronic device?

Mr. SKARZYNSKI. In terms of a differential response?

Mr. ISSA. Yes.

Mr. SKARZYNSKI. Yes, it was.

Mr. ISSA. So this is not a new problem, this is a problem that

already existed?

Mr. SKARZYNSKI. It would have been and we do have a diary

market today for the markets 43 through 303, so we do see that

in the diary.

Mr. ISSA. We do have a problem, young people love to carry a cell

phone but have a problem with a pager when it doesn’t deliver

messages to them. Perhaps if you could embed your rating system

in a cell phone and hand them a cell phone, this problem would go

away. If you gave someone a free cell phone for a year or two, I

guarantee you would have a high carry rate with the young.

Mr. SKARZYNSKI. Congressman, that was Congresswoman Watson’s suggestion to us. Actually, that is a next generation product

for us that we are looking at, just that.

Mr. ISSA. As soon as you get that, Diane and I don’t have to be

berating you in a public hearing, right?

Mr. SKARZYNSKI. I certainly don’t view it as being berated.

Mr. ISSA. Anytime you are called monopolistic at the opening,

you have a little bit of a problem with the dais.

I am concerned, along with the chairman, that there is an accuracy question. I am going to close with one question and I want to

be very succinct here today. Is the electronic machine, the PPM

machine, in dispute as to its accuracy here today? I only want to

see a yes if you are disputing the accuracy of the product. Is it reasonably fail safe?

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Seeing no response, what we have is a better piece of equipment.

Mr. Skarzynski, what I hear today is that your purported customer—I view the advertiser having been an advertiser—as your

most important customer because I demand the accuracy in order

to make good decisions with my money which ultimately I am her

customer as an advertiser and that is what we are trying to

achieve when we are on the other side of it.

Can you briefly tell us how does this committee have a high confidence that with an accurate piece of equipment, you are going to

take care of the other problems that have today been called in

doubt? Mr. Liggins is going to be up in a minute and he is a little

different than this first panel. Although he will talk about the

same problems, he is hopeful you are going to get there.

Would you tell us how you are going to get to the level of accuracy, knowing that the tool isn’t the problem, but these other problems exist? What are you going to do in the next 12 months so you

don’t have to be back here again?

Mr. SKARZYNSKI. Congressman, we are improving our performance. Mr. Ivie put up some charts that talked about how we are

performing at certain levels. If you were to look at Appendix B of

our written testimony, we have the data for all of our markets that

goes through the month of November. We are performing at a

much higher level for all markets. It is based on improvements

that we are making to the sample size and the sample quality that

we are making across the board. We are getting these suggestions

from our customers and from the MRC staff. We are committed to

making our service the very best service that it can be.

Mr. ISSA. Thank you very much.

If anyone else wants, answer briefly.

Mr. HONIG. Thank you, Congressman.

First, I should have put my hand up when you asked if anyone

questioned the accuracy of it because it is accurate if you are talking about measuring stations that are encountered. If what you are

trying to find out is what people listen to, it isn’t and can’t possibly

be accurate because people often encounter stations and they are

not listening, not paying attention. They are not listening to the

advertisements.

The other question that I think you are going to is really the

heart of what we are here for which is what is the duty of care.

These things are understandably relative but we have a lot of

precedent on that. This is somewhat analogous to the reason why

we hold surgeons to a higher standard than general practitioners.

What we have here is a company engaged in the highest level of

statistical research. This isn’t a sophomore class in statistics learning how to do this and you find surprisingly someone who used to

teach sophomore statistics. You find grossly unrepresentative samples by race, ethnicity, and age. You find the lack of a measure of

engagement such that those who command high loyalty, whether it

be Black, Spanish, radio personalities, or Sean Hannity are undercounted.

Mr. ISSA. I would be happy to hear more but the chairman has

limited ability to give me time and this hearing is strictly on the

diaries versus the PPM, so to a great extent, we are trying to limit

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rate. We can’t necessarily get at the entire history of everything

that is not right with this company.

Ms. Shagrin, if you have something, briefly, please.

Ms. SHAGRIN. The tool may accurately record and report what

people are exposed to, but the gist of the matter is, are the people

who are carrying the tool representative of U.S. America in all

ways and for minorities as well as non-minorities by age? I think

the answer to that question is no. The best tool in the world with

a bad sample does not give you good data.

Mr. ISSA. Thank you. Thank you for a succinct answer.

Mr. Clay [presiding]. The ranking member’s time has long expired.

The gentleman from Texas, Mr. Cuellar, for 5 minutes.

Mr. CUELLAR. Thank you, Mr. Chairman.

Mr. Skarzynski, taking into account that I believe Arbitron has

been sued by four attorney generals, New Jersey, New York, Maryland, and Florida, taking into account that Arbitron has failed to

receive accreditation from the MRC for many of the markets, taking into account that there have been issues about methodology,

taking into account the testimony we have heard here and people

sitting behind you, wouldn’t it be better for you to listen more to

your direct customers and try to implement some changes while

keeping the accuracy of the information than having a legislative

fix?

Mr. SKARZYNSKI. Congressman, we listen to our customers and

we have a set of improvements that we have made based on customer input that has improved our performance. As I mentioned in

response to Congresswoman Chu’s question, we feel we are performing at a level in nine markets, including New York, where we

have earned MRC accreditation. We are very open to receiving inputs. We have a very active program to take any changes, any improvements that we make and not just put them in one market,

but put them in all markets. We are committed to making our service the very best service that we can make.

Mr. CUELLAR. Ms. Shagrin.

Ms. SHAGRIN. I would like to ask Mr. Ivie to confirm or not confirm the statement that Mr. Skarzynski just made about eight or

nine markets being ready to be accredited.

Mr. CUELLAR. I thought it was only two markets.

Mr. IVIE. You don’t earn accreditation until we grant it, so it is

not earned yet. That is simply how I would state that.

I do want to correct one thing or at least make a statement because I don’t want to leave the committee with a mis-impression.

Ranking Member Issa was talking about paying people more if they

are African-American or problematic in terms of gaining cooperation. Arbitron provides substantial incentives to people, financial

incentives, to carry this device and participate.

We are actually not of the opinion that a lot more money is what

is necessary here in terms of payments to panelists. In fact, there

is an element of danger there. If you pay people too much, they

might change their behavior based on that and you don’t want to

change their behavior, you want to measure their behavior.

We are looking at other avenues, more contact to panelists, training to panelists, strategies to convince a young, African-American

163

panelist why it is important to carry this device, why it is meaningful to them. It doesn’t message back to you, it is not a cell phone

or something. It is not a money thing.

Mr. CUELLAR. Thank you very much. Let me ask a few more

questions.

What happened with those four law suits that were brought in

by the attorney generals? There were questions on the methodology

issues being brought up here today, correct?

Mr. SKARZYNSKI. The suits were focused on the allegation that

we are under-counting minorities.

Mr. CUELLAR. Which is sort of the same testimony we are hearing today?

Mr. SKARZYNSKI. In part.

Mr. CUELLAR. Were those suits settled?

Mr. SKARZYNSKI. We have settled the suits with the New York

attorney general, the New Jersey attorney general, and the Maryland attorney general and we are meeting all of our obligations

under those settlements. The Florida attorney general came up just

in the last few months and we are in discussions with the Florida

attorney general.

Mr. CUELLAR. They were settled on the basis that there were

questions about methodology, similar issues that we are bringing

up today?

Mr. SKARZYNSKI. Not questions on methodology so much as the

issue around the allegation of under-counting Black and Hispanic

listeners.

Mr. CUELLAR. Which is a concern that I think is being brought

up here today.

Mr. SKARZYNSKI. Yes, it is.

Mr. CUELLAR. Why wait for a lawsuit, why wait for a legislative

fix? Why not just sit down with the customers and have the end

result of getting accurate information? Why not sit down? If I was

a monopoly, it would be a lot easier. It would be different than if

I had four or five other competitors providing the same service.

