Arbitron Inc. Reports 2010 Third Quarter Financial Results

COLUMBIA, Md., Oct. 26 /PRNewswire-FirstCall/ -- Arbitron Inc. (NYSE: ARB) today announced results for the third quarter ended September 30, 2010.

The Company reported revenue of $99.5 million, an increase of 1.4 percent as compared to revenue of $98.1 million during the third quarter of 2009.  Revenue in the quarter increased due to the commercialization of the Portable People Meter^™ (PPM^™) radio ratings service in 10 additional markets versus the five markets commercialized in the third quarter of 2009.  The increase in revenue realized from the ongoing transition to the PPM service in the third quarter was partially offset by a number of previously disclosed factors, including the impact of certain customers who were subscribers in 2009 and who either reduced their level of service in 2010 or did not renew expiring contracts.

Costs and expenses for the third quarter increased by 7.0 percent, from $73.5 million in 2009 to $78.6 million in 2010, due primarily to the continued commercialization of the Portable People Meter radio ratings service and investments in programs to recruit persons age 18-34 in PPM and diary markets.

Earnings before interest, income tax expense, depreciation and amortization (EBITDA) for the quarter was $25.4 million, a decrease of 11.7 percent compared with EBITDA of $28.7 million for the third quarter of 2009.

For the third quarter of 2010, net income was $11.3 million, a decrease of 17.4 percent compared with $13.7 million for the third quarter of 2009.  Earnings per share (diluted) was $0.42 for the quarter versus $0.51 for the third quarter of 2009.

For the nine months ended September 30, 2010, revenue was $283.7 million, an increase of 0.1 percent versus revenue of $283.4 million for the same period in 2009.

During the first three quarters of 2010, the increase in revenue realized from the ongoing transition to the PPM radio ratings service was offset by a number of previously disclosed factors including: the decision by Cumulus and Clear Channel to subscribe to a competitor's diary-based radio ratings service in a limited number of small and medium-sized markets (which primarily affected first quarter results); and the impact of certain customers, including Univision, that were subscribers in 2009 but reduced their level of service or did not subscribe in 2010.

Costs and expenses for the nine months ended September 30, 2010 increased by 1.0 percent, from $234.8 million to $237.0 million.

EBITDA increased 2.0 percent from $66.1 million in the first nine months of 2009 to $67.5 million for the same period in 2010.  Net income for the nine-month period decreased 2.3 percent to $28.9 million compared with $29.6 million in 2009. Earnings per share (diluted) for the first nine months of 2010 was $1.07 compared with $1.11 per share (diluted) for the first nine months of 2009.

Management Comment on Third Quarter 2010 Results

Said William T. Kerr, President and Chief Executive Officer:

"In the third quarter, the radio advertising marketplace continued its recovery from the severe advertising recession of 2009. At the same time, radio broadcasters remain cautious in this still uncertain economic environment. This uncertainty has kept some of our customers on the sidelines in terms of discretionary services and contract renewals.

"We aren't simply waiting for an economic rebound to undo the impact of the ad recession.  We are focused on strengthening the value proposition that an Arbitron ratings subscription represents to broadcasters in markets large and small. Thanks to this focus, we recently signed the last of our top-five renewals for 2010, as well as additional contracts in PPM and diary markets, including in competitive diary markets.

"In the third quarter, we commercialized the PPM service in ten new markets.  The PPM radio ratings service is now the currency for buying and selling radio advertising in 43 markets, accounting for nearly half of all radio ad revenue. The panels for the final five PPM markets are recruited and these markets are in their two-month pre-currency period. We continue to expect that we will complete the commercialization of the PPM service by the end of the year.

"We also strengthened the executive leadership as part of our continuing effort to evolve a long-term senior management structure that will drive and support Arbitron's growth. We announced that Gregg Lindner, an experienced research executive from Scarborough Research, will become our new chief research officer. We also named Bill McKenna, an innovator in media research with decades of experience, as our senior vice president of New Media Ventures.

"As we approach the end of the year, we will continue our focus on completing the commercialization of our PPM ratings service, maintaining our programs designed to improve key sample quality metrics for our PPM and diary services and developing further our cross-platform measurement capabilities."

2010 Guidance

Arbitron is updating its revenue and EPS guidance for 2010.

For the full year 2010, Arbitron now expects its revenue increase to be near the lower end of the previously announced range of 2 percent to 6 percent versus 2009.

