Arbitron Inc. (ARB)
Q2 2008 Earnings Call Transcript
July 22, 2008 10:00 am ET
Thom Mocarsky – IR
Steve Morris – Chairman, President and CEO
Sean Creamer – EVP, Finance and Planning & CFO
Alexia Quadrani – JP Morgan
Jim Boyle – CL King
Mark Bacurin – Robert W. Baird
Troy Mastin – William Blair and Company
Steven Rott [ph] – Carl Domino [ph]
Previous Statements by ARB
» Arbitron, Inc. Q4 2008 Earnings Call Transcript
» Arbitron Inc. Business Update Call Transcript
» Arbitron Inc. Q3 2008 Earnings Call Transcript
It's now my pleasure to turn the call to your host, Thom Mocarsky, Senior Vice President of Press and Investor Relations. Sir, you may begin your conference.
Thank you, Rey. Good morning ladies and gentlemen and welcome to the Arbitron second quarter 2008 earnings conference call. Today, I have the pleasure of introducing Steve Morris, our 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 second quarter of 2008. They will also make some comments about our expectations for 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 include forward-looking statements. These forward looking statements are within the meaning of the Private Security Litigation Reform Act of 1995. These statements are based on current expectations about future events. Arbitron has derived these expectations from the information that's currently available to us. Actual results might differ materially from the results projected in our forward-looking statements, which involve known and unknown risks.
For discussion of the factors that could cause our actual results to differ materially from our forward-looking statements, please refer to 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'd like to turn the call over to Steve Morris, our President and Chief Executive Officer.
Thank you, Tom and good morning everybody. It's again a pleasure to have this opportunity to update you on the quarter and on the six months and an outlook for the rest of the year.
Immediate business and radio specifically continues to suffer to an extended period of softness with the intersection of the recession in the overall economy and the continued flow of national buyers [ph] into online alternatives. The (inaudible) makes the price increase on PPM very uncomfortable and also makes new sales with discretionary peripheral items like software were challenging. At (inaudible) course, listening to radio remained strong with above 93% of the nation still in the audience every week especially if the local level radio remained an extremely important advertising vehicle for businesses all across the country. As we also note, radio has difficulty need to be seen on the context of the weakening of some of its key local competitors like newspapers. I have also encouraged by the speed with its radio groups who are jumping into internet delivery of their content. It will be exciting to work with our customers this summer as PPM measurement of internet radio screen begins, and radio stations can start to package their online and offline product for maximum affect. So as the specific for the quarter has ended, but when you sort to the impact with PPM delay, results were consistent with what we have anticipated when we provided yearly guidance back in February.
We are in the middle of the major swim [ph] in our business model from all diary, the PPM and the top 10 markets and all PPM markets come next year. Without new PPM revenue, we are going modestly in the 4% to 6% range. With our expenses are being incurred and recognized in advancing our revenue in new PPM markets, it was an anticipated lower level of profitability for the second quarter, about $0.02 per share, In the second half of the year, this will change if the pricing up with the PPM starts to cover the incremental cost of the panels and should help us produce some of the year the guidance target that we’ve talked about.
Focusing on a PPM operationally, we announced in early June that we are going to restart a commercial based on a PPM service with the intention of expanding from the Houston, Philadelphia base to bring twelve new markets on the stream [ph] by the end of the year. We spent the last seven months working on quality metrics with the panel in training both buyers and sellers. Last week, we start our advisory council of the areas where we are raising the bar in terms of the performance benchmarks. For example we increased our guaranty level of 18-54 delivering from an 80 DDI or designated delivery index to an 80. Well, it was not a question of statistical validity of the data, a higher DDI does add value for our customers by getting larger samples from the key buying demos. From our perspective it raises performance standards but our success over the last year in controlling demographic delivery makes us confident that we can deliver the samples market by market, add or above 90 at a consistent basis.