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Wireless Group PLC (TWG)

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Tuesday 16 March, 2004

Wireless Group PLC

Legal Action Against RAJAR

Wireless Group PLC
16 March 2004



                             THE WIRELESS GROUP PLC
                            ('TWG' or 'the Company')

                 TWG INSTITUTES LEGAL PROCEEDINGS AGAINST RAJAR

                         £66 MILLION SOUGHT IN DAMAGES



The Wireless Group plc ('TWG') -- which owns national commercial station
talkSPORT and 16 local and regional radio stations -- commenced High Court
proceedings against RAJAR today, claiming damages of more than £66 million in
lost revenues and seeking an order that RAJAR's refusal to introduce electronic
measurement immediately is unlawful.

TWG claims the RAJAR tests of electronic measurement were fatally flawed (see
TWG vs RAJAR: The facts - statement at the end of this announcement).
The company may also take legal action against RAJAR's shareholders -- the BBC 
and the Commercial Radio Companies Association (CRCA).

The inaccuracy of RAJAR's diary system results in talkSPORT losing revenues of
approximately £1.5 million per month, compared to what it would earn if an
accurate audience measurement system such as the technology-driven audience
measurement watch system were being used.

If damages were claimed from August 2000, when TWG first requested that RAJAR
introduce electronic measurement, then they would amount, before tax, to more
than £66 million together with interest up to judgement which is expected to be
in March next year. In addition, the estimated total legal costs of both sides
for a court case could be £1.5 million.

Radio audience ratings determine where millions of pounds in advertising
investment flow every day. Because talkSPORT is forced to trade using figures
produced by RAJAR's discredited diary system, millions of pounds of advertising
revenues that should be coming to talkSPORT are either lost or going to
commercial competitors instead.

This is because RAJAR's diary system underestimates talkSPORT's weekly reach
currently by around 4.7 million listeners (1.9 million adults under RAJAR
compared against 6.6 million adults under electronic measurement, according to
the latest figures for Q4, 2003. Sept 15-Dec 14, 2003).

Since Wireless Group first asked RAJAR to introduce electronic measurement in
August 2000 it has taken RAJAR until January 2002 to carry out tests of two
electronic meters, which themselves took 15 months ending in March 2003. On 1
July 2003, RAJAR issued a press release saying that it would not be adopting
electronic measurement. RAJAR refused to publish any of its test results.

GfK have conducted a national broadcast survey -- commissioned by The Wireless
Group -- using electronic measurement of radio and TV audiences since March
2003. Results from the survey have been published on a monthly basis since April
-- and consistently show talkSPORT to be the Number One commercial station in
the UK ahead of Classic FM and Virgin AM and FM. Under RAJAR, talkSPORT is
ranked behind both these competitors.

On 15 October 2003, RAJAR issued a press release saying that it intended to test
a second generation of electronic meters but would not be able to start doing so
until July 2004 at the earliest. It now says that they could not be introduced
until 2006.

The legal action claims there is nothing wrong with the current generation of
electronic meters, particularly the watch which has been proved to be very
satisfactory in Switzerland, where it is the radio and TV currency, and much
more accurate than the diary. Electronic measurement for national and London
stations could be introduced now.

Kelvin MacKenzie, Chairman and Chief Executive of The Wireless Group, said:

'Incredibly, I have spent more than three years of my life trying to persuade
the radio industry that the diary, pencil and short-term memory should be
replaced by a technology that measures radio audiences more accurately.

'My opponents have tried desperately to kick the issue into the long grass
because they are making a hell of a lot of money out of this fraudulent system.

'Today signals the end of my attempt to seek straightforward change through
negotiation and the beginning of the final stage in which I will make my case to
a judge while they make theirs.

'In our Particulars of Claim, we reveal quite shocking revelations that the
public was not involved in crucial RAJAR tests of the new technology. In fact,
RAJAR came out against the software by simply carrying out tests among
themselves, involving, among others, the former Managing Director and it was on
this basis that RAJAR said 'No' to change.

'Knowing what I now know about how RAJAR's tests were conducted and upon what
basis the board's decision was made, I look forward to the result of the trial
with 100% confidence.'

To follow, statement issued to UK media this morning:

For further information, please contact:

David Rydell/Robin Tozer
Bell Pottinger Financial       Tel: 020 7861 3232

talkSPORT Press Office         Tel: 020 7959 7821


FURTHER INFORMATION:


                            TWG vs RAJAR: THE FACTS

              Scandal of RAJAR's tests of electronic measurement:

•RAJAR staff members used in qualitative tests (no members of public involved)

•Electronic wrist watch found faulty on basis of RAJAR staff members' week-old 
 memory

•No facts produced on diary system's accuracy

The Wireless Group has discovered the scandalous way in which RAJAR tested
electronic measurement...which formed the basis of the Board's decision to 
reject the new technology.

Shocking facts have emerged from TWG's investigation of RAJAR's secret tests
during pre-court disclosure.

Both electronic systems were tested from the premise that the diary system was
100% accurate. RAJAR's current diary system was not placed under any scrutiny
whatsoever by RAJAR as to its accuracy and reliability.

