by Eastlan Ratings CEO Mike Gould
Is Nielsen spending 1.26 billion dollars to buy Arbitron and improve service to their indispensable radio customers or to eliminate a potential threat to their monopolistic TV empire? Today?s Arbitron is a billion dollar company fueled primarily by revenue from radio stations. They are poised to be swallowed by an even bigger firm to whom radio won?t even be their most important customer.
Imagine a day this Fall when radio station owners all over America are forced to take an urgent call from their new consolidated ratings vendor letting them know their old Arbitron contract has been torn up ?and that rates are going down! No doubt this call will come on your cell phone while you and Elvis are enjoying box seats at Game 7 of the World Series at Wrigley Field.
The long-term impact of consolidation is seldom in the best interest of those whose options are eliminated. If you are still fortunate enough to work in a radio station everyday, consider how consolidation has changed your job. Then consider how consolidation has impacted the overnight jock.
What about TV? It seems a widely held belief that the PPM trumps any technology Nielsen currently uses. Will there now be a second bite at the apple with television broadcasters given the opportunity to pay for the same PPM innovation that radio has already funded over the past decade?
It?s time for radio to speak up. Demand that your leadership get involved now.
Consider the past 5-8 years, in most cases; your annual payment to Arbitron has grown dramatically while the radio industry has struggled to achieve even meager growth. This scenario is about to get worse. Radio broadcasters win by fostering an environment that encourages competition among its vendors-especially expensive categories like ratings research. This proposed merger would likely raise the barrier of entry and as a result, discourage any new innovation or competition.
Our company, Eastlan Ratings, has taken 14 years to amass nearly 100 markets. We have a unique culture allowing Eastlan to grow by remaining patient and focusing only on our core competency: providing an alternative in small and medium market radio measurement. In today?s business environment, few companies can afford this kind of slow and steady approach within such a narrow niche.
Radio is an industry with a pattern of letting others dictate its fate. Most recently, radio stood still as the fledgling satellite radio technology re-positioned and marginalized them as ?terrestrial radio?. Online jukebox services have be allowed to infringe on radio?s brand, too (Pandora is an useful online service but it?s not radio.). Before that Arbitron was able to exercise their power as the industry?s most influential vendor to foist huge price increases by promising adoption of the PPM would increase radio?s revenue. Remember ?70 is the new 100??
More than a hundred years before the American Association of Advertising Agencies hired Archibald Crossley to produce the first radio ratings, Thomas Jefferson said, ?(We) are now taking so steady a course as to show by what road it will pass to destruction, to wit: by consolidation of power first, and then corruption, its necessary consequence.
The proposed merger would benefit Arbitron stockholders in 1.26 billion ways. If you think the proposed merger will benefit radio broadcasters in any way, here?s hoping you and Elvis enjoy the World Series!
Mike Gould is the President and CEO at Eastlan Ratings and can be reached by e-mail at mgould@eastlanratings.com