I don’t want to tell you how to run your business, but if I had

customers that have been forced to go to 2 years instead of 1 week,

questions about the use of incentives, demographic information,

using your own target levels for demographic representatives on

the panels, cutting down the participants when you had the diary

by 66 percent, those are legitimate questions.

The way I see it, I come from a district that is about 78 percent

minority, mainly Hispanics. I come from the State of Texas that

has now earned pretty much minority majority status now. You

look at the demographics for the United States, you look at the

purchasing power of Hispanics, for example, and if you include the

Blacks, the purchasing power is, what, $800 billion a year and by

2012 it will be over $1.2 trillion—huge purchasing power.

The way I see it, either you are going to be sued or you are going

to get a legislative fix. If I were you, and I don’t want to tell you

how to run your business because you are the expert, I would rather sit down with them and say, what other changes do we need to

make.

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I know you are saying you are listening to your customers, but

if you look to the person right next to you or other folks, they are

saying no.

Mr. SKARZYNSKI. We sit down with our customers on a regular

basis, we sit down with them on an individual basis. We have a

Radio Advisory Council where all broadcasters are represented.

Univision actually has two members on the Radio Advisory Council. We have an Advertising Agency Council where advertising

agencies, including Hispanic and urban advertising agencies are

present. We do a great deal to listen to our customers and we act

on those inputs.

Mr. CUELLAR. If you were totally listening to your customers, we

wouldn’t be having this legislative hearing.

Mr. Chairman, thank you very much.

Chairman TOWNS [presiding]. Thank you very much.

I yield for 5 minutes to the gentleman from Missouri, Mr. Clay.

Mr. CLAY. Thank you, Mr. Chairman.

Just to piggyback on what my friend from Texas just said, with

the introduction of Arbitron’s PPM, several markets have been negatively impacted by poor methodology and undeveloped technology.

Even in my home district in St. Louis, long established, minorityowned radio KATZ-FM fell victim to the latest string of closings.

Let me ask Ms. Shagrin, Univision was able to end their contracts with Arbitron in two markets. Basically, why was this decision made?

Ms. SHAGRIN. When the Houston market was rolled out and the

methodology in Houston is different, we signed a long term contract. When Arbitron changed the methodology to the radio-only

methodology, I had a lot of concerns in terms of whether or not

they would be able to recruit and maintain a representative sample.

Because of my background, I realized what those problems would

be and encouraged Arbitron at that time to make some changes in

how they recruited.

Mr. CLAY. Ms. Shagrin, I am going to ask for the short version

because I only get 5 minutes.

Let me ask you, on average, how much does it cost to subscribe

to Arbitron and are these rates higher than before?

Ms. SHAGRIN. The rates are significantly higher than they were

in a diary market.

Mr. CLAY. Thank you so much.

Mr. Skarzynski, clearly Univision’s decision to decline your services and the PPM’s lack of accreditation signals that your results

are not accurate and negatively impact minority stations. How can

you justify charging stations through exclusive and binding contracts for inaccurate information that can end their business?

Mr. SKARZYNSKI. Congressman, Univision did not break their

contract with us. The contract was up for renewal. They did not

renew. That is the specific issue on Univision.

We feel that we have a solid methodology and solid technology

and we have had very, very strong performance in 2009 and we

think we have a representative and valid survey. We are proud of

what we do and we are confident that we are providing the best

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service that we possibly can and we are not focused at all on trying

to hurt any of our customers, including Hispanics.

Mr. CLAY. How do you adjust for the skewed results then of the

different demographics? How do we fix that?

Mr. SKARZYNSKI. In terms of our performance against our methodology, we are performing at a similar level, at a comparable level

for African-American and Hispanic listeners as we are for white listeners. Mr. Ivie showed some charts where he showed some dips,

particularly in the summer. We have a problem with seasonality in

the summer, but all of those levels of performance are levels that

we share across the board. We don’t have a different level of performance.

Mr. CLAY. To my understanding, you are using 66 percent fewer

individuals on your PPM panels than when you used the diary

method. You have also used your own target demographics instead

of using reliable census data to accurately reflect your market.

When these smaller panels are then broken down by ethnicity and

other demographics, sample sizes are quite small. How can you

possibly measure a station’s audience accurately with such a small

sample?

Mr. SKARZYNSKI. Congressman, we do use census data, just to

comment on that. In terms of how Arbitron research compares to

other consumer research, the Gallup Poll, for example, with which

you are familiar, has a sample size of 2,400. The JD Power vehicle

study has a sample size of 46,000. Our current sample size for the

country is on the order of 55,000 right now. We feel we have a statistically significant sample size.

Mr. CLAY. How does this much smaller sample size account for

unexpected results such as, for instance, suburban listeners listening to an urban station and other ways in which American cultures

intersect? Sometimes I listen to Charlie Pride, believe it or not, or

gospel.

Mr. SKARZYNSKI. Congressman, we work with all radio broadcasters in a given market in St. Louis, so we would be encoding

every station in St. Louis. We don’t charge any money for a particular station. In terms of covering the market of St. Louis, we

would cover a listening area as opposed to just the city limits of

St. Louis, so we would cover suburbs and we would get a representative sample that would map to the demographics of St. Louis

based on census data updated each year for Claritas data.

Mr. CLAY. Dr. Barry Blessing stated ‘‘Weak encoding signals can

prevent the PPM from recording certain stations.’’ What is Arbitron

doing to correct technical issues with the PPM that can negatively

impact smaller stations with weaker signals?

Mr. SKARZYNSKI. We are aware of Dr. Blessing. He didn’t contact

Arbitron when he did his study. We are aware that he published

his report. We have been in consultation with the MRC staff about

that report and about that issue and we don’t feel that particular

comment is an accurate comment by Dr. Blessing.

Mr. CLAY. I yield back, Mr. Chairman. Thank you for your indulgence.

Chairman TOWNS. I want you to know you have nothing to yield

back, but the language sounds good.

I yield to the gentleman from Massachusetts.

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Mr. TIERNEY. Thank you, Mr. Chairman.

Am I missing something here or does taking the human element

out of it, the reporting element out of it really create a problem?

For instance, if I have one of your PPM devices, Mr. Skarzynski,

and I go into an elevator a couple of times a day and I am not listening but I am subject to that music or if I go into a shopping mall

into the individual stores and every time I walk around, I am probably not listening to that stuff, but it is being recorded as if I am

a listener, is that right?

Mr. SKARZYNSKI. That is correct, Congressman. We measure the

radio that you are exposed to, so if you are in the elevator or in

the shopping center or having lunch with Congressman Clay and

you both are focused on your conversation but you are exposed to

a particular radio station, we are measuring that. Why is that important? It is important for advertisers to know how much exposure does an individual have to radio.

Mr. TIERNEY. I guess if I am an advertiser, I want to know

whether someone is listening or not, not whether they are exposed

to it. That is just a personal preference, I guess, but if I am going

to spend money, I want to know that someone is not just stuck in

an elevator talking to somebody else and stepping out. I want to

know that they are actually listening to it.

Mr. Ivie, are you familiar with the terms of the three settlements

and the litigation?

Mr. IVIE. I am familiar with the terms of the New York and New

Jersey settlements.

Mr. TIERNEY. Do those terms and the obligations to Arbitron

under those settlements at all address any of the issues that you

think were important for accreditation?

Mr. IVIE. I should let you know that both of those organizations

subpoenaed our records, so they understood when they reached

those settlements what our audit findings and discussions with

Arbitron were. However, I would say that both New York and New

Jersey set certain performance levels for Arbitron. Particularly, I

am thinking about the compliance levels. They needed to have all

the various demographic groups comply at certain rates with carrying the PPM. Some of those rates are lower than the MRC would

desire. The settlements reached by the attorney generals—I am

aware of the two, New York and New Jersey—are actually not the

same levels that we would seek to set but they looked at our documentation when they set those levels.

Mr. SKARZYNSKI. Congressman, may I make a comment?

Mr. TIERNEY. I would like to go to Ms. Shagrin first. I think you

indicated you would like to comment.

