10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2008

Or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number: 1-1969

ARBITRON INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 52-0278528
(I.R.S. Employer Identification No.)

142 West 57^th Street
New York, New York 10019-3000
(Address of principal executive offices) (Zip Code)
(212) 887-1300
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ	Accelerated Filer o
Non-Accelerated Filer o (Do not check if a smaller reporting company)	Smaller Reporting Company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     The registrant had 26,384,835 shares of common stock, par value $0.50 per share, outstanding as of October 31, 2008.

ARBITRON INC.

INDEX

	Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets — September 30, 2008, and December 31, 2007		4
Consolidated Statements of Income — Three Months Ended September 30, 2008, and 2007		5
Consolidated Statements of Income — Nine Months Ended September 30, 2008, and 2007		6
Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2008, and 2007		7
Notes to Consolidated Financial Statements — September 30, 2008		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		38
Item 4. Controls and Procedures		38
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		39
Item 1A. Risk Factors		40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 6. Exhibits		42
Signature		43

     Arbitron owns or has the rights to various trademarks, trade names or service marks used in its radio audience measurement business and subsidiaries, including the following: the Arbitron name and logo, Arbitrends^SM, RetailDirect^®, RADAR^®, Tapscan^TM, Tapscan WorldWide^TM, LocalMotion^®, Maximi$er^®, Maximi$er^® Plus, Arbitron PD Advantage^®, SmartPlus^®, Arbitron Portable People Meter^TM, Marketing Resources Plus^®, MRP^SM, PrintPlus^®, MapMAKER Direct^SM, Media Professional^SM, Media Professional Plus^SM, Qualitap^SM, MediaMaster^SM, Prospector^SM, and Schedule-It^SM.

     The trademarks Windows^® and Media Rating Council^® are the registered trademarks of others.

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PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARBITRON INC.
Consolidated Balance Sheets
(In thousands, except par value data)

	September 30,			December 31,
	2008			2007
	(unaudited)			(audited)
Assets
Current assets
Cash and cash equivalents	$	8,491		$	21,141
Trade accounts receivable, net of allowance for doubtful accounts of $1,987 in 2008 and $1,688 in 2007		34,658			34,171
Prepaid expenses and other current assets		7,262			4,505
Current assets of discontinued operations held for sale		—			5,677
Deferred tax assets		2,256			3,124
Total current assets		52,667			68,618
Investment in affiliate(s)		8,500			15,262
Property and equipment, net		57,981			50,183
Goodwill, net		38,500			38,500
Other intangibles, net		985			1,252
Noncurrent assets of discontinued operations held for sale		—			1,869
Noncurrent deferred tax assets		2,755			4,089
Other noncurrent assets		1,025			770
Total assets	$	162,413		$	180,543
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities
Accounts payable	$	8,950		$	10,338
Accrued expenses and other current liabilities		27,069			27,702
Current liabilities of discontinued operations held for sale		—			4,651
Current portion of long-term debt		—			5,000
Deferred revenue		55,878			66,768
Total current liabilities		91,897			114,459
Long-term debt		70,000			7,000
Other noncurrent liabilities		9,848			10,884
Total liabilities		171,745			132,343
Commitments and contingencies
Stockholders’ (deficit) equity
Preferred stock, $100.00 par value, 750 shares authorized, no shares issued		—			—
Common stock, $0.50 par value, authorized 500,000 shares, issued 32,338 shares as of September 30, 2008, and December 31, 2007		16,169			16,169
Net distributions to parent prior to the March 30, 2001, spin-off		(239,042	)		(239,042	)
Retained earnings subsequent to spin-off		223,591			279,996
Common stock held in treasury , 5,968 shares in 2008 and 4,028 shares in 2007		(2,984	)		(2,014	)
Accumulated other comprehensive loss		(7,066	)		(6,909	)
Total stockholders’ (deficit) equity		(9,332	)		48,200
Total liabilities and stockholders’ (deficit) equity	$	162,413		$	180,543

See accompanying notes to consolidated financial statements.

4

ARBITRON INC.
Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)

	Three Months Ended
	September 30,
	2008			2007
Revenue	$	102,526		$	93,322
Costs and expenses
Cost of revenue		41,795			34,451
Selling, general and administrative		20,058			18,965
Research and development		10,274			9,587
Total costs and expenses		72,127			63,003
Operating income		30,399			30,319
Equity in net loss of affiliate(s)		(2,194	)		(3,263	)
Income from continuing operations before interest and income tax expense		28,205			27,056
Interest income		127			554
Interest expense		644			95
Income from continuing operations before income tax expense		27,688			27,515
Income tax expense		10,788			10,394
Income from continuing operations		16,900			17,121
Discontinued operations
Income from discontinued operations, net of taxes		57			99
Loss on sale of discontinued operations, net of taxes		(2	)		—
Total income from discontinued operations, net of taxes		55			99
Net income	$	16,955		$	17,220
Income per weighted-average common share
Basic
Continuing operations	$	0.63		$	0.58
Discontinued operations		—			—
Net income	$	0.64		$	0.58
Diluted
Continuing operations	$	0.63		$	0.57
Discontinued operations		—			—
Net income	$	0.63		$	0.58
Weighted-average common shares used in calculations
Basic		26,652			29,602
Potentially dilutive securities		248			301
Diluted		26,900			29,903
Dividends declared per common share outstanding	$	0.10		$	0.10

Note: Certain per share data amounts may not total due to rounding.

See accompanying notes to consolidated financial statements.