One of the major concerns presented to the RAJAR board was the claim that the
Radiocontrol watch produced a significant number of false positives, i.e. that
it recorded listening to a radio station when no such listening took place. If
true, this would be a fundamental flaw of the watch -- and yet, when examined,
not one case has been proven.

Much is made of false positives in RAJAR research director Paul Kennedy's
records, but these show less than 1% alleged false positives

That is the equivalent of one incorrect box in three weeks of RAJAR diaries.

By his own admission, RAJAR research director Kennedy found that 'to complete
the log was very difficult and tiring and took weeks before he was able to do it
properly'. So how can RAJAR expect members of the public to find completing a
listening diary any easier than its own research director?

Kennedy was one of just 12 people involved in the expert witness tests
including:

Jane O'Hara      RAJAR Managing Director (now left)

Paul Kennedy     RAJAR Research Director

Carole Dunn      RAJAR PA

Paul Brown       CRCA Chief Executive

Kennedy has admitted that some of the 1% alleged false positives in the expert
witness tests were not backed up by listening logs or diaries or anything in
writing in any form. These false positives, he admitted, were alleged purely on
the basis of the person's memory -- which could be as much as eight days after
the event.

The 1% false positive reports from the expert witness tests average out to the
equivalent of less than eight minutes listening per person per week -- or one
incorrect box in a RAJAR diary.

This compares against just two examples of diary false positives from a GfK
single-source survey, in which 215 radio listeners (who were ordinary members of
the public) filled out RAJAR-style diaries as well as wore a Radiocontrol watch
simultaneously for a week:

7 hours of diary false positives. Diary mistakenly attributes Radio 1 for
10am-5pm. Watch matches Radio 2 for that period (Male, 34, Whitefield, June 17,
2002)

7 hours of diary false positives. Diary mistakenly attributes talkSPORT for
10.30am-5.30pm. Watch matches Five Live for that period (Male, 53, Greater
Manchester, June 8, 2002).

In this single-source survey, half of all diary hours are false positives.

Average hours double from 12 to 23.2 under diaries. The GfK diary recorded the
same as the RAJAR diary for average hours 23.2 vs 23.5 (which shows how accurate
the GfK diary survey was). Total hours dropped from 8.32m (diaries) to 4.30m
(watch) -- which means that 48.3% of all diary hours are false positives.

Weekly reach for all radio went up from 298,000 to 381,000 adults -- which means
that diaries fail to pick up 28% of all radio listeners! One of the stations
that suffers most under the diary system is talkSPORT, which has 26,100
listeners with the diaries and 38,600 listeners with the watches -- a 48%
increase.

The average number of stations listened per week rises from 2.73 to 4.40. So the
diary picks up only 62% of stations listened -- 38% false negatives.

It is also relevant to point out that RAJAR's laboratory tests showed that the
watch produced one suspected false positive during the entire laboratory testing
being two samples out of 63,440 samples or 0.0032%.

The following reports -- from Philadelphia and Switzerland -- reveal how
top-line results do not vary in that reach goes up and hours go down under
electronic measurement.

ARBITRON RESULTS FROM PHILADELPHIA SURVEY

Weekly reach increases

   •All 20 stations surveyed show higher weekly reach - up to more than three
    times the diary figure

Hours drop

   •Average time spent listening drops for all stations - in one case by 75%

Average numbers of stations per listener per week doubles

   •Diary -- 3 stations per person per week
   •Meter -- 6 stations per person per week

RADIOCONTROL RESULTS IN SWITZERLAND

Reach goes up:

Total radio       71 - 92%

SBC               45 - 66%

Private stations  28 - 59%


Hours go down:

Total radio          170 - 110 mins per day     - 35%

SBC                  100 - 84                   - 16%

Private stations     64 - 28                    - 70%

A major plank in RAJAR's rejection of electronic measurement was, incredibly,
based on the fact that the results of the tests on the two different systems
were different.

In the second paragraph of its 1 July press release announcing the decision,
RAJAR reports: 'RAJAR's principal concern with both meters is that there is no
consistency of results in the audiences recorded in terms of meter versus meter,
casting doubts over the 'perceived accuracy' of meters.'

However, the technologies used to measure listening are different. (Radiocontrol
uses audio-matching to identify stations, whereas Arbitron uses encoded signals
to identify stations). This can produce different, but not necessarily wrong,
results. For example, Radio 4 may be under-reported by Arbitron because RAJAR
may not have embedded the encoded signal on all the station's simulcasted
platforms (LW and DAB, for example) -- whereas Radiocontrol could pick up the
sound pattern for audio matching.

Furthermore, the meter results are bound to be different -- because the tests
were carried out under completely different conditions. RAJAR refuses to publish
all these shocking details but they will have to be disclosed at the trial of
Wireless Group's case.

Even if the meter results were different, it does not mean both meters are
flawed, as RAJAR has assumed. One could be more accurate than the other -- and
both could still be more accurate than the diary system.

RAJAR's report to the Board contains numerous erroneous and unsubstantiated
allegations against electronic measurement which will be exposed and disproved
at trial.





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