Ms. SHAGRIN. Just a point of order. They are not settlements,

they are consent decrees. All of the attorney general discussions or

lawsuits were consent decrees which means they could be reopened

at any time.

Mr. TIERNEY. Mr. Skarzynski, did you want to make a comment?

Mr. SKARZYNSKI. The settlements with the New York attorney

general and the New Jersey attorney general.

Mr. TIERNEY. The settlement or the consent decree?

Mr. SKARZYNSKI. The settlement follow the metrics of the MRC

and look at particular periods of time beginning, for the New York

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attorney general, the June, October, and December of this year and

June of next year.

Mr. TIERNEY. What was the motivating factor for you not just

going to the system that you used in Houston, Riverside, and San

Bernardino and just implementing that everywhere because you

knew that had been approved and you were ready to roll? Was it

just cost or another factor?

Mr. SKARZYNSKI. The system that we use in Riverside-San

Bernardino, which is accredited, is the system we are using everywhere in the country.

Mr. TIERNEY. As was the one in Houston, which is why I am asking you why you didn’t just implement those systems everywhere?

Mr. SKARZYNSKI. The system we use in Riverside-San Bernardino

is the system we are implementing across the country. The system

in Houston was developed and set up at a time when we were

working in cooperation with Nielsen whereby the same panel was

going to have the audience measure television for Nielsen and

radio for Arbitron. After starting that methodology in Houston,

Nielsen decided they didn’t want to pursue that. Hence, that is the

explanation as to why we are using a radio-first methodology which

was accredited in Riverside-San Bernardino and we are using that

elsewhere in the country.

Mr. TIERNEY. Mr. Ivie, do you agree that the Riverside-San

Bernardino product is what is being brought countrywide by

Arbitron? Can you explain why it is good in one place and not in

another?

Mr. IVIE. It is a very complex issue because we look at Arbitron’s

performance and their compliance with our standards and we accredit a market. Then we don’t know what happens after that. We

have to rely on Arbitron to maintain that performance.

When Riverside-San Bernardino was implemented, it had among

the highest performance that we had ever seen. For example, the

charts I showed earlier showed male and female tabulation rates

for the PPM. If you remember, Atlanta was 70 or something like

that. At the time when we accredited Riverside, those rates were

over 75 and some were over 80 percent.

What has happened since in Riverside is that performance has

fallen way down. Riverside looks very similar to the other market.

The MRC is faced with a complex question. What do we do with

Riverside? We have accredited Riverside; Arbitron has had that

performance decline significantly, and if I can amend the record, I

have a chart that actually illustrates that for you for Riverside.

Mr. TIERNEY. Mr. Chairman, I ask that the chart be put in with

unanimous consent.

Chairman TOWNS. Without objection, so ordered.

[The information referred to follows:]

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Mr. TIERNEY. Can you explain why San Bernardino changed?

Mr. IVIE. I can’t. It has to do with how Arbitron interacts with

its panelists. Some of it, as Mr. Skarzynski said, might be

seasonality, although the period I am looking at for Riverside on

this chart is from October, when we accredited it, to September.

When Mr. Skarzynski says he believes that in however many markets it was, seven or eight markets, they earned accreditation, we

are looking at Riverside and saying, if we accredit, what is going

to happen next month.

What we need from Arbitron is a demonstration that their performance can be sustained because it wasn’t sustained in Riverside.

I urge you to take a look at this chart on Riverside. We are trying

to assess what we do with Riverside. It is accredited right now. We

made a decision to accredit it. It is difficult for us to remove accreditation. We are trying to figure out what to do with it. We are trying to be constructive, improve it just like the other markets. This

is a challenging issue, trying to get these markets to have good performance that is sustained. I urge you to look at this chart for Riverside.

It is true that Houston has a totally different methodology in several areas—the in-person recruitment, the in-person coaching.

Houston is a different system than the other markets, but Riverside is the same.

Mr. TIERNEY. Thank you very much.

Thank you, Mr. Chairman.

Chairman TOWNS. Thank you very much.

Let me indicate to the Members that in about 5 or 10 minutes,

we will have votes. I would like to release this panel. Votes are

now. We will recess for 1 hour and then we will come back, so you

can have lunch.

Let me say before we recess, I am very concerned with the fact

that you are saying that you really have no supervision, no anything and if you decide to roll out something, you roll it out and

if you are asked to wait, you roll it out anyway. It is serious business because some of these radio stations are not going to be

around if something is not done and done very quickly. I don’t see

the kind of commitment that I would like to see.

I am one that does believe in legislation. I want you to know

that. I am hoping that we can work this out and come up with

some kind of agreement before we move any further. You say the

FCC has no role, MRC is voluntary and that is good if they want

to be invited. You invite them. If not, you tell them go home and

I understand all that.

At the same time, I am concerned about the fact that these minority stations are under-represented right now. Over the last 30

years we have done a little something and now to lose that really

bothers me. I think you need to know that before we leave, we need

to make certain there is going to be some movement here that is

going to make it possible to have the kind of reporting that is going

to be accurate and to make certain these stations are able to stay

around.

When I hear of a station that is No. 1, then you change the system and it becomes No. 15, I have problems understanding that

just from a numbers standpoint. I just want to make that clear.

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We are going to dismiss this panel and we will come back at 1:30

p.m. I want to let you know that I am troubled and we need to

make certain that something is done that brings about the kind of

accuracy that is going to help in terms of these stations being able

to advertise and get business. I understand the economic situation,

but when I look at the 20 percent difference, I have to look at that.

The other question is in terms of your bottom line versus what

it was when you had the paper diary versus what it is now, that

is an issue. I think you might be cutting corners and at the same

time, you are cutting people out.

We will adjourn until 1:30 p.m.

[Recess.]

Chairman TOWNS. The committee will reconvene.

It is a longstanding practice that we swear in all of our witnesses. Please stand and raise your right hands.

[Witnesses sworn.]

Chairman TOWNS. You may be seated.

Let me introduce our panel.

First, we have Charles Warfield, president and CEO of the Inner

City Broadcasting Corp. since 2000 and is a 32-year veteran of the

broadcasting industry. His company owns 17 radio stations which

target African-Americans and urban audiences in New York City,

San Francisco, Jackson, MS and Columbia, SC. It is the second

largest African-American-owned radio station company in the

United States. Welcome.

We also have Frank Flores who started his career in the broadcasting industry in 1981. Since then, he has worked his way up

from sales associate at a local station to the current position of

chief revenue officer and New York market manager for the Spanish Broadcasting System. Welcome.

Mr. Alfred Liggins is the president and CEO of Radio One, Inc.

and president and chairman of TV One, LLC. Radio One is the

largest, multimedia company that targets African-Americans and

urban listeners with 52 radio stations located in 16 urban markets.

Mr. Liggins is responsible for the overall management and operations of Radio One assets. Welcome.

Jessica Pantanini serves as the chief operating officer for

Bromley Communications, Inc. as well as vice chair for the Association of Hispanic Advertising Agencies. Ms. Pantanini is recognized

as a national expert within the evolving Hispanic marketing industry.

Let me welcome all of you.

We will start with you, Mr. Warfield, and come right down the

line.

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STATEMENTS OF CHARLES WARFIELD, PRESIDENT AND

CHIEF OPERATING OFFICER, ICBC HOLDINGS, INC.; JESSICA

PANTANINI, CHIEF OPERATING OFFICER, BROMLEY COMMUNICATIONS, INC.; FRANK FLORES, CHIEF REVENUE OFFICER

AND NEW YORK MARKET MANAGER, SPANISH BROADCASTING SYSTEM; AND ALFRED C. LIGGINS III, CHIEF EXECUTIVE

OFFICER AND PRESIDENT, RADIO ONE, INC.

STATEMENT OF CHARLES WARFIELD

Mr. WARFIELD. Thank you.

Chairman Towns, Ranking Member Issa, members of the committee, thank you for inviting me today to testify.