5

ARBITRON INC.
Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)

	Nine Months Ended
	September 30,
	2008			2007
Revenue	$	275,246		$	258,337
Costs and expenses
Cost of revenue		129,490			107,918
Selling, general and administrative		58,587			59,343
Research and development		29,802			32,023
Total costs and expenses		217,879			199,284
Operating income		57,367			59,053
Equity in net loss of affiliates		(973	)		(1,930	)
Income from continuing operations before interest and income tax expense		56,394			57,123
Interest income		582			1,743
Interest expense		1,524			286
Income from continuing operations before income tax expense		55,452			58,580
Income tax expense		21,615			22,211
Income from continuing operations		33,837			36,369
Discontinued operations
(Loss) income from discontinued operations, net of taxes		(438	)		134
Gain on sale of discontinued operations, net of taxes		423			—
Total (loss) income from discontinued operations, net of taxes		(15	)		134
Net income	$	33,822		$	36,503
Income per weighted-average common share
Basic
Continuing operations	$	1.24		$	1.22
Discontinued operations		—			—
Net income	$	1.24		$	1.23
Diluted
Continuing operations	$	1.23		$	1.21
Discontinued operations		—			—
Net income	$	1.23		$	1.21
Weighted-average common shares used in calculations
Basic		27,339			29,768
Potentially dilutive securities		207			301
Diluted		27,546			30,049
Dividends declared per common share outstanding	$	0.30		$	0.30

Note: Certain per share data amounts may not total due to rounding.

6

ARBITRON INC.
Consolidated Statements of Cash Flows
(In thousands and unaudited)

	Nine Months Ended September 30,
	2008			2007
Cash flows from operating activities
Net income	$	33,822		$	36,503
(Loss) income from discontinued operations, net of taxes		(15	)		134
Income from continuing operations		33,837			36,369
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment		12,392			8,063
Amortization of intangible assets		267			621
Loss on asset disposals		1,052			282
Deferred income taxes		2,303			346
Equity in net loss of affiliates		973			1,930
Distributions from affiliate		6,850			6,100
Bad debt expense		840			686
Non-cash share-based compensation		6,399			5,046
Changes in operating assets and liabilities
Trade accounts receivable		(1,327	)		361
Prepaid expenses and other assets		(2,233	)		(353	)
Accounts payable		(525	)		(1,246	)
Accrued expenses and other current liabilities		(4,004	)		(9,257	)
Deferred revenue		(10,890	)		(7,866	)
Other noncurrent liabilities		(326	)		(1,011	)
Net cash (used in) provided by operating activities of discontinued operations		(1,170	)		323
Net cash provided by operating activities		44,438			40,394
Cash flows from investing activities
Additions to property and equipment		(22,734	)		(15,261	)
Payments related to business acquisitions		(522	)		—
Investment in affiliate		(1,061	)		(2,136	)
Purchases of short-term investments		—			(170,545	)
Proceeds from sales of short-term investments		—			190,020
Net cash provided by (used in) investing activities from discontinued operations		2,123			(27	)
Net cash (used in) provided by investing activities		(22,194	)		2,051
Cash flows from financing activities
Proceeds from stock option exercises and stock purchase plan		9,815			14,476
Stock repurchases		(96,266	)		(64,998	)
Tax benefits realized from share-based awards		955			2,016
Dividends paid to stockholders		(8,367	)		(8,995	)
Borrowings of long-term debt		125,000			—
Payments of long-term debt		(67,000	)		—
Net cash used in financing activities		(35,863	)		(57,501	)
Effect of exchange rate changes on cash and cash equivalents		(18	)		114
Net change in cash and cash equivalents		(13,637	)		(14,942	)
Cash and cash equivalents at beginning of period		22,128			33,640
Cash and cash equivalents at end of period	$	8,491		$	18,698
Cash and cash equivalents from continuing operations at end of period	$	8,491		$	16,044
Cash and cash equivalents from discontinued operations at end of period		—			2,654
Cash and cash equivalents at end of period	$	8,491		$	18,698

See accompanying notes to consolidated financial statements.

7

ARBITRON INC.
Notes to Consolidated Financial Statements
September 30, 2008
(unaudited)

1. Basis of Presentation and Consolidation

Presentation

     The accompanying unaudited consolidated financial statements of Arbitron Inc. (the “Company” or “Arbitron”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included and are of a normal recurring nature. Certain amounts in the financial statements for prior periods have been reclassified to conform to the current period’s presentation. The consolidated balance sheet as of December 31, 2007, was audited at that date, but all of the information and footnotes as of December 31, 2007, required by U.S. generally accepted accounting principles have not been included in this Form 10-Q. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Consolidation

     The consolidated financial statements of the Company for the nine months ended September 30, 2008, reflect the consolidated financial position, results of operations and cash flows of the Company and its subsidiaries: Arbitron Holdings Inc., Audience Research Bureau S.A. de C.V., Ceridian Infotech (India) Private Limited, CSW Research Limited, Euro Fieldwork Limited, Arbitron International, LLC, and Arbitron Technology Services India Private Limited. All significant intercompany balances have been eliminated in consolidation. The Company consummated the sale of CSW Research Limited and Euro Fieldwork Limited, a subsidiary of CSW Research Limited, on January 31, 2008. The financial information of CSW Research Limited and Euro Fieldwork Limited has been separately reclassified within the consolidated financial statements as a discontinued operation. See Note 3 for further information.

8

2. New Accounting Pronouncements

     In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”), which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS No. 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. The Company adopted SFAS No. 157 for all financial assets and liabilities and the impact to the consolidated financial statements was immaterial. In accordance with FASB Staff Position 157-2, the provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2008, for all nonfinancial assets and nonfinancial liabilities. The management of the Company is evaluating the impact of adopting the nonfinancial asset and nonfinancial liability provisions of SFAS No. 157, but does not currently expect such adoption, effective January 1, 2009, to have a material impact on the Company’s consolidated financial statements.

     Effective December 31, 2006, the Company adopted SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (“SFAS No. 158”). The Company currently measures plan assets and benefit obligations as of September 30 of each year. In accordance with the provisions of SFAS No. 158, the measurement date will be required to be as of the date of the Company’s fiscal year-end statement of financial position effective for fiscal years ending after December 15, 2008. The management of the Company has evaluated the potential impact of adopting the measurement date provisions of SFAS No. 158 on the Company’s consolidated financial statements and expects that such impact will not be material to the financial position, results of operations, or cash flows of the Company.

