Court awards victory to Spanish Broadcasting System over Arbitron.

Spanish Broadcasting System Inc ( “SBS”) (NASDAQ: SBSA) announced that In a notable decision, on March 29, 2010, the Supreme Court of New York reversed its previous February 16, 2010, order in which it provisionally issued a temporary restraining order (TRO) in favor of Arbitron, Inc. requiring Spanish Broadcasting System, Inc. (“SBS”) to encode its radio broadcasts. The “encoding process” allows Arbitron’s Portable People Meters (PPMs) to collect audience listening data from which Arbitron then produces ratings estimates. Arbitron’s ratings are the standard by which commercial radio stations price and sell advertising time and sponsorships to media buyers.

The Court’s reversal of its earlier TRO is a significant victory for SBS, which ceased encoding its broadcasts based on a loss of confidence in Arbitron’s PPM methodology and its belief that the methodology undercounts minority audiences to the detriment of the minority radio broadcasters. SBS is one of just many critics of Arbitron’s PPM methodology. Arbitron’s staunchest critic is the PPM Coalition, which has voiced its concerns regarding Arbitron’s PPM methodology to the FCC, Congress and the Attorneys General of several states. These concerns have resulted in Congressional hearings on the soundness of the PPM methodology.

Critical to the Court’s reversal was its finding that Arbitron failed to demonstrate that it would suffer “permanent and irreparable harm.” In her 10-page order, the Honorable Shirley Kornreich specifically noted Arbitron’s failure to show proof that SBS’s failure to encode would devalue the ratings that Arbitron provides to other subscribers or cause any meaningful damage to Arbitron’s credibility. The Court’s Order notes that Arbitron has numerous contracts that expire at different times across 300 different markets – a fact which undercut Arbitron’s assertion that SBS’s pulling of its encoders could, by itself, have a material impact. “Arbitron’s characterization of its business as one in which the loss of any one client will cause irreparable harm has not been established and is not plausible,” the order states.

Frank Flores, SBS’s Chief Revenue Officer, praised the Court for considering the entirety of the SBS-Arbitron dispute, noting, “I am glad that Justice Kornreich considered our argument and ruled in our favor.” SBS’s attorney, James Sammataro of Kasowitz, Benson, Torres & Friedman, similarly stated, “The Court considered all of the party’s submissions and came to the right decision on the facts and the law.” Flores emphasized that, SBS’s victory notwithstanding, SBS remains committed to reaching an amicable resolution with Arbitron. To this end, the parties have agreed to mediate their dispute before John Feerick, the former dean of Fordham Law School.