As indicated, I am Charles Warfield, president and chief operating officer of ICBC Broadcast Holdings, Inc. Our 37-year-old African-American owned company operates 17 commercial broadcast

radio stations that primarily target African-American audiences in

New York City, San Francisco, Jackson, MS, and Columbia, SC.

We have firsthand experience with the conversion of Arbitron

rating surveys from paper diaries to the new Personal People

Meter. Our stations have experienced a disproportionate reduction

in the number of listeners reported by Arbitron’s PPMs compared

with stations that serve general audiences.

The principal measurement that our industry uses is the average

quarter hour ratings which translates directly into the number of

dollars that an advertiser will pay for running a commercial. The

average quarter hour can be measured for various demographics.

Advertisers on our stations are most interested in listeners between the ages of 25 and 54 or, in some cases, 18 to 34.

In New York City, the adults 25 to 54 average quarter hour for

our station, WBLS, have been a steady 0.8 or 0.9 for the last seven

quarters in which Arbitron had used paper diaries for collecting

data which incorporates the period of fall 2006 through the spring

of 2008.

Immediately following the conversion to PPM, the average quarter hour from WBLS abruptly dropped to 0.4 for September 2008,

a 50 percent reduction. The average quarter hour rating has fluctuated in the range of 0.3 to 0.6 for the 14-month rating period beginning with that first report in September. Our formats did not

change, our audiences did not change. The only change was the

PPM methodology.

Arbitron also switched from paper diaries to PPM in the San

Francisco market in September 2008. Our station, KBLX-FM, took

a similar hit in that market. In the spring ratings book, KBLX’s

adults 25–54 average quarter hour was 0.5. The first PPM report

gave the station an average quarter hour of 0.3, a drop of 40 percent. Since then, each monthly PPM survey has shown a decrease

anywhere from 60 to 20 percent from the previous diary results.

The same pattern shows up for stations serving African-American and Hispanic audiences in other markets when PPM ratings

are introduced. WDAS-FM, Philadelphia’s top-rated station according to the paper diaries, suffered a 44.4 percent decline in its average quarter hour ratings for listeners 12-years-old and older. Even

more damaging was a 57.1 percent decline in its primary target demographics of adults 25 to 54. Also in Philadelphia, WRNB-FM and

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WUSL-FM incurred losses of 60 and 57.1 percent respectively in a

12-plus audience.

KJLH–FM, the Los Angeles Station owned and operated by

Stevie Wonder and managed by Ms. Karen Slade who is in attendance here today, suffered an 84 percent audience decline and

dropped from No. 20 in that market to No. 40 with effectively no

ratings.

In Chicago, WGCI-FM, second ranked under paper surveys, lost

67 percent with PPM and dropped to No. 12.

In all of these markets, the only factor that can account for the

precipitous deterioration is Arbitron’s unaccredited ratings methodology. Plummeting ratings have shown up again and again for

stations targeting African-Americans and Hispanic audiences and

other markets where Arbitron has introduced PPM. Ratings for

stations using formats appealing to general audiences have been no

where near as significantly affected.

We do not believe the ratings shifts are the result of electronic

measurement technology itself, but rather, they stem from the

methodology that Arbitron employs. The company has relied on

telephone solicitation to recruit PPM survey panelists instead of

addressed-based contacts. This change alone leaves out households

with unlisted numbers and those that rely exclusively on cell

phones.

Young urban Blacks and Hispanics are more likely to rely exclusively on cell phones than the average U.S. household. Arbitron has

tried to make up for this with separate cell phone only samples but

the numbers have been too small. Additionally, Arbitron is demanding that PPM panelists make longer term commitments to

carry around a pager-sized device from the time they roll out of the

bed until they return at night.

Congressional hearings back in 1964 made it obvious that ratings play a key role in the economics of commercial radio. The nonprofit MRC was formed to analyze ratings methodology and practices. So far Arbitron has qualified its PPM service for MRC accreditation in only two markets, Houston and Riverside, out of the 30

plus that it has rolled it out in.

The Houston project was a joint venture and did demonstrate

that the PPM survey can be accredited but the recruiting process

necessary is expensive, more than Arbitron wants to spend.

Arbitron has been unwilling to invest the resources necessary to

achieve MRC accreditation in any other markets.

The reductions in average unit ratings and station revenues

caused by inaccurate PPM reports have left minority-targeted stations battered and bruised. Then rubbing salt in our wounds is the

Arbitron station contract. The standard form contract provided the

stations by the monopolistic ratings company with little opportunity to negotiate its terms requires stations to actually pay

Arbitron significantly higher fees once the inaccurate PPM system

is operating in our markets—more money for less accuracy and

lower revenue. The contracts do not require MRC accreditation.

The math only benefits Arbitron, which can increase its profits by

rushing PPM into markets with faulty methodology.

We are dedicated to serving minority audiences in the markets

where we have stations, as are other broadcasters who are memVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00176 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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bers of the PPM Coalition. It would be a far easier path to jettison

this mission and program to the ratings by converting to run-ofthe-mill, plain vanilla formats.

Large group broadcasters with clusters of stations in a market

can already do that by shuffling formats among their stations. As

minority owners, we have a strong sense of responsibility toward

providing broadcast services that otherwise would be unavailable.

Our coffers, however, are not bottomless and our ability to sustain

our businesses in the face of these problems is ultimately limited.

Attorneys general in four States have made attempts to ameliorate these problems, but even the simple concept of requiring

Arbitron to secure MRC accreditation has thus far not been fruitful. We believe this committee should send a strong message to the

industry that something must be done to preserve diversity of programming and ownership in broadcasting.

Requiring accurate and fair ratings data is one step. We believe

at least this requires Arbitron to gain MRC accreditation before

any additional markets are commercialized. It neither is requiring

Arbitron to release minority-targeted stations from those burdensome contracts.

With that, I do thank you for the invitation today and welcome

any questions as we continue.

[The prepared statement of Mr. Warfield follows:]

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Chairman TOWNS. Thank you very much for your testimony.

Ms. Pantanini.

STATEMENT OF JESSICA PANTANINI

Ms. PANTANINI. Good afternoon, Chairman Towns, Ranking

Member Issa and Honorable Members of Congress.

Thank you for the opportunity to address the House Committee

on Oversight and Government Reform regarding the serious challenges and repercussions of the roll out and use of Arbitron’s Personal People Meter.

I am Jessica Pantanini, vice chair of the Association of Hispanic

Advertising Agencies [AHAA] and COO of Bromley Communications, Inc., a minority-owned, Hispanic advertising agency.

AHAA represents 98 percent of Hispanic specialized agencies in

the United States and more than 100 related industry suppliers

such as research firms, media companies, and production companies, all of which the vast majority are small businesses.

I am here today because the specialized advertising industry is

facing severe consequences resulting from the implementation of

PPM currency. My testimony here is a culmination of numerous attempts and years of effort and resources to resolve sampling methodology challenges with Arbitron unsuccessfully.

Arbitron’s continuous improvement plan has yet to alleviate our

concerns. We need a commitment to when we can expect PPM to

be accredited and I pray it is before more minority stations are

forced out of business. There are two points I would like to make.

One, we support electronic measurement. We believe wholeheartedly that the industry needs to move in that direction and

that PPM technology more accurately measures listening versus

diary. This is not about PPM versus diary. Rather, it is about the

methodology that fuels the data.

In addition, while we may only represent a handful of Arbitron’s

clients, we are the ones that have a vested interest in the accurate

measurement of minority audiences. It is our bread and butter.

Our goal is to ensure that radio sampling methodology is reliable

and fair so that AHAA agencies and members can adequately deliver consumers and ultimately sales for advertisers. We depend on

the independent endorsement of accrediting bodies such as the

Media Ratings Council to provide us with the competence we need

to make appropriate media buying decisions.

Because our membership represents a growing but smaller portion of the market as compared to the general market agencies and

radio broadcasting companies, we don’t have the resources to verify

the data and subsequently rely heavily on the MRC.

The bottom line is that Hispanic listeners are being represented

inaccurately by Arbitron. While Arbitron is making great leaps in

rolling out PPM, they are only making small improvements in

methodology such as increasing the number of cell phone only

households.