9

3. Discontinued Operation

     During the fourth quarter of 2007, the Company approved a plan to sell CSW Research Limited (“Continental”), which represented a component of the Company’s international operations. As a result, the assets and liabilities, results of operations, and cash flow activity of Continental were reclassified separately as a discontinued operation held for sale within the consolidated financial statements for all periods presented. On January 31, 2008, the sale of Continental was completed at a gain of $0.4 million. The following tables present key information associated with the net assets and operating results of the discontinued operations for the reporting periods included in the consolidated financial statements filed in this quarterly report on Form 10-Q for the period ended September 30, 2008 (in thousands):

	September 30,		December 31,
Assets and Liabilities of Discontinued Operations	2008		2007
Cash	$	—	$	987
Receivables		—		4,112
Deferred taxes-current		—		49
Prepaids and other current assets		—		529
Current assets		—		5,677
Property, plant and equipment		—		46
Goodwill		—		2,058
Deferred taxes-noncurrent		—		(235	)
Noncurrent assets		—		1,869
Total assets	$	—	$	7,546
Accounts payable	$	—	$	1,499
Accrued expenses and other current liabilities		—		2,526
Deferred revenue		—		626
Total liabilities	$	—	$	4,651
Accumulated other comprehensive income	$	—	$	376

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Results of Discontinued Operations	2008			2007			2008			2007
Revenue	$	—		$	3,193		$	1,011		$	9,002
Operating expenses		—			3,086			1,802			8,908
Operating income (loss)		—			107			(791	)		94
Net interest income		—			32			7			94
Income (loss) before income tax (expense) benefit		—			139			(784	)		188
Income tax (expense) benefit		57			(40	)		346			(54	)
Income (loss) from discontinued operations, net of taxes		57			99			(438	)		134
(Loss) gain on sale, net of taxes		(2	)		—			423			—
Total (loss) income from discontinued operations, net of taxes	$	55		$	99		$	(15	)	$	134

10

4. Long-Term Debt

     On December 20, 2006, the Company entered into an agreement with a consortium of lenders to provide up to $150.0 million of financing to the Company through a five-year, unsecured revolving credit facility (the “Credit Facility”). The agreement contains an expansion feature for us to increase the total financing available under the Credit Facility up to $200.0 million with such increased financing to be provided by one or more existing Credit Facility lending institutions, subject to the approval of the lending banks, and/or in combination with one or more new lending institutions, subject to the approval of the Credit Facility’s administrative agent. As of September 30, 2008, and December 31, 2007, the outstanding borrowings under the Credit Facility were $70.0 million and $12.0 million, respectively. There was no short-term portion of long-term debt recorded as of September 30, 2008. The $12.0 million of debt recorded as of December 31, 2007, included $5.0 million in short-term obligations under the provisions of the Credit Facility.

     Under the terms of the Credit Facility, the Company is required to maintain certain leverage and coverage ratios and meet other financial conditions. The agreement contains certain financial covenants, and limits among other things, the Company’s ability to sell certain assets, incur additional indebtedness, and grant or incur liens on its assets. Under the terms of the Credit Facility, all of the Company’s material domestic subsidiaries, if any, guarantee the commitment. As of September 30, 2008, and December 31, 2007, the Company had no material domestic subsidiaries as defined by the terms of the Credit Facility. As of September 30, 2008, and December 31, 2007, the Company was in compliance with the terms of the Credit Facility.

     If a default occurs on outstanding borrowings, either because the Company is unable to generate sufficient cash flow to service the debt or because the Company fails to comply with one or more of the restrictive covenants, the lenders could elect to declare all of the then outstanding borrowings, as well as accrued interest and fees, to be immediately due and payable. In addition, a default may result in the application of higher rates of interest on the amounts due.

     The Credit Facility has two borrowing options, a Eurodollar rate option or an alternate base rate option, as defined in the agreement. Under the Eurodollar option, the Company may elect interest periods of one, two, three or six months at the inception date and each renewal date. Borrowings under the Eurodollar option bear interest at the London Interbank Offered Rate (LIBOR) plus a margin of 0.575% to 1.25%. Borrowings under the base rate option bear interest at the higher of the lead lender’s prime rate or the Federal Funds rate plus 50 basis points, plus a margin of 0.00% to 0.25%. The specific margins, under both options, are determined based on the Company’s ratio of indebtedness to earnings before interest, income taxes, depreciation, amortization and non-cash share-based compensation (the “leverage ratio”), and is adjusted every 90 days. The agreement contains a facility fee provision whereby the Company is charged a fee, ranging from 0.175% to 0.25%, applied to the total amount of the commitment. The interest rate on outstanding borrowings as of September 30, 2008, and December 31, 2007, was 3.3% and 5.8%, respectively.

     Interest paid during the nine-month periods ended September 30, 2008, and 2007, was $1.6 million and $0.2 million, respectively. Interest capitalized during the nine-month period ended September 30, 2008, was $0.1 million. No interest was capitalized during the nine-month period ended September 30, 2007, due to no outstanding borrowings being incurred during that period in 2007. Non-cash amortization of deferred financing costs classified as interest expense during each of the nine-month periods ended September 30, 2008, and 2007, was $0.1 million, respectively. Non-cash amortization of deferred financing costs classified as interest expense during each of the three-month periods ended September 30, 2008, and 2007, was less than $0.1 million, respectively.

