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Arbitron Inc. (ARB)

Q3 2008 Earnings Call Transcript

October 21, 2008 10:00 am ET


Thom Mocarsky − SVP, Press and IR

Steve Morris − Chairman, President & CEO

Sean Creamer − EVP, Finance and Planning & CFO


Alexia Quadrani − JP Morgan

Troy Mastin − William Blair & Company

Jim Boyle – CL King



Good morning. My name is Kashina and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2008 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions). Thank you. I would now like to turn the call over to Thom Mocarsky. Mr. Mocarsky, you may begin your conference.

Thom Mocarsky

Thank you Kashina and good morning ladies and gentlemen and welcome to Arbitron's third quarter 2008 earnings conference call. I'm Thom Mocarsky, I’m the Senior Vice President for Press and Investor Relations at Arbitron and I’ll be your moderator for today’s call.

Today, I have the pleasure of introducing Steve Morris, Chairman, President and Chief Executive Officer; and Sean Creamer, our Chief Financial Officer. In today's call, Steve and Sean will review Arbitron's activities, accomplishments, and financial results for the third quarter of 2008. They will also make some comments about our expectations for the full year of 2008. After the presentation, Steve and Sean will be happy to take your questions.

But, before we begin today's presentation, I do want to note that this morning's discussion includes forward-looking statements. These forward-looking statements are within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events. Arbitron has derived these expectations from information currently available to us. Actual results might differ materially from results projected in forward-looking statements, which involve known and unknown risks.

For a discussion of the factors that could cause actual results to differ materially from these forward-looking statements, please refer to the Arbitron's 10-K for the period ended December 31, 2007. A copy of that 10-K is on file with the Securities and Exchange Commission.

At this time, I want to turn the call over to Steve Morris, our Chairman, President and Chief Executive Officer.

Steve Morris

Thank you, Tom. Good morning everybody. This may not be a long call because of all the legal maneuvering going on that has effected a limit on how much we can say and we certainly act with respect relating on what outcomes might emerge from the many actions underway. So I hope you will forgive us if we are a more bit more reticent than usual.

Before I get to lay out on where we stand on the political, legal and regulatory front, I do want to state the obvious (inaudible) the media business and radio business specifically. There have now been 17 consecutive months of downticks in radio industry revenue.

Some of this is a direct result of the much publicized weakness in the overall economy. But we believe some also comes from the relative weakness of the radio's positioning on the subject of accountability versus other media.

The importance of moving on to a PPM platform has never been stronger and they account from the standing (inaudible) crowds of radio buyers and sellers that we’ve experienced as we kicked off each new PPM market. At the speed level, we observed that many in the industry are chopping off a bit to move forward and to present a new face for radio to the buyers of media time.

Addressing the impact to the environment on our business, on the one end, our rating services are generally provided under long-term contracts and visibility and future revenue trend is good. However, those services that we provide that are not essential items for our customers such as these software products even Scarborough do feel the effect of fewer discretionary dollars available.

There are also some renewals in non-PPM markets that likely could be affected. As expected, this is having some impact on 2008, and the effect will no doubt carry over into 2009, with perhaps 1% to 2% of growth rate at risk.

With all this as background, we did commercialize PPM in new markets on October 6 and we’re currently planning to commercialize four more in December. This has been an enormous effort on the part of people of Arbitron and it’s very encouraging to see the quality metrics not only hold up but steadily improve over the last few months when these panels were completed.

Focusing now on our diary-based service, the remaining markets, we recently announced several important enhancements. We planned at households to our sample frame that use only cell phones, a growing group that cannot be reached using our landline-phone frame. This is similar to what we do on the PPM sample. We also plan to accelerate a long-term project to evolve the diary increasingly toward an online approach. So the underlying business continues to move forward.

Let me describe where things stand now from a legal point of view. Most of you are update on this, so if you follow the trades, that gives a quick overview. On October 6, we commenced the civil action in the United States District Court in the Southern District of New York seeking a declaratory judgment and injunctive relief against the New York Attorney General. And on October 10, Arbitron brought a civil action in the United States District Court for the District of New Jersey seeking a declaratory judgment and injunctive relief against the New Jersey Attorney General. In each case seeking to prevent any attempt by the Attorneys General to restrain our publication of our PPM listing estimates. These proceedings are pending.

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