Those changes are insignificant compared to the damaging impact the roll out is having on our industry. We need sustainable

change and improvement on the sample now before additional markets are converted to this new currency.

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Radio is a critical element of our marketing mix and has been

the backbone of our advertising outreach efforts for decades. Ethnic

stations that were once ranked at the top have dropped significantly in the reported audience levels in PPM markets. We need

your help to stop the commercialization of PPM without MRC accreditation or prohibit broadcasters from using PPM data until

markets are accredited.

Hispanic Americans are fueling the growth as indicated by the

census in States such as California, Texas, and Florida which are

becoming majority minority. How is it possible that Arbitron can

continue to improperly measure these audiences?

In closing, we ask that Arbitron is forced to gain accreditation in

these markets. It is key to the success of the industry and has devastating impacts to agencies, broadcasters and advertisers alike.

[The prepared statement of Ms. Pantanini follows:]

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Chairman TOWNS. Thank you very much for your statement.

Mr. Flores.

STATEMENT OF FRANK FLORES

Mr. FLORES. Thank you very much for the opportunity, Chairman Towns.

I am Frank Flores, the chief revenue officer of the Spanish

Broadcasting System [SBS], based in New York.

SBS is the largest publicly traded Hispanic-controlled media and

entertainment company in the United States today. SBS owns and

operates 20 radio stations in the Hispanic markets of New York,

Los Angeles, Miami, Chicago, San Francisco, and Puerto Rico, including four of the top-rated Spanish language radio stations airing

the Tropical, Mexican Regional, Spanish Adult Contemporary, and

Urban formats.

For purposes of brevity and not to recount everything said before,

let me just summarize a couple of important points.

For all intents and purposes, Arbitron is an unregulated monopoly, the only recognized source of radio ratings in the United States

today, especially in the market where we operate radio stations.

SBS, the company, has had an unblemished history as a client in

good standing with Arbitron for over a quarter of a century.

SBS was the first group owner to sign up for PPM. SBS was the

first minority broadcaster to sign up for PPM. SBS wholeheartedly

supports electronic measurement of all radio audiences. However,

and this is a big point, significant modifications and alterations

need to be undertaken in order for PPM to accurately reflect the

listening levels of all minority audiences. The effects of PPM on

Spanish radio have been devastating and in direct contradiction to

the years of rating results provided by the diary methodology.

Worse yet, Arbitron is charging up to 60 percent more for its PPM

ratings than it did for its diary ratings.

SBS has offered to assist Arbitron in conjunction and in cooperation with other radio colleagues in working on a universally accepted resolution to this PPM issue.

Let me further state that the entire industry has been affected

by the economy and some will say that the economy, in large part,

is solely responsible for the down trend in our business, but there

can be no argument that the ratings produced by the PPM methodology has also added greatly to our inability to price our inventory on a competitive basis lending to these historic declines in revenue.

In closing, the fact that our business, the business of minority

broadcasting, has been unfairly affected by the implementation of

PPM, we, as a company, are committed to finding a way to resolve

our issues for the betterment of our company and our ability to

serve our community. We are hopeful that by working with all parties, including Arbitron, to find these solutions, our goal is to

achieve a more accurate and stable result in ratings that reflect a

more representative account of all minority listeners. The best way,

in our opinion, would be MRC accreditation in all markets. We are

resolute to have that be our eventual goal.

Thank you.

[The prepared statement of Mr. Flores follows:]

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Chairman TOWNS. Thank you very much for your testimony.

Mr. Liggins.

STATEMENT OF ALFRED LIGGINS

Mr. LIGGINS. Thank you, Chairman Towns, Ranking Member

Issa, and other members of the committee for providing me the opportunity to testify.

For those of you I have not met, let me introduce myself. I am

Alfred Liggins, CEO of Radio One, Inc. As you heard earlier, we

are the largest media company targeting African-Americans in the

United States. We are a multi-platform company that includes

radio, Internet, satellite, and our nationally distributed cable network, TV One.

As owner of 52 radio stations located in 16 urban markets, I

want to express both my support and confidence in the future of

urban radio in a PPM world. My understanding is that during this

hearing, you are asking, does PPM affect the diversity of radio and

is it contributing to minority radio’s decline? I categorically say

that I believe in both the short- and long-run, PPM is neither affecting the diversity of our air waves nor contributing to the decline

in minority radio.

Rather, what PPM has done is expose some poor choices made

during the good times before this recession hit. Some broadcasters

became over-leveraged, including ourselves, and perhaps expanded

when they should not have and some broadcasters launched urban

formatted stations in markets where there are already established

urban radio stations, many that we have owned and many our colleagues in the minority radio business have owned and we drew

competitors that we should not have.

I do not believe that the commercialization of PPM is to blame

for the problems currently facing some minority broadcasters.

Based on our own PPM experience, PPM does not discriminate

against minority-owned broadcasters or urban formatted stations.

There are always short-term dislocations in a learning curve when

a new technology is adopted, but PPM is the new reality and I

would much rather get reality on the road now and keep it moving

forward than to delay it.

The heated dispute and controversy result primarily from the

fact that the PPM device, as compared to the paper diary, can have

a downward impact on the average quarter hour rating or AQH,

which is a result of dramatically increased audiences combined

with lower amounts of time spent listening.

The average quarter hour rating numbers with PPM are generally lower for most stations in all markets regardless of format.

Radio One has seen dramatic declines in its AQH ratings after

PPM’s commercialization in a market. However, by designing our

programming for a PPM world, including fine tuning our music,

promotions and commercial breaks, we have regained most, if not

all, of our pre-PPM ranked positions without changing formats. Although our audiences are smaller, our rank has returned and in

many cases, that ranks us as No. 1, 2 or 3 in different markets.

The reduction in reported average quarter hour listening from

diary to PPM is not, in my opinion, caused by racial bias, but rather, is due to the fact that the diary is a subjective tool that asks

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participants to recall from memory what stations they listened to

on the radio. In my experience, the diary service has a bias in favor

of legacy stations or programs with a strong brand name or identity.

PPM is a more objective measurement tool that plays no favorites and allows all stations to compete for listeners on a level playing field. The PPM is without question a major improvement over

the diary service. It gives broadcasters a type of granular and timely data that the diary system simply cannot provide.

For the first time, we can evaluate on a minute-by-minute basis

the listening habits of our audience, when they tune in, how long

they listen and when they switch to another radio station. This

level of specificity allows us to respond almost in real time to listeners’ tastes and show advertisers that we can attract listeners to

our programming. That in turn translates into revenue for broadcasters.

As a result of the Internet, advertisers expect timely information

to respond to ever changing customer preferences. No matter the

media, advertisers expect to see how many eyes and ears are paying attention. PPM is doing that for radio by providing clear, actionable intelligence on radio’s audience.

If PPM is not universally adopted, the radio industry is in danger of losing advertising dollars to other mass media and information platforms that have passive measurement systems. PPM contributes to advertisers’ perception of the strength and value of

brand conscious and brand loyal African-American consumers who

have almost $1 trillion to spend annually. In short, electronic

measurement provides compelling evidence about the power of

urban radio.

Through PPM, Radio One has been able to deliver reliable and

credible measurement of our audience to our advertisers. Some

have said that PPM should take a breather, especially until it is

fully accredited by the Media Ratings Council. My response is an

emphatic ‘‘no’’ as that would confuse advertisers who now rely on

PPM and cause them to question the reliability of radio as an advertising medium. It would hurt the radio industry, not just

Arbitron.

While we acknowledge that Arbitron has not created a perfect

service, in my opinion we need to move forward with PPM, adapt

to it, monitor Arbitron’s progress and offer our suggestions and

concerns, work with Arbitron to make it better and look forward

to better times for all in the radio industry.

Thank you for this opportunity.

[The prepared statement of Mr. Liggins follows:]

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Chairman TOWNS. Thank you very much.