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5. Stockholders’ (Deficit) Equity

     Changes in stockholders’ (deficit) equity for the nine months ended September 30, 2008, were as follows (in thousands):

									Net Distributions
									to Parent			Retained			Accumulated
									Prior to			Earnings			Other			Total
	Shares			Common		Treasury			March 30, 2001			Subsequent			Comprehensive			Stockholders'
	Outstanding			Stock		Stock			Spin-off			to Spin-off			Loss			(Deficit) Equity
Balance as of December 31, 2007		28,310		$	16,169	$	(2,014	)	$	(239,042	)	$	279,996		$	(6,909	)	$	48,200
Net income		—			—		—			—			33,822			—			33,822
Common stock issued from		307			—		153			—			9,487			—			9,640
treasury stock
Stock repurchased		(2,247	)		—		(1,123	)		—			(98,876	)		—			(99,999	)
Excess tax benefit from		—			—		—			—			955			—			955
share-based awards
Non-cash compensation		—			—		—			—			6,399			—			6,399
Dividends declared		—			—		—			—			(8,192	)		—			(8,192	)
Other comprehensive loss		—			—		—			—			—			(157	)		(157	)
Balance as of September 30, 2008		26,370		$	16,169	$	(2,984	)	$	(239,042	)	$	223,591		$	(7,066	)	$	(9,332	)

     A quarterly cash dividend of $0.10 per common share was paid to stockholders on October 1, 2008. Of the $100.0 million of the Company’s outstanding stock repurchased for the nine months ended September 30, 2008, $3.7 million was paid for in cash during the month of October 2008.

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6. Short-Term Investments

     The Company has historically made short-term investments in municipal and other government-issued variable-rate demand notes. Such investments, if any, are recorded by the Company at fair value and any outstanding investment assets are classified as available-for-sale securities in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. As of September 30, 2008, and December 31, 2007, there were no outstanding short-term investment assets recorded on the Company’s balance sheet.

     There were no purchases or sales of available-for-sale securities during the nine months ended September 30, 2008. For the three-month and nine-month periods ended September 30, 2007, purchases of available-for-sale securities were $30.3 million and $170.5 million, respectively. For the three-month and nine-month periods ended September 30, 2007, proceeds from the sales of available-for-sale securities were $61.1 million and $190.0 million, respectively.

7. Net Income Per Weighted-Average Common Share

     The computations of basic and diluted net income per weighted-average common share for the three-month and nine-month periods ended September 30, 2008, and 2007, are based on the Company’s weighted-average shares of common stock and potentially dilutive securities outstanding.

     Potentially dilutive securities are calculated in accordance with the treasury stock method, which assumes that the proceeds from the exercise of all stock options are used to repurchase the Company’s common stock at the average market price for the period. As of September 30, 2008, and 2007, there were options to purchase 1,730,683 and 1,863,273 shares of the Company’s common stock outstanding, of which options to purchase 430,713 and 182,791 shares of the Company’s common stock, respectively, were excluded from the computation of diluted net income per weighted-average common share for the quarter ended September 30, 2008, and 2007, respectively, either because the options’ exercise prices were greater than the average market price of the Company’s common shares or assumed repurchases from proceeds from the options’ exercise were potentially antidilutive. The Company elected to use the alternative method prescribed by FASB Staff Position SFAS No. 123R-3, Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards, for determining its initial hypothetical tax benefit pool. In addition, in accordance with provisions under SFAS No. 123R, Share-Based Payment, (“SFAS No. 123R”) the assumed proceeds associated with the entire amount of tax benefits for share-based awards granted prior to SFAS No. 123R adoption were used in the diluted shares computation. For share-based awards granted subsequent to the January 1, 2006, SFAS No. 123R adoption date, the assumed proceeds for the related excess tax benefits were used in the diluted shares computation.

13

8. Comprehensive Income and Accumulated Other Comprehensive Loss

     The Company’s comprehensive income is comprised of net income, changes in foreign currency translation adjustments, and changes in retirement liabilities, net of tax (expense) benefits. The components of comprehensive income were as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2008			2007		2008			2007
Net income	$	16,955		$	17,220	$	33,822		$	36,503
Other comprehensive (loss) income:
Change in foreign currency translation adjustment, net of tax benefit (expense) of $139 and $(17) for the three months ended September 30, 2008, and 2007, respectively; and a tax benefit (expense) of $381 and $(60) for the nine months ended September 30, 2008, and 2007, respectively.		(215	)		29		(588	)		97
Change in retirement liabilities, net of tax benefit (expense) of $(93) and $(87) for the three months ended September 30, 2008, and 2007, respectively; and a tax benefit (expense) of $(280) and $(258) for the nine months ended September 30, 2008, and 2007, respectively.		145			138		431			418
Other comprehensive (loss) income		(70	)		167		(157	)		515
Comprehensive income	$	16,885		$	17,387	$	33,665		$	37,018

The components of accumulated other comprehensive loss were as follows (in thousands):

	September 30,			December 31,
	2008			2007
Foreign currency translation adjustment, net of taxes	$	(214	)	$	374
Retirement liabilities, net of taxes		(6,852	)		(7,283	)
Accumulated other comprehensive loss	$	(7,066	)	$	(6,909	)

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9. Investment in Affiliates

     Investment in affiliates consists of the Company’s 49.5% interest in Scarborough, a syndicated, qualitative local market research partnership, and until its termination on June 30, 2008, the Company’s 50.0% interest in Project Apollo LLC, a pilot national marketing research service. Both investments are accounted for using the equity method of accounting. The following table shows the investment activity for each of the Company’s affiliates and in total for the periods ended September 30, 2008, and 2007:

	Summary of Investment Activity in Affiliates (in thousands)
	Three Months Ended								Three Months Ended
	September 30, 2008								September 30, 2007
				Project								Project
				Apollo								Apollo
	Scarborough			LLC		Total			Scarborough			LLC			Total
Beginning balance	$	12,794		$	—	$	12,794		$	12,542		$	1,366		$	13,908
Equity in net loss of affiliates		(2,194	)		—		(2,194	)		(2,040	)		(1,223	)		(3,263	)
Distributions from affiliate		(2,100	)		—		(2,100	)		(1,600	)		—			(1,600	)
Cash investments in affiliate		—			—		—			—			1,182			1,182
Ending balance at September 30	$	8,500		$	—	$	8,500		$	8,902		$	1,325		$	10,227

