NEW YORK (AdAge.com) -- The legal battle surrounding Arbitron's much-contested electronic radio measurement system in New York reached a truce today, as the company reached an agreement with the attorney general's office.
The groundbreaking agreement, announced today by New York Attorney General Andrew Cuomo, requires Arbitron to revise the standards for its portable-people-meter system and pay $260,000 to settle claims of fraud and illegality under the attorney general's lawsuit. The suit disputed Arbitron's PPM methodology, which measures radio listening on a minute-by-minute basis and routinely underreports audience engagement for minority broadcasters.
Payment to trade groups
"The radio airwaves should represent the diversity of New York State," Mr. Cuomo said in a statement. "With this lawsuit, we sought to address the misrepresentation of a flawed product in the marketplace and its impact on the communities that need the most protection. ... As Arbitron works to improve this product, which should not have been released in its current form, my office will aggressively hold Arbitron to rigorous standards to make PPM a better product."
In addition to the $260,000 for fraud and illegality, Arbitron will pay $100,000 to minority trade associations to support minority radio and finance an ad campaign of at least $25,000 dedicated to promoting minority radio. Arbitron will also fund a study, overseen by the attorney general, to prevent any measurable bias PPM methodology may have on racial minorities.
Victory for Spanish-language radio
The agreement was also deemed a victory for Spanish-language stations, among the most vocal about Arbitron's flaws in measuring listener engagement. In a joint statement, ICBC Broadcast Holdings, Spanish Broadcast Systems and Univision Communications, said, "Arbitron's implementation of its unaccredited and misleading PPM system has been devastating to radio stations serving African-American and Hispanic citizens of New York. We welcome the Attorney General's requirement of accelerated actions by Arbitron to bring its flawed and discriminatory PPM system to a competence level which can be embraced by all broadcasters."
Minorities aren't the only groups who have found flaws with Arbitron's oft-delayed PPM program. In November, Clear Channel and Cumulus tapped rival measurement company Nielsen to start measuring radio listening in 50 small to medium-size markets, a sign that other top radio groups may follow if flaws continue in major markets such as Los Angeles and Chicago.