Let me thank all of you for your testimony. I also want to thank

Arbitron for staying and listening to your testimony. Sometimes

people come, testify, and then leave. I want to let them know I respect the fact that they are staying to listen to what you have to

say.

It was so bad here at one point, when people would testify and

then all the agency heads would leave, I was in the position to

have the people talk first and the agencies come behind them. I notice we don’t have to do that today. They are staying and listening

to you. I want you to know I am impressed with that because they

appear to be concerned about what you have to say. That, to me,

means a lot.

Let me begin by asking, have any of your organizations approached Arbitron about problems with its methodology and undercounting minorities? If you did, what happened?

Mr. WARFIELD. Mr. Chairman, Inner City Broadcasting at one

point owned a radio station in Philadelphia when Arbitron had a

test market in Philadelphia with PPM. The issues and concerns we

are still facing today, the under-representation of minorities, existed at that point. We had numerous discussions as an AfricanAmerican broadcaster with Arbitron in Arbitron’s offices and our

corporate offices in New York City that unfortunately did not bring

about the kind of improvements in the methodology we thought

were necessary before it could be commercialized.

We specifically asked Arbitron not to commercialize the methodology until those issues had been addressed. Unfortunately, we

are here today in 2009 still facing those challenges.

Chairman TOWNS. Yes, Ms. Pantanini.

Ms. PANTANINI. AHAA has met with Arbitron several times, one

time in person and then had several communications with them as

well. Arbitron’s response has been to provide us with more data to

better inform us of why they were taking the positions they were

taking.

It is our sense that there was not a willingness to address the

issues but more of a willingness to provide context on their position

on the issues.

Mr. FLORES. We have had continual conversations with the good

folks at Arbitron trying to see if we could work out whatever issues

there are on the table. I can tell you that we have been in this fight

for a little over 2 years and at least they are at the point where

they are willing to listen to what the issues are.

Two years ago, they believed they had no problems at all with

the PPM. It is a different mind set now.

Chairman TOWNS. Mr. Liggins, let me ask you this. Do you believe the MRC offers a fair and accurate assessment of audience

measurement services?

Mr. LIGGINS. We are a member of the MRC. Our head of research, Amy Volks, sits on the MRC, so she is heavily involved. I

am not personally involved since it is not my particular area of expertise, but from my involvement in this issue, I believe the MRC

is a necessary body. I believe there are a lot of smart people working there to make sure that we have accurate measurement and research, but I think one of the problems that you have with the

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MRC is it is a bit of a black box in that there aren’t any defined

benchmarks that a company like Arbitron can meet or hit in order

to get accreditation. It makes it very difficult to create a business,

roll out a business.

I think Mr. Skarzynski mentioned Nielsen and their electronic

measurement system is still largely unaccredited because of the

process and how long it takes and the fact that there is never a

right answer. It is just a notification when we feel you have met

the criteria.

If it was possible to have a goal that was set where Arbitron, if

they hit these metrics, then they could get accredited, I think this

would be a lot more practical and workable, but we are stuck with

the system that we have. The MRC is what it is and as long as

it is operated in that manner, which I am not questioning its validity, it is going to take a long time to get accreditation, if you will.

Chairman TOWNS. Let me ask the others, do you believe that

Arbitron should continue trying to achieve accreditation through

the MRC?

Mr. FLORES. Most definitely. In fact, we said from the get go,

speaking for the PPM Coalition, should Arbitron get MRC accreditation in the markets in which we compete and operate radio stations, our grievances will go away. That has been a prime focus for

us since the very beginning. We believe that is an important issue.

Ms. PANTANINI. As a small business and AHAA representing

those small businesses, I will tell you that we don’t have the resources available within our organizations to be able to do the kind

of due diligence that the MRC provides. We believe that the MRC’s

expertise, the due diligence they provide and their focus on auditing is extremely important to ensure the validity of data moving

forward.

Mr. WARFIELD. At ICBC, we are certainly, as Frank indicated, as

members of the PPM Coalition, fully supportive of the MRC process

and have made it very clear that our interest is to see the accreditation process completed by Arbitron. As Frank indicated, the concerns we have, we believe, would be addressed with successful completion of that accreditation process by Arbitron with the MRC.

Chairman TOWNS. Let me ask you this. What do you think accounts for this discrepancy?

Mr. WARFIELD. I think one of the main concerns we have is

under representation of segments of our audience in the markets

in which we operate in San Francisco and New York. The inconsistent delivery of a representative sample in different age groups, 12-

plus, 18 to 34, 25 to 54 and we have asked for a representative

sample. We have asked for that from the beginning but they have

not been able to deliver that to give us a product we believe accurately represents our communities.

Mr. FLORES. For us, it is also even a question of country of origin

which came up early on when we were looking at some findings of

the PPM results in the New York area. When we asked the

Arbitron representatives had they taken country of origin into account, they said, why would we? For people who operate in the Hispanic marketplace and provide radio programs for the Hispanic

marketplace, you have to know how diverse it is. A Hispanic is not

a Hispanic. A Mexican Hispanic is different than a Hispanic from

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the Caribbean. Their music tastes are different, their language is

slightly different. What works on the West Coast will not work on

the East Coast. What works on the Southeast Coast might not necessarily work on the North East Coast. It is that diverse and that

different.

If country of origin is not taken into account, then all you need

is one format for the Hispanic and so be it. That is not the case.

That is not the case at all. Even something we would think would

be a give to them was a revelation. They looked at us and said,

why would we care about that?

Now they have come around and all of a sudden they are examining country of origin. That is part of what they are looking into.

That is quite a different stance than they had in the very beginning. I think that attributed to some of the initial results we were

looking at to PPM.

Chairman TOWNS. Thank you very much.

I now yield to the ranking member.

Mr. ISSA. Thank you, Mr. Chairman.

I want to followup a little, Mr. Flores. My understanding is

Arbitron now is asking country of origin and never did under the

diary system. Is that also your understanding?

Mr. FLORES. Yes.

Mr. ISSA. That could, in fact, be part of why some people were

disenchanted with the results is, to a certain extent, the more information you have, it has to change results. If results are going

down or up, that could be a factor, right?

Mr. FLORES. It definitely could be a factor. Talking about results,

there is an important factor that no one had talked about this

morning. Someone mentioned the economy and how that has affected our business. As I mentioned in my opening testimony, there

can be no doubt that the economy has affected our business.

When you have ratings that are 60 or 70 percent less than they

were before and you have a depressed economy, and you have radio

dollars that you are now fighting for that are less, and now you are

not No. 1, No. 2 or No. 3 in our market, you are now No. 14 or

No. 15 in our market, then you are doubly affected. It is not only

the economy, it is the economic impact it has on the radio dollars

coming in.

Mr. ISSA. Good point.

Mr. Warfield, if Arbitron’s new PPM had led to a 40 percent increase in your ratings, would you be here today?

Mr. WARFIELD. I would like to have had that. We would still be

wanting to understand why there was such dramatic change.

Mr. ISSA. That wasn’t the question.

Mr. WARFIELD. Would I be here today? Probably would not be

here.

Mr. ISSA. I suspect that the advertising public would be asking

why the cost of advertising on your station was going up.

Can we all admit that if you get an exact number of minutes that

people have a particular station playing, that will never indicate

the value that radio being on will have to a particular advertiser.

Numbers alone will never cover it?

Mr. WARFIELD. That is correct. Numbers alone don’t cover that

and we certainly do talk about and do sell the value of our audiVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00204 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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ences. That is part of the selling process that our stations have always followed. The difficulty you have, and this is not about diary

versus PPM, such a disproportionate reduction in audience across

various formats that is not explainable, that is an argument that

you really don’t have a position for.

Mr. ISSA. I understand.

Mr. Liggins, I am going to go through a series of questions for

you, one, because you are our witness. Eight people, we get one and

you are it. Also because you deal with the same problems as Mr.

Warfield, what have you done to show, at a given numeric rating,

the value to the advertisers of what you have to offer? In other

words, if you are just a commodity rated completely based on

Arbitron’s numbers and your revenue completely rises or falls with

those numbers and nothing else, isn’t it true that this would be

devastating? I am not saying it isn’t devastating but it would be

devastating and there would be no recourse.

