Eric Rhoads' Blog
Q&A: Arbitron's Michael Skarzynski
By Radio Ink Editor-in-Chief Brida Connolly
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When Michael Skarzynski joined Arbitron, he jumped in at the deep end. Succeeding Steve Morris as president/CEO, he arrived just after Arbitron settled the Portable People Meter lawsuits in New York and New Jersey, and soon after said it would extend the changes agreed to in those settlements to all PPM markets. And he got there as NABOB and the Spanish Radio Association were saying that's good — but it's not enough to satisfy their concerns over the PPM. The emergency petition from NABOB and the SRA for an FCC investigation into the PPM rollout, filed last year, is still on the table.
Along with the ongoing PPM drama, there’s Nielsen’s soon-to-roll-out new service in some Arbitron markets, with Clear Channel and Cumulus signed up. And Skarzynski has stirred things up himself, with a management reorganization: He’s added three executive VP positions, two of which have been filled, and eliminated and realigned other top posts — and the tough decision, in the face of the ongoing economic turmoil, to cut 10 percent of Arbitron’s workforce. And that was all in his first three months on the job.
In this candid and wide-ranging Q&A with Radio Ink, Skarzynski covers all that territory and more, including Arbitron's image problems and its plans to win back the customers it's lost.
What made you want to head up Arbitron at this time?
The board was looking for a CEO who has public-company experience, a good familiarity with technology, and experience with business development activities and partnering; and a candidate who is very good with building relationships with customers.
I was attracted to the company for many different reasons. First, Arbitron has a very strong research organization, and I have worked at a variety of companies, including AT&T and Lucent Technologies — which has Bell Labs — that have world-class research organizations. I know that a strong research team can be a tremendous asset when it’s given the right goals, management, and resources.
Second, Arbitron has a very strong market leadership position, and I think it’s easy to build on that foundation and look at new product lines and new businesses with customers where you have strong relationships.
Third is the opportunity for Arbitron to build on the core radio ratings business and see if we can’t extend our ratings business to other media. That seems like a pretty neat opportunity.
What other media, specifically?
We’ve launched a strategic planning effort, and we’re looking at a series of opportunities. We haven’t made any declarations or statements of what precisely we’re going to do in terms of pursuing new markets. But obviously, markets such as television, the Internet, and out-of-home audience measurement and the related business intelligence and analytics for measurement are areas we’re considering.
How are you putting your imprint on the company culture? What kind of company do you want Arbitron to be?
There are many positive values in the culture, including, first and foremost, the great employees that Arbitron has. And the company pays a lot of attention to the quality of its service. That is a good foundation to build on for future growth.
In terms of areas where I am making an impact, I have reorganized the company, and we’re bringing in a couple of new executives. The first position we’re bringing in is an executive vice president of customer solutions. Customer solutions will be the product house for Arbitron.
We’re going to focus our research and product-management teams on getting closer to the customer and using our very strong research foundation to make some improvements in our services, including our diary services — for example, to upgrade the coverage that we have for cellphone-only sampling, improve the proportionality we have in various demos, and do as strong an upgrade as we can in the application software and qualitative research aspects of both our diary markets and our PPM market services.
We’re also bringing in an executive vice president and chief marketing officer, responsible for marketing and communications and for new product introduction. It fair to say that Arbitron has not done as good a job as we need to do in marketing, so this is an area that I would expect we’d make some significant improvements, and quickly.
And the third position is executive vice president of strategic planning and business development. We’ve brought a strategic planning team together from the best and the brightest within the company, and this team has been working for on building a new strategic plan. Anyone in the company who wishes to can make a contribution to this effort.
Another component of the third new executive vice president is business development, which will be focused on transactions related to acquisitions, joint ventures, and partnerships. We’re bringing in a new executive who has completed successful transactions in this area to help us in business development. That will be another new area of focus — not only on internal growth, but also make some selected strategic investments to extend our capabilities.
My view of Arbitron is that our core business will remain radio ratings. Any new activity or opportunity that we will review will be in the context of how we can take the strengths, skills, and assets of our core radio ratings business and build on it.
Arbitron might be said to have had an image problem over the years. Do you agree? How is that being addressed?
Certainly in the last 12 months, critics of Arbitron have said there are a number of problems with the company. Some customers have commented that the research methodology is flawed, and said we don’t do a good enough job of getting an accurate and comprehensive view of sampling, and that’s a problem. Some customers have said we’re not representing certain minority demographics among black listeners and Hispanic listeners in particular, and of a younger age group. Other customers have said Arbitron doesn’t do a good enough job of caring for the cellphone-only sample. So these are some comments on research methodology.
Other concerns are that Arbitron doesn’t take into account customer requirements as fully as it needs to. Some of this has been translated into the actions by, for example, the attorneys general of New York and New Jersey, with whom the company was engaged in lawsuits in the fourth quarter of 2008. Those lawsuits have been settled, and the settlements have been made public. And in the first quarter of ’09, there was a public announcement about what the company had agreed to with the attorney general of the state of Maryland.
Also, there’s been a dialogue between the company and the FCC that started in probably the third quarter and extended into the fourth quarter of 2008.
With the emergency petition for an investigation of the PPM rollout?
Correct — that was in direct response to the emergency petition that had been filed by the National Association of Black Owned Broadcasters and the Spanish Radio Association. All of this activity, taken together, has mean quite a bunch of tumult in the marketplace.
