[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
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
U.S. GOVERNMENT PRINTING OFFICE
55-996 PDF WASHINGTON : 2010
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts JOHN J. DUNCAN, Jr., Tennessee
WM. LACY CLAY, Missouri MICHAEL R. TURNER, Ohio
DIANE E. WATSON, California LYNN A. WESTMORELAND, Georgia
STEPHEN F. LYNCH, Massachusetts PATRICK T. McHENRY, North Carolina
JIM COOPER, Tennessee BRIAN P. BILBRAY, California
GERALD E. CONNOLLY, Virginia JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois JEFF FLAKE, Arizona
MARCY KAPTUR, Ohio JEFF FORTENBERRY, Nebraska
ELEANOR HOLMES NORTON, District of JASON CHAFFETZ, Utah
Columbia AARON SCHOCK, Illinois
PATRICK J. KENNEDY, Rhode Island BLAINE LEUTKEMEYER, Missouri
DANNY K. DAVIS, Illinois ANH ``JOSEPH'' CAO, Louisiana
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
Ron Stroman, Staff Director
Michael McCarthy, Deputy Staff Director
Carla Hultberg, Chief Clerk
Larry Brady, Minority Staff Director
C O N T E N T S
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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
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. 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.
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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 collection 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 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 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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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 messages. 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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.
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
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.
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?
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 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 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 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.
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 stations, 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 under-count, 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 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 district 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.
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 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, African-American 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.
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 accounting 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?
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 under-counted.
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 how, with the new tool, changes need to
be made to be more accurate. 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 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.
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, minority-owned 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 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.
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 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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.
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.
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 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 non-profit 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 members of the PPM Coalition. It would be a far easier path
to jettison this mission and program to the ratings by
converting to run-of-the-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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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 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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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
under-counting 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 African-American 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 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 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 audiences. 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 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 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 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 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 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 ignore 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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