Don’t you, in fact, have to deal with what is the value and how

do you demonstrate that to the advertisers on an individual basis

after they have looked at your Arbitron number?

Mr. LIGGINS. As your witness, I am hoping not to disappoint you.

Mr. ISSA. You are all of our witness. You are the one we chose.

Mr. LIGGINS. I am going to tell you the truth. If your ratings get

cut in half, you can demonstrate value to advertisers but it will not

anywhere near make up for the landslide and falling revenue that

you will have.

On the margin, you can demonstrate value but advertising in

this country is largely bought on cost per thousand as demonstrated by ratings, whether that is on the Internet, on television

or whether that is an outdoor message. Yes, you can create value.

Advertising is priced on supply and demand, so the more people

who want your spots, the higher price you pay. If you actually perform well for a large number of businesses, the more businesses

will want the ads and you can raise the rates.

The fact of the matter is, many advertisers don’t even really

track the response to you individually. You are part of a media

mix. At the end of the day, if ratings drop, get cut in half, look,

we have radio stations that have been hurt by PPM. In fact, I have

a station here in Washington, DC, whose ratings weren’t cut exactly in half, but probably close to 40 percent. Revenue is down 40

to 50 percent, but I had other radio stations that did better because

it showed us having more audience under PPM than the diary did.

Yet, I was a fan of more accurate ratings because I felt we would

ultimately be better off hurt in some places but helped in many

others. I think it is a misnomer to think showing value can actually

make up for the dramatic loss of ratings.

Mr. ISSA. Let me go through one more round because the chairman has indulgence.

All four of you are basically here to tell us that minorities are

being under-counted by PPM and that this problem is not diaries

versus PPM but it is a problem and you want to get it right. I am

going to ask each of you what you have done as industry leaders

to get the correct count.

Politicians do polls or have polls done for them. Pollsters do not

take raw numbers and say here is the result. Pollsters take raw

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numbers and take various algorithms, if you will, that have historically shown to be accurate, particularly when they are rating them

to when an election day is going to be. The people actually listening

and buying products, that is your election day and the people being

polled are Arbitron. That is really what we are dealing with, a poll

versus what you say the reality is.

I rely on a pollster to tell me the difference between the number

he asks and what it really means or will mean predictively on election day. I don’t do it very often. I have done it enough.

What have you done as industry leaders to create some sort of

a legitimate answer to Arbitron, here is what you said, here is

what our research, not what your failures are because they have

admitted they want to make it better. Mr. Liggins, I know they are

working with you and others to try to make it better. What have

you done to actually say here is your number, here is reality? I am

seeing blank faces. Have any of you or collectively done anything

so that you can come back and say here is the proof that our number of listeners is different? I am not trying to be hard. I think this

is a soft ball.

Mr. WARFIELD. As I indicated, our company, Inner City Broadcasting, has two markets we knew were going to be impacted by

Arbitron because our other two markets, Jackson, MS and Columbia, SC, are in the 83 and 120 and are not likely in our lifetime

to get PPM measurement.

We have worked very closely with Arbitron to understand the

underlying methodology here and why the results were where they

were. We have seen consistently the challenges that are there.

Arbitron offered, for example, to work with our company and

work with other minority broadcasters who also in looking at the

numbers, just looking at the numbers, realized we were disproportionately impacted by this methodology even before they rolled it

out.

There were offers they made, what about if we do some type of

engagement metric or engagement study which tries to address

this issue of loyalty that seems to have been lost in PPM at a cost

to the broadcasters who quite honestly we were being asked to pay

65 percent more with this methodology with less results. That was

something at that point that was premature because we couldn’t

get a representative sample.

We reached out to other broadcasters to ask them to look at the

results of their marketplace and what was going on. Let us try to

understand, for example, what is the story of the African-American

consumer and African-American radio stations in this new PPM

world. There was no story to tell, unfortunately, without understanding we are talking about a representative panel which in

2009 we still have not been able to get.

As a broadcaster, we have reached out with the members of the

PPM Coalition who, as they started to roll this out in pre-currency

in New York City, suddenly got to understand what we had been

seeing in some markets.

Mr. ISSA. I have to apologize, Mr. Warfield, but the question is

more narrow than that. We can’t deal with difference between loyalty, etc., in some way from here and neither can Arbitron. What

they can do and what I hope we are helpful in here on the dais

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because we are on a bipartisan basis very concerned, is if in fact

your real effective numbers should be weighted in some way to

where an advertiser, and I used to be an advertiser, can look and

say, wait a second, the comparative value of being on one of your

stations or one of any of your stations is an eight, not a six, and

I am looking at a rate, assuming I am going to pay so much per

million, you can probably make a lot of arguments about your listeners being better than that guy’s listeners.

That is what I was leading to with Mr. Liggins, but from our

standpoint if the effective number because of under-count, who is

willing to carry PPM, any of that, if it is off, what were you asking

yourselves to do or Arbitron who has stayed here and really I believe wants to get the right number regardless of everything being

said at times. What have you done to say OK, here is how we could

analytically come up with a rate and we would accept that adjusted

rate? In other words, the scored rate is here, the skew is this. It

doesn’t seem like it is that hard.

I did direct marketing at one time. We tagged 800 numbers, so

every single ad if it went out on a different station had a different

800 number. People used the 800 line, we verified what our return

on investment was. That allowed us to know as I said in my opening that BET, and I didn’t say in my opening, the Tune Network,

out-performed on a per dollar of advertising dollar many of the

other competitors in our buy. We did that because we wanted to

know. That is an advertiser.

You are the people who want to sell me in my old profession,

what are you doing to work with Arbitron or asking us to ask them

to do to get that number right so the number doesn’t have to be

direct market checked by somebody like me but you and the rating

agency can come out with an accurate rate.

This is no different than we ask Standard and Poor’s, by the

way, when they had them here and we wanted to know why junk

was being rated AAA. We are just as concerned here.

Mr. FLORES. Let me see if I can answer that in a very analytical

way.

It would be nice if we could afford to find another service to come

in and give us what we would consider more accurate ratings, but

at this point in time, with the exorbitant amount of money that we

have to pay on our current contracts to Arbitron and the current

economic conditions of radio stations, we cannot afford to do so. We

rely on pushing as much as we can as many buttons as we can in

front of us, including the MRC, including meetings with Arbitron,

to get that because we can’t afford an alternate service to come in

and give us that. We can’t. It is as simple as that.

If we get some leverage on our contract, had we not signed such

onerous contracts that don’t allow us to do that, we might be able

to do so. We might be able to get someone that could step up to

a monopoly and say, ‘‘here is a different form of reading this marketplace and here, you have the ability and the opportunity to go

and seek where your ratings really are.’’

Mr. ISSA. Mr. Liggins.

Mr. LIGGINS. Arbitron has put together a committee to work on

this but some metric that isolated sort of passive exposure to what

was really active listening would actually help minority targeted

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formats. The reason these minority radio stations, including our

targeted radio stations, had such high ratings in the diary is because the diary keeper would say ‘‘I listened to WKYS’’ and just

draw a line that I listened all day. Actually, minorities do listen

to radio longer. They are more engaged, they take it more seriously.

If you were able to isolate that electronically somehow, then you

could show a different value. Actually, you would discredit the audience of the easy listening station and this happens in PPM. The

easy listening station could be No. 2 with teens 12 to 17 playing

beautiful music. We know that is not the case, but if meters happened to be in an environment carried by a teenager where they

are exposed, that is what you get.

I think they are working on that. I know we are pushing for that.

That would be extraordinarily helpful, leading back to your other

question, in presenting value.

Mr. FLORES. Can I also say one more thing because I think there

is something that hasn’t been said here that I think needs to be

said.

Even if the playing field were right, even if it is PPM or diary,

because I can speak about diary and I can tell you when the playing field was right in the New York area, I worked for Infinity

Broadcasting that had Howard Stern in the morning. I was the Director of Sales before I came to SBS. Howard left that radio station

at the tail end of 2005. All of 2006 in the New York area, the No.

