• by Erik Sass  @eriksass1, October 10, 2008

Shortly after New York State attorney general Andrew Cuomo sued Arbitron to prevent publication of radio ratings from its Portable People Meter, the attorney general of New Jersey, Anne Milgram, said she would also sue Arbitron to block the release of data from the passive electronic measurement system.

Like Cuomo, Milgram argues that PPM under-represents minority audiences and therefore violates her state's "consumer fraud, advertising, and anti-discrimination laws."

As part of their lawsuits, both attorneys general are accusing Arbitron of dishonest business practices, including making deceptive public statements about PPM's readiness for commercialization as the radio industry's currency for ad sales.

Arbitron moved up the commercialization of PPM ratings in New York State by two days to Oct. 6, after Cuomo indicated on Oct. 3 that he would be launching legal action against the company sometime in the coming week. Cuomo's office filed the actual lawsuit on the morning of Oct. 10, followed a few hours later by his colleague in New Jersey.

The legal actions are motivated by the fear of some minority broadcasters that PPM measurement will undercut their ratings, leading to big drops in ad revenue--a phenomenon they blame on flawed sampling methodology associated with PPM. Specifically, broadcasters with urban formats targeting African-Americans and Hispanics say these groups are under-represented in Arbitron's samples--especially important segments like men ages 18-34.

Radio stations targeting African-American and Hispanic listeners in Houston, Philadelphia and New York say they have seen dramatic drops in ratings after the transition from paper diaries to PPM measurement. (PPM ratings have already been commercialized in Houston and Philadelphia.)

Both attorneys general also noted Arbitron's failure to gain accreditation for PPM from the Media Rating Council in any market outside Houston. Arbitron has said it will continue with the scheduled rollout in New York, followed by other top markets, without waiting for further MRC accreditation. However, the company is committed to getting accreditation in all markets where PPM is eventually used.

The FCC has said it is considering launching its own inquiry into the PPM ratings system, although Arbitron claims the agency has no legal authority to regulate it. In this connection, the MRC also lacks regulatory power, as ratings firms are not legally required to gain accreditation before commercializing a new methodology.