Clear Channel Seeks New Rating System

Clear Channel Communications Inc., the largest U.S. radio broadcaster, is seeking proposals for a new audience rating system to replace what it calls the antiquated use of personal diaries manually kept by listeners.

Arbitron Inc., the current provider, will be among those invited to make a proposal, San Antonio-based Clear Channel said Monday in a statement.

Clear Channel Chief Executive John Hogan said the industry needed to make faster progress “with advertisers and media buyers using more credible, accurate information on radio’s value.”

Clear Channel is questioning whether participants in Arbitron’s system accurately fill out their diaries, said Lee Westerfield, an analyst with Harris Nesbitt in New York.

Clear Channel and other radio broadcasters need more accurate data as they compete for listeners’ time with other media such as the Internet and digital music devices, he said.

“The root question is the reliability of the diarists,” Westerfield said. “Do Arbitron diarists accurately recall what stations they listen to?” Westerfield rates Clear Channel’s shares “outperform” and doesn’t own them.

Clear Channel shares rose 8 cents to $30.60. They have declined 8.6% this year. Arbitron shares fell 80 cents to $41.23. The stock is up 5.2% this year.

The average amount of time a listener tunes in to traditional radio in the top 100 U.S. markets fell to 19 1/2 hours per week in 2004 from 20 3/4 hours in 2000, New York-based Arbitron has said.

Arbitron, which is testing electronic meters to replace the diaries, welcomes Clear Channel’s demand for more accurate measurements, Arbitron spokesman Thom Mocarsky said.

Arbitron tested its “portable people meters” in Philadelphia in 2003 and will begin a new round of tests in Houston in July, he said.

“We’ve been beating the drum for electronic measurement for a long time,” he said.

The portable meters are carried by the participant and record listening habits by detecting electronic codes embedded in radio station broadcasts, he said.

At night, the meter is set in a docking station and the day’s statistics are transmitted to Arbitron, he said.