SAN FRANCISCO–California Attorney General Kamala D. Harris announced a settlement with Arbitron Inc., the nation’s dominant provider of radio audience ratings, over allegations that the method it used to collect ratings information discriminated against radio stations with predominantly African American and Latino audiences. The settlement is the result of a consumer protection lawsuit filed jointly by the state of California and the cities of Los Angeles and San Francisco.

Attorney General Harris, Los Angeles City Attorney Carmen A. Trutanich and San Francisco City Attorney Dennis Herrera alleged that Arbitron Inc.’s implementation of “Portable People Meters” (PPM) to measure radio station listenership in California beginning in 2008 violated the state’s Unfair Competition Law, False Advertising Law and Unruh Civil Rights Act by dramatically undercounting minority audiences, causing sharp declines in advertising rates and revenue for many broadcasters.

“This settlement ensures that California’s diverse audiences will be fully counted by Arbitron’s ratings systems and that broadcasters serving these communities will have the opportunity to compete fairly in the marketplace,” said Harris. “I am pleased that Arbitron will be revising its practices in the state and thank my partners in this effort, city attorneys Carmen Trutanich and Dennis Herrera.”

Arbitron’s ratings are based on information provided by sample groups of listeners. In deploying a new system that relied on electronic metering devices in place of personal listenership diaries, Arbitron’s listener recruitment methodology failed to reflect the diversity of broadcast audiences in California markets, according to the complaint filed in San Francisco Superior Court.

The settlement mandates that Arbitron meet concrete metrics in its efforts to ensure that its audience sampling methods are fair and representative of California’s diverse media markets. Specifically, Arbitron will improve its sample-audience recruitment by increasing address-based outreach to 65 percent of its total recruitment activity by Dec. 31, 2012.

Previously, recruitment was conducted primarily via land-line telephone, a survey method that failed to adequately include minority households. Arbitron will also take all reasonable steps to increase minority participation in their sample audience panels in five California major media markets. Additionally, Arbitron will begin incorporating country of origin as a standard demographic characteristic collected from participating Hispanic households–an additional benefit to Spanish-language media outlets. The Columbia, Md.-based media research firm also has agreed to pay a total of $400,000 to the plaintiffs: $150,000 each to the state of California and city of Los Angeles and $100,000 to the city and county of San Francisco.

Radio stations serving primarily African American and Latino audiences were disproportionately affected by the sample audience recruitment methods Arbitron began using with its switch to the PPM ratings scheme in 2008. Of the 18 stations serving minority audiences in Los Angeles, 16 experienced ratings decreases in excess of 30 percent under the initial PPM system. Three of these fell by over 70 percent. One Los Angeles radio station whose audience is mostly African American, was rated 0.0 for a significant portion of the day immediately after implementation of the new PPM ratings. One Spanish- language radio station that had previously enjoyed a No. 1 ranking in the Los Angeles market saw its ratings plummet by more than 50 percent under Arbitron’s PPM ratings for September 2008.

Arbitron’s PPM methodology was criticized by minority broadcasters and the Media Ratings Council, the independent industry body that accredits media ratings systems, which has found problems with minority representation in Arbitron’s sample audiences in the past.

“Through this settlement, Arbitron has agreed to take important steps to ensure that minority radio stations are reasonably treated in order that they may fairly compete in the California marketplace,” said Trutanich. “In a city as diverse as Los Angeles, it is important that all of our residents and our businesses be equally represented and able to compete in our field of commerce. Only then will all Californians have a voice.”

“Assuring the integrity of broadcast rating methodologies is essential to protect media outlets that serve California’s diverse communities,” said Herrera. “These measures set all-important ad rates and revenue, and largely determine the success or failure of media outlets in a competitive industry. I’m grateful for the hard work and expertise of my co-counsel in this case, Attorney General Kamala D. Harris and L.A. City Attorney Carmen Trutanich. I am also appreciative to Arbitron and its legal team for their cooperative approach and willingness to negotiate with us in good faith.”