	Nine Months Ended									Nine Months Ended
	September 30, 2008									September 30, 2007
				Project									Project
				Apollo									Apollo
	Scarborough			LLC			Total			Scarborough			LLC			Total
Beginning balance	$	14,420		$	842		$	15,262		$	13,907		$	—		$	13,907
Equity in net income (loss) of affiliates		930			(1,903	)		(973	)		1,095			(3,025	)		(1,930	)
Distributions from affiliate		(6,850	)		—			(6,850	)		(6,100	)		—			(6,100	)
Non-cash investments in affiliate		—			—			—			—			2,214			2,214
Cash investments in affiliate		—			1,061			1,061			—			2,136			2,136
Ending balance at September 30	$	8,500		$	—		$	8,500		$	8,902		$	1,325		$	10,227

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10. Retirement Plans

     Certain of the Company’s United States employees participate in a defined-benefit pension plan that closed to new participants effective January 1, 1995. The Company subsidizes healthcare benefits for eligible retired employees who participate in the pension plan and were hired before January 1, 1992. The Company also sponsors two nonqualified, unfunded supplemental retirement plans.

     In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, (“SFAS No. 158”). During 2007 and prior years, the Company measured plan assets and benefit obligations as of September 30. In accordance with the provisions of SFAS No. 158, effective for fiscal years ending after December 15, 2008, the measurement date is required to be as of the date of the Company’s fiscal year-end statement of financial position, December 31. The management of the Company has evaluated the potential impact of adopting the measurement date provisions of SFAS No. 158 on the Company’s consolidated financial statements and expects that such impact will not be material to the financial position, results of operations, or cash flows of the Company.

     The components of periodic benefit costs for the defined-benefit pension, postretirement, and supplemental retirement plans were as follows (in thousands):

	Defined-Benefit						Postretirement				Supplemental
	Pension Plan						Plan				Retirement Plans
	Three Months						Three Months				Three Months
	Ended September 30,						Ended September 30,				Ended September 30,
	2008			2007			2008		2007		2008			2007
Service cost	$	196		$	217		$	10	$	9	$	30		$	33
Interest cost		507			445			24		21		58			52
Expected return on plan assets		(597	)		(552	)		—		—		—			—
Amortization of prior service cost		5			5			—		—		(5	)		(6	)
Amortization of net loss		182			165			8		12		46			49
Net periodic benefit cost	$	293		$	280		$	42	$	42	$	129		$	128

	Defined-Benefit						Postretirement				Supplemental
	Pension Plan						Plan				Retirement Plans
	Nine Months						Nine Months				Nine Months
	Ended September 30,						Ended September 30,				Ended September 30,
	2008			2007			2008		2007		2008			2007
Service cost	$	587		$	652		$	31	$	27	$	89		$	98
Interest cost		1,520			1,335			71		63		176			157
Expected return on plan assets		(1,826	)		(1,655	)		—		—		—			—
Amortization of prior service cost		17			16			—		—		(17	)		(17	)
Amortization of net loss		546			496			25		35		138			145
Net periodic benefit cost	$	844		$	844		$	127	$	125	$	386		$	383

     During the nine months ended September 30, 2008, the Company contributed $1.4 million to the defined benefit pension plan. The Company estimates that $0.2 million will be contributed to the other benefit plans during 2008.

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11. Taxes

     The effective tax rate from continuing operations increased to 39.0% for the nine months ended September 30, 2008, from 37.9% for the nine months ended September 30, 2007, to reflect the increase in certain non-deductible expenses and the increase in certain state income tax rates.

     The Company’s net unrecognized tax benefit for certain tax contingencies was $1.0 million as of both September 30, 2008 and December 31, 2007. If recognized, the $1.0 million of unrecognized tax benefits would reduce the Company’s effective tax rate in future periods.

     The Company accrues potential interest and penalties and recognizes income tax expense where, under relevant tax law, interest and penalties would be assessed if the uncertain tax position ultimately was not sustained. The Company has recorded a liability for potential interest and penalties of $0.1 million as of September 30, 2008.

     Management determined it is reasonably possible that certain unrecognized tax benefits as of September 30, 2008, will decrease during the subsequent twelve months due to either the expiration of statutes of limitation or due to the settlement of certain state audit examinations. The estimated decrease in these unrecognized federal tax benefits and the estimated decrease in unrecognized tax benefits from various states are both immaterial.

     The Company files numerous income tax returns, primarily in the United States, including federal, state, and local jurisdictions, and certain foreign jurisdictions. Tax years ended December 31, 2005, through December 31, 2007, remain open for assessment by the Internal Revenue Service. Generally, the Company is not subject to state, local or foreign examination for years prior to 2004. However, tax years 1989 through 2003 remain open for assessment for certain state taxing jurisdictions where net operating loss (“NOL”) carryforwards were utilized on income tax returns for such states since 2003.

     As the Company is subject to federal and state audits throughout the normal course of operations, losses for tax contingencies are recognized for unasserted contingent claims when such matters are probable and reasonably estimable.

     Income taxes paid on continuing operations for the nine months ended September 30, 2008, and 2007, were $15.8 million and $15.3 million, respectively.

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12. Share-Based Compensation

     The following table sets forth information with regard to the income statement recognition of share-based compensation (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
Cost of revenue	$	155	$	207	$	567	$	523
Selling, general and administrative		1,751		1,264		5,451		4,205
Research and development		146		102		381		318
Share-based compensation	$	2,052	$	1,573	$	6,399	$	5,046

     There was no capitalized share-based compensation cost recorded during the nine-month periods ended September 30, 2008, and 2007.