Another issue that needs to be pointed out is that Nielsen entered our home market of the diaries in the November ’08 time frame, at the invitation of both Cumulus and Clear Channel. There were comments from those two very fine customers of Arbitron’s saying, "We prefer to have another competitor in the marketplace," and, "There are some issues that we have with the Arbitron diary service that we expect to see improved with the participation of Nielsen in the market."
It’s been a busy time, dealing with all of these issues and fixing problems where we and customers saw them. Making improvements and delivering them to customers have all contributed to, as you have said, the image problem.
You've talked about winning back customers that were lost. Is that a question of communication? Do you have other plans?
I don't want to discuss publicly any contract negotiations, because that is a private matter between Arbitron and Clear Channel and Arbitron and Cumulus. I will say that we are actively engaged with all of our customers in various contract-renewal negotiations.
I am personally involved in negotiations with those two customers. We view all of our actions as absolutely paramount to earning that business from Clear Channel and from Cumulus. It’s a number-one strategic objective of the company to win back that business. It’s also a number one strategic objective of the company to take on Nielsen in the diary markets. We're very active on both fronts.
How are you positioning your company against Nielsen in those markets?
Nielsen is just getting started, so it's tough for anyone to have a clear view of where they're going to come out. The one-week trial in Lexington, KY, has been talked about publicly, and we have some information from what has been said publicly by Nielsen. But I don’t have a view of exactly how this service is going to function, what its differentiation might be, and how it might come out as a competitor. The information we have is limited, and it would be important for Nielsen to formalize their service and get it rolling before Arbitron can comment on how we’re going to compete against it.
But we have a very clear view from our customers of the improvements that we need to make — and that we are making — in our diary service to maintain our leadership position. We have specific plans, with specific metrics that we expect to hit, within specific timeframes. And then customers can say, "Against these half-a-dozen issues that were of concern for us, we know what Arbitron’s going to do, or what Arbitron has promised to do." Then the customer can make a decision as to which service to select.
Another thing that we'll be competing on in the diary markets is the fact that we've been accredited by the Media Rating Council. Our first MRC accreditation occurred back in 1969. I don't wish Nielsen well in the diary markets, make no mistake, but if they were to plane up out of the water and come up with a service in late 2009 or early 2010, they will not be accredited by the MRC. They won't be accredited for some time, and advertisers and ad agencies, in trying to plan, buy, and sell advertising for radio, will use the Arbitron service as currency. Arbitron has pledged that we will remain in all of the diary markets. We're in the diary markets to stay. We're going to make these improvements, and we expect to maintain our leadership position.
We're listening to customers, perhaps in a way that we should have, or didn't, in years before, and reacting in a more rapid and clear way to changes that are asked for.
Are there talks going on with representatives from NABOB and the Spanish Radio Association on the PPM? After the announcement that you were extending some of the settlement changes to other markets, they still did express some dissatisfaction.
We are in talks with the customers who are the members of the NABOB and SRA groups. What those customers have said publicly about their discussions with Arbitron is that, if I may just quote them, "Arbitron has made a good first step," but they say they’re looking for more improvements and more progress, and more rapidly delivered to the market.
In my view, the goals of our customers are exactly the same as the goals of Arbitron, which is to improve the service. Period. Full stop. There’s no difference there.
I’ve been personally involved in these discussions. I have told the customers that "I’ll tell you what we can do, I’ll tell you when we can do it. You won’t be 100 percent satisfied, but we’re going to make improvements, and we have to keep a dialogue going in order to have a clear understanding and a clear exchange between Arbitron and our customers." And that’s what’s going on.
I know the FCC is in a transition period, but would you place a bet now on which way they’re going to go on the PPM investigation?
I don't know that I want to place a bet. I met with acting FCC chairman Michael Copps a couple of weeks ago, and that’s a matter of public record. We’re working with the FCC, certain members of Congress, state governments, municipal governments — we’re having a dialogue with all government officials who want to talk about Arbitron issues. It wouldn’t be appropriate for me to comment on whether or not the FCC will launch a 403 investigation.
Arbitron’s position remains that they don’t have jurisdiction?
Yes. That’s correct.
If it does happen, how might that affect the PPM’s development and its further commercialization?
Oh, gee whiz, it would have a big, big, big effect on the company. Any 403 investigation is a huge activity. Not everyone, but many, many people in the company would be distracted and focused on preparing responses and background materials for the 403 investigation. So that would have a very deleterious effect on the Arbitron improvement programs.
With the difficult economy, where are the risks for Arbitron? Are there particular areas you’re concerned about?
I don’t know of a customer of Arbitron who is not hurting in today’s economy. One of the things that I’m trying highlight or emphasize — not necessarily as a change in the Arbitron culture, but as a point of emphasis — is that Arbitron wants to be a cheerleader for the radio industry. Even though we’re having all these terrible problems in the general economy and in the radio industry, radio audiences are at record levels. Particular formats such as news and talk have benefited greatly from the political campaigns of 2007-2008 and through lots of focus on the economy and the banking and housing crises. What Arbitron needs to do is help our customers in these very, very difficult times to build their radio audiences, to work with customers to increase their advertising, to demonstrate to the entire market the benefit of advertising in radio and the benefits of radio as a medium. Those are some of the activities that we’re stepping up inside of Arbitron.
As you’re coming into radio, are you optimistic? What’s your vision for the industry?
I’m very, very worried about 2009. It’s a gloomy economic situation in the general market. But I’m very optimistic about the long-term success of radio, and Arbitron’s continued place in the radio industry. We have to slug through 2009 together, but as we go through the year and things pick up in the general economy, I think that the radio industry will recover nicely in 2010, and will continue to grow.
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