[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





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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

                              ----------                              
                                                                   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:]

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    Chairman Towns. Thank you very much for your testimony.
    Mr. Honig.

                    STATEMENT OF DAVID HONIG

    Mr. Honig. Chairman Towns, Ranking Member Issa and members 
of the committee, my name is David Honig. I am the president 
and executive director of the Minority Media and 
Telecommunications Council [MMTC].
    MMTC is a member of the PPM Coalition which consists of the 
Spanish Radio Association, Univision Communications, Inc., 
Spanish Broadcasting System, Untravision Communications Corp., 
the National Association of Black-Owned Broadcasters, ICBC 
Broadcast Holdings, Border Media Partners, the Association of 
Hispanic Advertising Agencies, KJLH Los Angeles and of course, 
MMTC. I appreciate this opportunity to address the committee as 
it considers the effects of Arbitron's PPM on diversity in 
radio broadcasting.
    The Supreme Court has noted that ``It has long been a basic 
tenet of national communications policy that the widest 
dissemination of information from diverse and antagonistic 
sources is essential to the welfare of the public.'' Diversity 
means acknowledging, understanding, accepting, valuing, and 
celebrating differences among people with respect to age, 
class, ethnicity, gender, and race.
    True diversity in broadcast ownership will result in more 
diverse speech, more choices for listeners, and more owners who 
are responsive to their local communities and serve the public 
interest. Adequate representation of minority viewpoints in 
programming serves not only the needs and interests of the 
minority community, but also enriches and educates the non-
minority audience. It enhances the diversified programming 
which is a key objective of the Communications Act and the 
first amendment.
    For example, two studies have clearly demonstrated that 
minority-oriented media produce a positive and measurable 
impact on the communities they serve. A 2005 study found that 
Black-targeted newspapers and radio stations function as 
mobilizing channels for political participation among Black 
voters. Controlling for the size of the Black population in the 
market, the availability of Black-targeted media had an 
elevating effect on Black voter participation.
    A 2006 study determined that voter turnout among Hispanic 
voters was 5 to 10 percentage points higher in areas with 
Spanish language local news than in areas without that service. 
Thus, communications services to diverse audiences benefit our 
democracy as a whole in our continuing quest for opportunity 
and equality.
    The U.S. Court of Appeals for the D.C. Circuit has 
recognized that public policy places primary reliance with 
respect to diversification of content on media ownership, which 
has historically proven to be significantly influential with 
respect to editorial comment and the presentation of the news.
    This has proven to be true in recent months as minority 
audiences have been under-counted by PPM rating services. All 
commercial broadcasters depend upon advertising for their 
livelihood and audience ratings are the sole method of 
determining the size of audiences that are available to listen 
to radio advertising 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:]

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    Chairman Towns. Thank you very much.
    Before we start our questioning, I would like to recognize 
in the audience, Commissioner Clyburn of the FCC. Thank you so 
much for coming.
    Let me begin with you, Mr. Skarzynski. In a letter to this 
committee in October, Arbitron represented that it is committed 
to the Media Rating Council accreditation process. Do you agree 
that the MRC standards and its codes of conduct ensure fair, 
accurate, and reliable rating data? Is it fair and reliable 
rating data?
    Mr. Skarzynski. Mr. Chairman, Arbitron is committed to the 
MRC process and we believe that the MRC process does yield the 
results that you have just described.
    Chairman Towns. If that is the case, why is it that you 
have only been approved in 2 out of the 33? Why would you 
continue to roll out if you really respect that process and 
feel that it is important? Why would you continue to do that?
    Mr. Skarzynski. Mr. Chairman, Arbitron follows the rules of 
the MRC process. The MRC process does not require that an 
audience measurement service provider obtain accreditation 
prior to commercialization. The process to obtain accreditation 
can take many, many years and this is the industry practice 
that audience measurement service providers not only in radio, 
but in television, Internet, cable TV, and print, while 
striving to get accreditation, can commercialize a market and a 
service. We are following the rules.
    The important step before commercialization is that an 
audit is conducted, as Mr. Ivie has described, by a third 
party. In the case of Arbitron, Ernst & Young is the third-
party auditor who audits our markets prior to 
commercialization, and the audit process is a very lengthy, 
thorough, and detailed process.
    I can assure you, Mr. Chairman, that as CEO of Arbitron, if 
there was a show stopper that came up in the context of the 
audit, we would not commercialize a market. We are following 
the rules. Accreditation can take many, many years.
    Nielsen, in its TV audience measurement, launched 
electronic measurement in 2002 and they have obtained probably 
10 or 11 accredited markets at this point in time and are still 
seeking accreditation. So this is the industry practice.
    Chairman Towns. Mr. Skarzynski, let's face it, we are 
talking about 33 markets and you only have approval in 2. I 
could see may be one or two over and you are still working on 
it, but to me that seems like you are just totally ignoring and 
just doing whatever you want to do. There is a clear indication 
here.
    Let me ask you, Mr. Ivie, what are the main reasons that 
the MRC has not granted accreditation to Arbitron in these 31 
markets?
    Mr. Ivie. What are the reasons, is that the question, Mr. 
Chairman?
    Chairman Towns. Yes, that is the question.
    Mr. Ivie. First of all, if I could spend a second because 
Mr. Skarzynski raised a rather complex issue, it is true that 
the MRC is not a government organization. We have no authority 
and we were not designed to prevent a commercial enterprise 
from rolling out a product. We do not have that type of 
authority.
    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:]

