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Future's Clear for Billion Dollar Arbitron
Arbitron's week has had its ups and downs but its leaders will enjoy their weekend in the knowledge that its biggest client Clear Channel Radio has signed up for PPM and diary ratings for another five years for a reported $538m. The ratings firm's share price has leapt accordingly.
Clear Channel represented around 19% of all Arbitron's revenue in 2009, and the early renewal - the current contract still has a year to run - has been sufficient to drive enthusiastic investors into the stock, raising its share price from below $32 on Wednesday to around $38 this afternoon and its market value to over a billion dollars.
The news comes in a week when America's Media Rating Council (MRC) withdrew its accreditation for Arbitron's RADAR and Nationwide network and national radio audience services, due to their inclusion of unaccredited data from PPM markets; and a potentially alarming independent study of a small number of PPM panellists revealed evidence of 'cheating' by individuals keen to earn more monthly payments. The message from Clear Channel would seem to be that whoever else is uncertain about the ratings giant's new methodology, some of those with the most at stake are pleased with it.
Analyst Jim Boyle of Gilford Securities, quoted on www.fmqb.com , described the announcement as 'a Christmas gift to Arbitron investors' and said it should put pressure on other radio companies not to 'defect'. He estimates the contract will be worth around $83 million in 2011, escalating to $96 million by 2016.
Arbitron's share price, which has been rising for the past 3 weeks and is now 81% above its 12-month low of $20.96, was also helped by this week's forecast of full year 2011 EPS of $1.90 to $2.05.
Web site: www.arbitron.com .
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