     On May 13, 2008, the Company’s shareholders approved the 2008 Equity Compensation Plan that provides for the grant of share-based awards, including stock options, stock appreciation rights, restricted stock, and restricted stock units. The maximum amount of authorized share awards to be issued under this plan is 2,500,000 shares of the Company’s common stock and of this amount, a maximum of 625,000 shares of the Company’s common stock are authorized to be issued for awards other than stock options and stock appreciation rights. The expiration date of the 2008 Equity Compensation Plan is May 13, 2018. The Company’s policy for issuing shares upon option exercise or conversion of its nonvested share awards and deferred stock units under all of the Company’s stock incentive plans is to issue new shares of common stock, unless treasury stock is available at the time of exercise or conversion.

Stock Options

     Stock options awarded to employees under the 1999 and 2001 Stock Incentive Plans and the 2008 Equity Compensation Plan (referred to herein collectively as the “SIPs”) generally vest annually over a three-year period, have five-year or 10-year terms and have an exercise price of not less than the fair market value of the underlying stock at the date of grant. Stock options granted to directors under the SIPs generally vest upon the date of grant, are generally exercisable in six months after the date of grant, have 10-year terms and have an exercise price not less than the fair market value of the underlying stock at the date of grant. The Company’s options provide for accelerated vesting if there is a change in control of the Company.

     The Company uses historical data to estimate option exercises and employee terminations in order to determine the expected term of the option; identified groups of optionholders that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted represents the period of time that such options are expected to be outstanding. The expected term can vary for certain groups of optionholders exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury strip bond yield curve in effect at the time of grant. Expected volatilities are based primarily on the historical volatility of the Company’s common stock.

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     The fair value of each option granted to employees and nonemployee directors during the periods ended September 30, 2008, and 2007, was estimated on the date of grant using a Black-Scholes option valuation model. Those assumptions along with other data regarding the Company’s stock options are noted in the following table (dollars in thousands, except per share data):

Assumptions for Options
Granted to Employees and	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
Nonemployee Directors	September 30, 2008	September 30, 2007	September 30, 2008	September 30, 2007
Expected volatility	23.99 - 24.70%	24.61 - 25.71.%	23.99 - 25.27%	24.95 - 26.52%
Expected dividends	1.00%	1.00%	1.00%	1.00%
Expected term (in years)	5.50 - 6.00	5.75 - 6.25	5.50 - 6.00	5.75 - 6.25
Risk-free rate	3.08 - 3.32%	4.31 - 4.61%	2.60 - 3.44%	4.31 - 4.91%
Weighted-average volatility	24.53%	25.51%	25.19%	25.45%
Weighted-average term (in years)	5.89	6.16	5.94	5.94
Weighted-average risk-free rate	3.18%	4.46%	2.92%	4.60%
Weighted-average grant date fair value per share	$12.65	$15.64	$11.50	$14.89
Other Data
Options granted	6,836	18,831	319,341	177,441
Weighted average exercise price for options granted per share	$47.25	$50.34	$42.81	$48.38
Intrinsic value of options exercised	$1,123	$1,386	$3,506	$5,508

     As of September 30, 2008, there was $4.0 million of total unrecognized compensation cost related to options granted under the SIPs. This aggregate unrecognized cost is expected to be recognized over a weighted-average period of 2.3 years. The weighted-average exercise price and weighted-average remaining contractual term for outstanding stock options as of September 30, 2008, were $39.88 and 6.80 years, respectively, and as of September 30, 2007, $38.35 and 6.51 years, respectively.

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Nonvested Share Awards

     The Company’s nonvested share awards generally vest over four or five years on either a monthly or annual basis. The Company’s awards provide for accelerated vesting if there is a change in control of the Company. Compensation expense is recognized on a straight-line basis using the market price on the date of grant as the awards vest. As of September 30, 2008, there was $8.1 million of total unrecognized compensation cost related to nonvested share awards granted under the SIPs. This aggregate unrecognized cost for nonvested share awards is expected to be recognized over a weighted-average period of 2.1 years. Other nonvested share award information for the periods ended September 30, 2008, and 2007, is noted in the following table (dollars in thousands, except per share data):

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2008		September 30, 2007		September 30, 2008		September 30, 2007
Number of shares granted		2,608		—		105,356		113,233
Weighted average grant-date fair value per share	$	47.05		—	$	43.99	$	46.33
Fair value of shares vested	$	53	$	53	$	1,693	$	638

Deferred Stock Units

     Deferred stock units granted to one of the Company’s employees vest annually on a calendar year basis through December 31, 2009, and are convertible into shares of common stock, subsequent to employment termination. Deferred stock units granted to nonemployee directors vest immediately upon grant and are convertible into shares of common stock subsequent to the directors’ termination of service. As of September 30, 2008, the total unrecognized compensation cost related to deferred stock units granted under the SIPs was $1.3 million and is expected to be recognized over a weighted-average period of 1.3 years. Other deferred stock unit information for the periods ended September 30, 2008, and 2007, is noted in the following table (dollars in thousands):

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2008		September 30, 2007		September 30, 2008		September 30, 2007
Shares granted to employee directors		29		—		21,753		21,667
Shares granted to nonemployee directors		1,171		1,147		3,937		3,532
Fair value of shares vested	$	54	$	52	$	182	$	169

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Employee Stock Purchase Plan

     On May 13, 2008, the Company’s shareholders approved an amendment to its compensatory Employee Stock Purchase Plan (“ESPP”) increasing the maximum number of shares of Company common stock reserved for sale under the ESPP from 600,000 to 850,000. The purchase price of the stock to ESPP participants is 85% of the lesser of the fair market value on either the first day or the last day of the applicable three-month offering period. Other deferred stock unit information for the periods ended September 30, 2008, and 2007, is noted in the following table (dollars in thousands):

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2008		September 30, 2007		September 30, 2008		September 30, 2007
Share-based compensation expense	$	75	$	77	$	242	$	230
Number of ESPP shares issued		8,276		9,117		26,733		26,494
Amount of proceeds received from employees	$	328	$	358	$	992	$	1,024

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13. Concentration of Credit Risk

     The Company’s quantitative radio audience measurement business and related software licensing accounted for the following percentages of revenue:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Quantitative Radio Business		83	%		81	%		77	%		76	%
Related Software Licensing		8	%		9	%		9	%		9	%

     The Company had one customer that individually represented 19% of its annual revenue for the year ended December 31, 2007. Although the industry consolidation has led to a concentration of the Company’s customer base, the Company has historically experienced a high level of contract renewals.