Earnings per share (diluted) for the full year 2010 is now expected to be $1.60 to $1.65, compared to the Company's previous earnings guidance of $1.50 and $1.75 per share (diluted.)

Earnings Conference Call: Schedule and Access

Arbitron will host a conference call at 10:00 a.m. Eastern Time on Tuesday, October 26, 2010.

The Company invites you to listen to the call toll-free by dialing (888) 562-3356. The conference call can be accessed from outside of the United States by dialing (973) 582-2700. To participate, users will need to use the following code: 15750169. The call will also be available live on the Internet at the following sites: www.arbitron.com and www.streetevents.com.

A replay of the call will be available from 1:00 p.m. on October 26, 2010, through 11:59 p.m. on November 9, 2010. To access the replay toll-free, please call (800) 642-1687 in the United States or (706) 645-9291 if you're calling from outside of the United States. To access the replay, users will need to enter the following code: 15750169.

Presentation of Non-GAAP Information

The terms EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that the management of Arbitron believes are useful to investors in evaluating the Company's results. These non-GAAP financial measures should be considered in addition to, and not as a replacement for, or superior to either net income as an indicator of Arbitron's operating performance, or cash flow, as a measure of Arbitron's liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP equivalent, see the EBIT and EBITDA Non-GAAP Reconciliation, along with related footnotes, below.

About Arbitron

Arbitron Inc. (NYSE: ARB) is a media and marketing research firm serving the media – radio, television, cable and out-of-home – as well as advertisers and advertising agencies. Arbitron's core businesses are measuring network and local market radio audiences across the United States; surveying the retail, media and product patterns of local market consumers; and providing application software used for analyzing media audience and marketing information data. The company has developed the Portable People Meter and PPM 360, new technologies for media and marketing research.

Portable People Meter^™, PPM^™ and PPM 360^™ are marks of Arbitron Inc.

PPM ratings are based on audience estimates and are the opinion of Arbitron and should not be relied on for precise accuracy or precise representativeness of a demographic or radio market.

Arbitron Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Arbitron Inc. and its subsidiaries in this document that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes," "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which we have derived from information currently available to us. These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied in such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:

• successfully maintain and promote industry usage of our services, a critical mass of broadcaster encoding, and the proper understanding of our audience measurement services and methodologies in light of governmental actions, including investigation, regulation, legislation or litigation, customer or industry group activism, or adverse community or public relations efforts;
• complete the Media Rating Council, Inc. ("MRC") audits of our local market Arbitron Portable People Meter  (PPM) ratings services in a timely manner and successfully obtain and/or maintain MRC accreditation for our audience measurement services;
• successfully commercialize our PPM service;
• design, recruit, and maintain PPM panels that appropriately balance research quality, panel size and operational cost;
• absorb costs related to legal proceedings and governmental entity interactions and avoid any related fines, limitations or conditions on our business activities, including, without limitation, by meeting or exceeding our commitments and agreements with various governmental entities;
• successfully develop, implement and fund initiatives designed to increase sample quality;
• successfully manage the impact on costs of data collection due to lower respondent cooperation in surveys, consumer trends including a trend toward increasing incidence of cell phone households, privacy concerns, technology changes, and/or government regulations;
• provide appropriate levels of operational capacity and funding to support the more costly identification and recruitment of younger demographics into our panels and samples;
• successfully manage the impact on our business of the recent economic downturn generally, and in the advertising market, in particular, including, without limitation, the insolvency of any of our customers or the impact of such downturn on our customers' ability to fulfill their payment obligations to us;
• compete with companies that may have financial, marketing, sales, technical or other advantages over us;
• effectively respond to rapidly changing technological needs of our customer base, including creating proprietary technology and systems to support our cell phone sampling plans, and new customer services that meet these needs in a timely manner;
• successfully execute our business strategies, including evaluating and, where appropriate, entering into potential acquisition, joint-venture or other material third-party agreements;
• effectively manage the impact, if any, of any further ownership shifts in the radio and advertising agency industries;
• successfully develop and implement technology solutions to encode and/or measure new forms of media content and delivery, and advertising in an increasingly competitive environment;
• successfully develop, implement, and launch our cross-platform initiatives; and
• renew contracts with key customers.

There are a number of additional important factors that could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements, including, without limitation, the risk factors set forth in the caption "ITEM 1A. — RISK FACTORS" in our Annual Report on Form 10-K for the year ended December 31, 2009, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission.

In addition, any forward-looking statements contained in this document represent our estimates only as of the date hereof, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

(Table to Follow)

SOURCE Arbitron Inc.

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