• by Joe Mandese  @mp_joemandese, May 18, 2006

CBS Radio, the second largest operator of radio stations in the U.S., has entered a seven-year agreement to purchase radio audience ratings based on Arbitron's portable people meter (PPM) system. The move comes as radio giant Clear Channel Communications is pushing an industry initiative to marshal potential competition to Arbitron's system.

The move is a surprise because CBS, like many other top radio broadcasters, has been holding out on doing a deal with Arbitron for the PPM, because Arbitron has been seeking significant price increases over its current paper-based diary system. According to executives familiar with those negotiations, the PPM costs are more than 60 percent higher than Arbitron's current ratings. The move suggests that CBS may have cut a better deal.

"CBS Radio is counting on the PPM to enhance the value of both our programming and the audiences we reach in the eyes of our advertisers," stated CBS Radio Chairman-CEO Joel Hollander, adding, "We're pleased to be the first major broadcaster to embrace the future by signing a contract for Arbitron's next-generation electronic audience measurement system. Radio has been searching for a more accountable method to provide advertisers with valuable information about its listeners, and I'm confident that the PPM will be supported throughout the industry."

The statement appears to rub in the face of Clear Channel, which has backed an industry effort to generate proposals from alternative suppliers capable of creating an even better electronic measurement system. The finalists for those proposals had been down to Arbitron, The Media Audit and Mediamark Research Inc., but on Friday MRI pulled out of the running due to lack of funding support for a market trial of its system. This week, Clear Channel Radio CEO John Hogan told MediaDailyNews the company would help fund MRI's trial.

Arbitron Inc. (NYSE: ARB) today announced that CBS RADIO, one of the largest major-market operators in the United States, has entered into a seven year agreement for Portable People Meter (PPM SM) radio ratings when the new audience ratings technology is deployed in the 35 CBS RADIO markets encompassed in Arbitron's previously announced PPM rollout plan.

Arbitron has announced plans to launch the PPM as the basis of its radio ratings in the top 50 markets, beginning with Houston in July 2006.