14. Financial Instruments

     Fair values of short-term investments, accounts receivable and accounts payable approximate carrying values due to their short-term nature. Due to the floating rate nature of the Company’s Credit Facility, the fair values of the $70.0 million and $12.0 million in related outstanding borrowings as of September 30, 2008, and December 31, 2007, respectively, also approximate their carrying amounts. There was no short-term portion of the long-term debt recorded as of September 30, 2008. The $12.0 million of debt recorded as of December 31, 2007, included $5.0 million in short-term obligations under the Credit Facility.

15. Stock Repurchases

     On November 14, 2007, the Company’s Board of Directors authorized a program to repurchase up to $200.0 million of the Company’s outstanding common stock through either periodic open-market or private transactions at then-prevailing market prices over a period of up to two years through November 14, 2009. For the nine months ended September 30, 2008, the Company repurchased 2,247,400 shares of outstanding common stock under this program for $100.0 million.

     On November 16, 2006, the Company’s Board of Directors authorized a program to repurchase up to $100.0 million of its outstanding common stock through either periodic open-market or private transactions at then-prevailing market prices over a period of up to two years through November 2008. For the nine months ended September 30, 2007, the Company repurchased 1,502,200 shares under this program for $72.9 million. As of October 19, 2007, the program was completed with 2,093,500 shares being repurchased for an aggregate purchase price of approximately $100.0 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto in this Quarterly Report on Form 10-Q.

Forward-Looking Statements

     This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Arbitron Inc. and its subsidiaries (“we,” “our,” “Arbitron” or the “Company”) in this document that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “intends,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology, are forward-looking statements based on current expectations about future events, which we have derived from information currently available to us. These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied by such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:

• absorb costs related to legal proceedings and governmental entity interactions and avoid related fines, limitations, or conditions on our business activities;

• successfully implement the commercialization of our Portable People Meter^TM (“PPM”) service;

• successfully maintain industry usage of our services, a critical mass of broadcaster encoding, and the proper understanding of our audience measurement services and methodology in light of governmental regulation, legislation, litigation, activism or adverse public relations efforts;

• successfully design, recruit and maintain PPM panels that appropriately balance research quality, panel size and operational cost;

• complete the Media Rating Council (“MRC”) audits of our local market PPM ratings services in a timely manner and successfully obtain and/or maintain MRC accreditation for our audience measurement business;

• renew contracts with key customers as they expire;

• successfully execute our business strategies, including entering into potential acquisition, joint-venture or other material third-party agreements;

• effectively manage the impact, if any, of any further ownership shifts in the radio and advertising agency industries;

• effectively respond to rapidly changing technological needs of our customer base, including creating new proprietary software systems and new customer services that meet these needs in a timely manner;

• successfully manage the impact on our business of any economic downturn, generally, and in the advertising and radio industries, in particular;

• successfully manage the trend of increasing data collection costs stemming from lower respondent cooperation in surveys, privacy concerns, consumer trends, including the increasing incidence of cell-phone-only households, evolving technology and/or government regulation; and

• successfully develop and implement technology solutions to measure new forms of audio-based content and delivery, multimedia and advertising in an increasingly competitive environment.

     There are a number of additional important factors that could cause actual events or our actual results to differ materially from those indicated by such forward-looking statements, including, without limitation, the risk factors set forth in the caption “ITEM 1A. RISK FACTORS” in our Annual Report on Form 10-K for the year ended December 31, 2007, the caption “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission.

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     In addition, any forward-looking statements represent our estimates only as of the date hereof, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update any forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

Overview

     We are a leading media and marketing information services firm primarily serving radio, cable television, advertising agencies, advertisers, retailers, out-of-home media, online media and, through our Scarborough Research joint venture with The Nielsen Company (“Nielsen”), broadcast television and print media. We currently provide four main services to our customers:

• measuring radio audiences in local markets in the United States;

• measuring national radio audiences and the size and composition of audiences of network radio programs and commercials;

• providing software used for accessing and analyzing our media audience and marketing information data; and

• providing consumer, shopping, and media-usage information services.

     In addition, we license our PPM technology to a number of international media information services companies for use in the measurement of both radio and television audiences.

     Historically, our quantitative radio audience measurement business and related software have accounted for a substantial majority of our revenue. Our quantitative radio audience measurement business accounted for 77 and 76 percent of our revenue for the nine-month periods ended September 30, 2008, and 2007, respectively. Our related software licensing accounted for nine percent of our revenue for the same periods in both 2008, and 2007. We expect that for the year ended December 31, 2008, our quantitative radio audience measurement business and related software licensing will account for approximately 78 percent and nine percent, respectively, of our revenue, which is consistent with historic annual trends. Quarterly fluctuations in these percentages are reflective of the seasonal delivery schedule of our quantitative radio audience measurement business and our Scarborough revenues. For further information regarding seasonality trends, see “Seasonality”. While we expect that our quantitative radio audience measurement business and related software licensing will continue to account for the majority of our revenue for the foreseeable future, we are actively seeking opportunities to diversify our revenue base by, among other things, leveraging the investment we have made in our PPM technology and by exploring applications of the technology beyond our domestic radio audience measurement business.