1 morning show was a Spanish language radio station owned and

operated by us.

As me, did we get the same rates? I can tell you emphatically,

not even a quarter of the same rates that my ex radio station had.

Our audiences are already discounted. Our audiences are already

not seen with the same quality, of the same rating, of the same audiences in other general market radio stations. To add insult to injury, put us at 50, 60 or 75 percent less in rating and what do you

get?

Mr. ISSA. Mr. Chairman, as we close, I found both panels very

informative. I intend to write a letter to Mr. Skarzynski and

Arbitron asking them to come back to us and tell us what they

could do to do some of this analytical analyses without additional

burden on our broadcasters, particularly minority broadcasters.

I also would like to see those innovations and I would like to see

as much information as the committee can request and Arbitron

can give us of side-by-side comparisons when a diary was being

filled out and someone was carrying the PPM device so that we

could have a closure to all of the questions that I think developed

here today on electronic versus diary. Hopefully, we can be constructive for the minority-owned stations and, to be honest, for all

of the rating stations because if you get it right, we get it right for

everyone.

Mr. Chairman, I want to thank you for holding an important,

long overdue hearing and for putting the time and effort into this.

I yield back.

Chairman TOWNS. Thank you very much.

Before we close, Mr. Liggins you said that Radio One was able

to regain its market share by changing programming to fit the

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PPM world. What did you mean by that? I tried not to ask that.

I tried to see if I could figure it out on my own.

Mr. LIGGINS. That is fair. One example is that during the diary

method, because the diary is done in quarter hours, programmers

thought the best way to get the highest ratings would be to stack

all of your commercials all of once and run 10 of them at the same

time with very long what are called stop sets so you could sweep

music for 40 minutes. You are kind of running one 20 minute block

that is 80 percent commercials, then you have a 40 minute block

that is commercial free.

The fact of the matter is we found that does the exact opposite.

In PPM, you are better off having more stop sets with actually

fewer commercials in them.

One of the things you are also seeing in PPM is that the talk

show hosts, the Hannitys, the Rush Limbaughs, I am sure the

Democrats will be happy to hear this, actually have less audience.

They are still loud and noisy and make a big impact but the fact

of the matter is their audiences in PPM have dropped dramatically.

I am sure their ad revenues are following as well.

That says that talk, no matter how big a personality you are, if

it is not absolutely entertaining is a death knoll, so you have to be

very careful about what your air personalities are saying. Some

personalities are better than others.

Also PPM will show you that people actually do listen to football

games on the radio and audiences spike. You can tell which bits

work. I don’t know how many of you listen to the Tom Joyner

Morning Show, but you can actually go through Tom Joyner’s hour

and figure out whether Huggie Low Down or the little known black

history fact or the Black America Web News, which one of those

are draws and which are turnoffs. You adjust your programming

dramatically. In fact, Tom has actually reformatted almost his entire show over the last 2 years because of the information we found

out from PPM.

Chairman TOWNS. Thank you.

Mr. WARFIELD. Mr. Chairman, one thing I would like to say

about that is as Alfred said, many of us use the data. On the one

hand, the Arbitron data is the only data we have available to use.

We do have to use that data and we do pay for that service.

On the other hand, as Mr. Liggins just indicated, we are making

those types of changes on the air whether we like that or not. Unfortunately, as he indicated, you are taking resources away from

the community and in many cases, you are taking programs that

were previously very successful off the air.

It still does not cover the reality here that in this PPM world,

formats that have taken the greatest hit, the greatest decline in

ratings consistently, market after market, has been Spanish and

urban radio station formats. It was stated this morning that these

formats still perform well. They do at a much larger decline in

their currency average quarter hour than any other formats that

have been affected by this methodology.

Mr. FLORES. Can I say one last thing. I find it really interesting

that in this day and age when you pick up a newspaper and find

out the exploding segments of our society happen to be Hispanic

and new arrival Hispanic, that Hispanic listening across the board

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is down dramatically. These people are not coming in from Dubuque or Montana, these people are coming in from countries

where they only speak Spanish. They are arriving here with no

English skills whatsoever. I know that our audience should be increasing in numbers that are great and PPM shows it to be just

the opposite. That can’t be. Logic tells me that is not right. I can’t

accept that. There has to be a disconnect some place.

Mr. LIGGINS. With the new census, there should be a rebalancing

of the populations which will flow through to Arbitron’s data base.

Hopefully, that will help Black and Hispanic formatted stations. In

Houston, TX, because of [Hurricane] Katrina, we think the Black

population has probably gone from 16.5 percent to 20 percent. We

are hopeful that is what the census will show and we will benefit

from that. Hopefully, you guys will too.

Ms. PANTANINI. I agree, however the issue at hand is the audience is currently not represented for the size of the segments represented today and the census isn’t going to come out for another

2 years before we actually get the data. We are way behind the 8

ball.

From an advertiser’s point of view, if it is not working, it is very

difficult to get an advertiser to come back into the marketplace. If

you can’t prove success today to an advertiser and a return on investment today, they are not going to be back tomorrow. That is

the problem we face.

We have radio stations we know have historically performed very

well in the marketplace. They don’t have the numbers. Without the

numbers, we can’t justify them being on a buy. Without them being

on a buy, we have ineffective plans in market. It is very difficult

to convince advertisers today to spend money in minority audiences. When you finally make that effort and get them to spend the

money and they don’t see the results, they are not coming back.

Mr. FLORES. As far as the new arrivals, how successful could you

possibly be trying to convince them to wear some sort of low jack

device on them when they come from countries where they don’t

trust their own government. Think how successful you are going to

be to get people to do that. May be your panels or your samples

are going to represent more English dominant Hispanics than

Spanish dominant Hispanics. That might be a problem for all Hispanic radio stations because that is who we serve.

Chairman TOWNS. Thank you very much.

Let me thank both panels of witnesses and I want to thank the

ranking member and all the Members who attended this hearing

today.

Before we adjourn, I must say today’s hearing has demonstrated

the ineffective process currently in place to ensure the accuracy of

media ratings services. I remain gravely concerned about the future of minority-owned, targeted radio stations if Arbitron does not

act quickly to correct these problems.

Minorities have battled over the past 30 years to obtain just 2

percent of the radio stations they now have, 2 percent. We are on

the brink of losing much of that progress. The Congress should not

allow this to happen. The MRC was created to ensure media ratings are fair and accurate. However, Arbitron seems to take the

MRC’s code of conduct as a mere suggestion. They feel free to igVerDate 11-MAY-2000 15:50 May 25, 2010 Jkt 000000 PO 00000 Frm 00210 Fmt 6633 Sfmt 6633 U:\DOCS\55996.TXT KATIE PsN: KATIE
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nore MRC’s recommendations and just move on. This approach

must change.

I am prepared to introduce legislation if necessary which protects

both the consumer and all radio and television competitors. I hope

I don’t have to do that. I hope we can work things out. The ranking

member suggested that we have some further discussions and dialog in terms of how we might be able to work together to resolve

some of these issues. I hope we can do that.

However, I urge all the participants involved in this issue, including the MRC and the FCC, to work during the next month to

reach a solution to this problem. The very survival of small and minority radio is at stake. I want to see a plan of action and a realistic timetable as the ranking member also suggested developed over

the next 30 days to correct this unsustainable situation.

After that point, I will look to see if sufficient progress has been

made or whether the Congress will need to step in. We don’t want

to step in and I hope we don’t have to step in, but I want you to

know that I am prepared to do whatever it takes to get an acceptable resolution to this problem.

Again, let me thank all of the witnesses. I look forward to working with you because I really feel we can do better. I am always

for fairness. I think what we see and hear is not fairness.

Thank you so much for coming.

The committee is now adjourned.

[Whereupon, at 2:41 p.m., the committee was adjourned.]

[The prepared statement of Hon. Gerald E. Connolly and additional information submitted for the hearing record follow:]

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