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    Chairman Towns. Thank you very much for your statement.
    Mr. Flores.

                   STATEMENT OF FRANK FLORES

    Mr. Flores. Thank you very much for the opportunity, 
Chairman Towns.
    I am Frank Flores, the chief revenue officer of the Spanish 
Broadcasting System [SBS], based in New York.
    SBS is the largest publicly traded Hispanic-controlled 
media and entertainment company in the United States today. SBS 
owns and operates 20 radio stations in the Hispanic markets of 
New York, Los Angeles, Miami, Chicago, San Francisco, and 
Puerto Rico, including four of the top-rated Spanish language 
radio stations airing the Tropical, Mexican Regional, Spanish 
Adult Contemporary, and Urban formats.
    For purposes of brevity and not to recount everything said 
before, let me just summarize a couple of important points.
    For all intents and purposes, Arbitron is an unregulated 
monopoly, the only recognized source of radio ratings in the 
United States today, especially in the market where we operate 
radio stations. SBS, the company, has had an unblemished 
history as a client in good standing with Arbitron for over a 
quarter of a century.
    SBS was the first group owner to sign up for PPM. SBS was 
the first minority broadcaster to sign up for PPM. SBS 
wholeheartedly supports electronic measurement of all radio 
audiences. However, and this is a big point, significant 
modifications and alterations need to be undertaken in order 
for PPM to accurately reflect the listening levels of all 
minority audiences. The effects of PPM on Spanish radio have 
been devastating and in direct contradiction to the years of 
rating results provided by the diary methodology. Worse yet, 
Arbitron is charging up to 60 percent more for its PPM ratings 
than it did for its diary ratings.
    SBS has offered to assist Arbitron in conjunction and in 
cooperation with other radio colleagues in working on a 
universally accepted resolution to this PPM issue.
    Let me further state that the entire industry has been 
affected by the economy and some will say that the economy, in 
large part, is solely responsible for the down trend in our 
business, but there can be no argument that the ratings 
produced by the PPM methodology has also added greatly to our 
inability to price our inventory on a competitive basis lending 
to these historic declines in revenue.
    In closing, the fact that our business, the business of 
minority broadcasting, has been unfairly affected by the 
implementation of PPM, we, as a company, are committed to 
finding a way to resolve our issues for the betterment of our 
company and our ability to serve our community. We are hopeful 
that by working with all parties, including Arbitron, to find 
these solutions, our goal is to achieve a more accurate and 
stable result in ratings that reflect a more representative 
account of all minority listeners. The best way, in our 
opinion, would be MRC accreditation in all markets. We are 
resolute to have that be our eventual goal.
    Thank you.
    [The prepared statement of Mr. Flores follows:]

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    Chairman Towns. Thank you very much for your testimony.
    Mr. Liggins.

