Arbitron shares fall after Nielsen move |

Arbitron shares fall after Nielsen move

Daily Staff Report

NEW YORK – Shares of Arbitron Inc. tumbled Thursday, a day after the radio ratings company said Nielsen Media Research would not join it in a joint venture to use a new technology for measuring broadcast audiences.Arbitron’s stock dropped $3.59 or 9.2 percent to $35.29 in heavy trading on the New York Stock Exchange, falling through its previous 52-week low of $37.04.Bear Stearns analyst Alexia S. Quadrani, in a note to investors, called the news a “disappointment” because a deal with Nielsen would have meant additional licensing revenues as well as a partner to share the costs.Arbitron said it would proceed with the “Portable People Meter” technology on its own for measuring radio audiences, even without Nielsen’s participation to measure TV audiences as well.The small, pager-like devices Arbitron has developed pick up data codes that are embedded in broadcasts but inaudible to the human ear.Arbitron favors the PPM system over the traditional written-diary method of measuring radio audiences since it would provide a greater amount of specific, automatically collected data on what listeners actually hear, which can then be reported electronically. The PPM system would be more costly to operate, however.Arbitron said late Wednesday that without the hoped-for partnership with Nielsen, and taking into account its own efforts to date on developing the PPM system, its full-year earnings would be $1.65 to $1.70 per share, below the $1.79 analysts polled by Thomson Financial had been expecting.Troy Mastin, an analyst at William Blair & Co., cut his rating on Arbitron to “Market Perform” from “Outperform,” and Stifel Nicolaus analyst Kit Spring also downgraded Arbitron to “Sell” from “Hold.”Baird analyst Mark A. Bacurin says he still believes Nielsen will end up buying Arbitron’s new technology, however, forming a partnership or eventually acquiring Arbitron. Bacurin said in a note that his team does “not believe Nielsen’s decision should be taken as an indication that Arbitron’s PPM technology is ineffective.”JPMorgan analyst Barton Crockett called Nielsen’s move a “modest negative,” saying in a note: “We still expect the radio industry to adopt PPM, since major ad agencies are supporting it and, to date, there are limited credible alternatives.”Nielsen said in a statement that while it did not plan a full partnership with Arbitron, it might be interested in licensing the PPM technology to measure out-of-home TV listenership.Nielsen is in a state of flux itself because its parent company VNU is the midst of talks with a group of private equity investors about possibly being taken over.Vail, Colorado

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