• by Erik Sass  @eriksass1, February 23, 2010

With client relationships like this, who needs enemies? The legal, regulatory and publicity battle between Arbitron and some of the clients for its Portable People Meter radio ratings has taken a turn for the even-worse.

Last week, Arbitron secured a court order requiring the Spanish Broadcasting System to encode for PPM ratings as per the terms of its contract with Arbitron -- effectively terminating an SBS boycott protesting alleged shortcomings in Arbitron's PPM sampling methodology.

In response, several minority broadcasters allied with SBS promised to bring even more scrutiny from the Federal Communications Commission to bear on Arbitron's PPM service; this could include renewed demands for regulatory intervention.

SBS signed a contract with Arbitron for radio audience measurement by PPM -- a passive electronic measurement device -- in June 2007, including a requirement that SBS encode its audio signals so they can be measured by PPM. Since then, PPM has become embroiled in controversy focusing on Arbitron's failure to meet target sample sizes for minority listeners, which minority broadcasters claim results in apparent declines in audience size, damaging their ad business.

The controversy has provoked civil lawsuits against Arbitron by the attorneys general of New York, New Jersey and Maryland, and hearings by Congress and the FCC.

Amid this ongoing dispute, SBS says it requested a credit -- or refund -- from Arbitron last year in accordance with their contract. Arbitron has previously offered refunds if it failed to deliver certain minimum target sample sizes for various audiences.

After Arbitron refused to grant SBS a credit in '09, SBS stopped paying for PPM ratings, which Arbitron stopped delivering shortly before the New Year (the media research firm claims SBS now owes it a total $2.5 million in unpaid fees).

On Feb.4, SBS stopped encoding its audio signals in New York, Miami, Chicago, L.A. and San Francisco. On Feb. 11, Arbitron responded by obtained a restraining order from the New York State Supreme Court requiring SBS to begin encoding for PPM again. At a second hearing on Feb. 16, the court confirmed that SBS must continue encoding for PPM measurement, at least for the time being.

By removing itself from the PPM measurement arena, SBS makes it more difficult for media buyers and radio broadcasters to assess the competitive landscape, decreasing the utility of PPM ratings. By obtaining a restraining order requiring SBS to begin encoding for PPM measurement again, Arbitron was trying to restore comprehensive coverage of the broadcast environment, giving its other clients a more complete picture.

Now that the legal battle is opened, SBS is also protesting against provisions in its earlier contracts with Arbitron requiring it to accept PPM ratings as a replacement for paper diary ratings sight-unseen, with no assurances as to the quality or suitability of the new electronic measurement system. SBS attorneys allege that this provision is typical of Arbitron's efforts to maintain a de facto monopoly in radio ratings in large markets.

But the courtroom is just one of several venues for the conflict between Arbitron and minority broadcasters, who in 2008 formed an industry lobbying group, the PPM Coalition, to carry their case to Congress and the FCC and provide legal representation (Coalition attorneys from Skadden Arps are representing SBS in its current court case).

Expressing anger over Arbitron's decision to seek a restraining order against SBS, the Coalition -- which also includes Entravision, Univision Radio, ICBC Broadcast Holdings, Border Media Holdings, the National Association of Black Owned Broadcasters, the Minority Media and Telecommunications Council, the Spanish Radio Association, and the Association of Hispanic Advertising Agencies -- said it would redouble its efforts to convince the FCC to open an inquiry into PPM. It began the renewed push for FCC intervention with a letter to the Commission on Feb. 12.

But it's not clear whether the FCC is willing to take on this task. Previously, the agency held an open forum asking for legal opinions. During the first round of hearings, Arbitron noted that Congress has chosen not to involve itself in the technical aspects of media ratings, and has therefore, declined to give the FCC jurisdiction over these issues, implying that the media research firm believed it could get any such inquiry halted by a federal court.