                  STATEMENT OF ALFRED LIGGINS

    Mr. Liggins. Thank you, Chairman Towns, Ranking Member 
Issa, and other members of the committee for providing me the 
opportunity to testify.
    For those of you I have not met, let me introduce myself. I 
am Alfred Liggins, CEO of Radio One, Inc. As you heard earlier, 
we are the largest media company targeting African-Americans in 
the United States. We are a multi-platform company that 
includes radio, Internet, satellite, and our nationally 
distributed cable network, TV One.
    As owner of 52 radio stations located in 16 urban markets, 
I want to express both my support and confidence in the future 
of urban radio in a PPM world. My understanding is that during 
this hearing, you are asking, does PPM affect the diversity of 
radio and is it contributing to minority radio's decline? I 
categorically say that I believe in both the short- and long-
run, PPM is neither affecting the diversity of our air waves 
nor contributing to the decline in minority radio.
    Rather, what PPM has done is expose some poor choices made 
during the good times before this recession hit. Some 
broadcasters became over-leveraged, including ourselves, and 
perhaps expanded when they should not have and some 
broadcasters launched urban formatted stations in markets where 
there are already established urban radio stations, many that 
we have owned and many our colleagues in the minority radio 
business have owned and we drew competitors that we should not 
have.
    I do not believe that the commercialization of PPM is to 
blame for the problems currently facing some minority 
broadcasters. Based on our own PPM experience, PPM does not 
discriminate against minority-owned broadcasters or urban 
formatted stations. There are always short-term dislocations in 
a learning curve when a new technology is adopted, but PPM is 
the new reality and I would much rather get reality on the road 
now and keep it moving forward than to delay it.
    The heated dispute and controversy result primarily from 
the fact that the PPM device, as compared to the paper diary, 
can have a downward impact on the average quarter hour rating 
or AQH, which is a result of dramatically increased audiences 
combined with lower amounts of time spent listening.
    The average quarter hour rating numbers with PPM are 
generally lower for most stations in all markets regardless of 
format. Radio One has seen dramatic declines in its AQH ratings 
after PPM's commercialization in a market. However, by 
designing our programming for a PPM world, including fine 
tuning our music, promotions and commercial breaks, we have 
regained most, if not all, of our pre-PPM ranked positions 
without changing formats. Although our audiences are smaller, 
our rank has returned and in many cases, that ranks us as No. 
1, 2 or 3 in different markets.
    The reduction in reported average quarter hour listening 
from diary to PPM is not, in my opinion, caused by racial bias, 
but rather, is due to the fact that the diary is a subjective 
tool that asks participants to recall from memory what stations 
they listened to on the radio. In my experience, the diary 
service has a bias in favor of legacy stations or programs with 
a strong brand name or identity.
    PPM is a more objective measurement tool that plays no 
favorites and allows all stations to compete for listeners on a 
level playing field. The PPM is without question a major 
improvement over the diary service. It gives broadcasters a 
type of granular and timely data that the diary system simply 
cannot provide.
    For the first time, we can evaluate on a minute-by-minute 
basis the listening habits of our audience, when they tune in, 
how long they listen and when they switch to another radio 
station. This level of specificity allows us to respond almost 
in real time to listeners' tastes and show advertisers that we 
can attract listeners to our programming. That in turn 
translates into revenue for broadcasters.
    As a result of the Internet, advertisers expect timely 
information to respond to ever changing customer preferences. 
No matter the media, advertisers expect to see how many eyes 
and ears are paying attention. PPM is doing that for radio by 
providing clear, actionable intelligence on radio's audience.
    If PPM is not universally adopted, the radio industry is in 
danger of losing advertising dollars to other mass media and 
information platforms that have passive measurement systems. 
PPM contributes to advertisers' perception of the strength and 
value of brand conscious and brand loyal African-American 
consumers who have almost $1 trillion to spend annually. In 
short, electronic measurement provides compelling evidence 
about the power of urban radio.
    Through PPM, Radio One has been able to deliver reliable 
and credible measurement of our audience to our advertisers. 
Some have said that PPM should take a breather, especially 
until it is fully accredited by the Media Ratings Council. My 
response is an emphatic ``no'' as that would confuse 
advertisers who now rely on PPM and cause them to question the 
reliability of radio as an advertising medium. It would hurt 
the radio industry, not just Arbitron.
    While we acknowledge that Arbitron has not created a 
perfect service, in my opinion we need to move forward with 
PPM, adapt to it, monitor Arbitron's progress and offer our 
suggestions and concerns, work with Arbitron to make it better 
and look forward to better times for all in the radio industry.
    Thank you for this opportunity.
    [The prepared statement of Mr. Liggins follows:]

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    Chairman Towns. Thank you very much.
    Let me thank all of you for your testimony. I also want to 
thank Arbitron for staying and listening to your testimony. 
Sometimes people come, testify, and then leave. I want to let 
them know I respect the fact that they are staying to listen to 
what you have to say.
    It was so bad here at one point, when people would testify 
and then all the agency heads would leave, I was in the 
position to have the people talk first and the agencies come 
behind them. I notice we don't have to do that today. They are 
staying and listening to you. I want you to know I am impressed 
with that because they appear to be concerned about what you 
have to say. That, to me, means a lot.
    Let me begin by asking, have any of your organizations 
approached Arbitron about problems with its methodology and 
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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