     In 2007 and 2006, we entered into multiyear agreements with many of our largest customers, including agreements for PPM-based ratings as and when we commercialize our PPM service in the PPM Markets, as defined in — PPM Rating Service Trends and Initiatives below. These broadcasters account for approximately 89 percent of the radio advertising revenue in these markets. The agreements for these customers generally provide for a higher license fee for PPM-based ratings than what we charge for diary-based ratings. As a result, we expect that the percentage of our revenues derived from our quantitative radio audience measurement business and related software licensing is likely to increase as we commercialize our PPM service.

     Concentration of ownership of radio stations has led to our increased dependence on a limited number of key customers. In 2007, Clear Channel Communications Inc. represented 19 percent of our total annual revenue. Because many of our largest customers own and operate radio stations in markets that we expect to transition to PPM measurement, we expect that our dependence on our largest customers will continue for the foreseeable future.

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     Response rates are an important measure of our effectiveness in obtaining consent from persons to participate in our surveys. We seek to achieve response rates that are sufficient to maintain usage of our ratings. Another measure often used by clients to assess quality in our ratings is sample proportionality, which refers to how well the distribution of the sample for any individual survey matches the distribution of the population in the local market. Initiatives designed to address response rates and sample proportionality can increase the costs associated with our data collection.

Diary Trends and Initiatives

     Beginning with the Spring 2008 diary survey, we expanded promised incentives to smaller markets where the Male 18-34 proportionality is less than certain thresholds, and we began offering a second chance to participate in our surveys to households in which respondents initially agreed to participate, but failed to return any diaries for the week selected. In the first quarter of 2008, we upgraded our diary processing capabilities with a new state-of-the-art facility that combines several business processes under one roof. We designed the new building, layout and equipment to increase productivity, efficiency and accuracy for diary processing, which will allow us to implement future planned diary sample improvement initiatives more quickly.

     In September 2008, we announced an expansion of our sample quality improvement programs for diary markets. The new efforts to further enhance the participation of 18-34 year olds in our samples include increasing cash and other incentives for persons age 18-34 while reducing incentives for age 55+ only households in all diary markets starting with the Spring 2009 survey, and accelerating our work to design web-based data collection and to test whether they could replace the paper and pencil diary as the primary means to collect data in diary markets.

     In October 2008, we announced plans to accelerate the introduction of cell-phone-only sampling in diary markets by six months. Beginning with the Spring 2009 survey, we intend to add cell-phone-only households to the sample in 50 diary markets and beginning with the Fall 2009 survey, to the sample of 125 diary markets. In addition, we announced that the same metric used to gauge our PPM sample quality performance—Designated Delivery Index—will be used to measure diary sample performance. Designated Delivery Index (“DDI”) is defined as the actual sample size achieved for a given demographic indexed against the target sample size for that demographic. Starting with the Fall 2008 survey, we plan to establish a sample benchmark for persons aged 18-54 in all diary markets equal to a DDI of 80. Should the actual sample performance fall below this threshold in a given market’s survey, we will attempt to bring the sample performance above that threshold in subsequent surveys.

     Some radio broadcasters in markets ranked 100+ have expressed a desire for alternatives to our current diary-based ratings services. We intend to continue to offer an array of options to customers in individual markets ranked 100+ that can provide them with the data they need to appropriately position their stations to maximize their revenue opportunities. On April 14, 2008, Cumulus Media Inc. (“Cumulus”) announced a request for proposals (“RFP”) for the development of a new radio audience measurement service designed to measure both quantitative and qualitative audience characteristics in markets ranked 100+. We have submitted a proposal for consideration as part of the RFP process. There can be no guarantee that Cumulus will select our proposal.

PPM Rating Service Trends and Initiatives

     We have begun execution of our previously announced plan to commercialize progressively our PPM ratings service in the largest U.S. radio markets, which we currently anticipate will result in commercialization of the service in 49 markets by December 2010 (the “PPM Markets”). We anticipate that we may continue to update the timing of commercialization and the composition of the PPM Markets from time to time. In November 2007, we announced our decision to delay the commercialization of the PPM ratings service in certain local markets in order to address feedback regarding the PPM service we had received from our customers, the Media Rating Council (“MRC”), and certain other constituencies. We believe that during the course of the delay, we enhanced our PPM samples in several areas. On October 6, 2008, we commercialized the PPM radio ratings service with the release of the September 2008 PPM report (August 21 to September 17) in eight markets, including New York, Nassau-Suffolk, Middlesex- Somerset-Union, Los Angeles, Riverside-San Bernardino, Chicago, San Francisco, and San Jose. The Spring 2008 survey was the last diary report for these markets.

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     On November 4, 2008, we announced an adjustment to our PPM commercialization schedule. Four markets — Kansas City, San Antonio, Salt Lake City and Las Vegas — are now scheduled to commercialize with the December 2009 PPM survey report (November 12 to December 9), currently slated for release on December 31, 2009. Previously, these four markets were slated to commercialize with the release of the March 2010 PPM survey report. The final diary-based audience survey in these four markets will be the Summer 2009 survey (June 25 — September 16). Five markets — Milwaukee, Charlotte, Columbus, Providence and Orlando — are now scheduled to commercialize with the release of the Septemer 2010 PPM survey report in October. Previously, these five markets were scheduled to commercialize with the release of the June 2010 PPM survey report. The final diary-based audience report in these four markets will now be for the Spring 2010 survey (April 1 — June 23). We are rebalancing our PPM commercialization schedule in order to create financial and operational efficiencies.

     Recently, costs and expenses related to litigation and other interactions with governmental entities, primarily regarding our PPM radio ratings service, have been substantial. We currently estimate that based on the current expense rates, the related 2008 legal and governmental expenses could be in the range of $4.0 million to $6.0 million during the fourth quarter of 2008, which is significantly greater than historical trends. Our actual legal and governmental costs and expenses could be above or below that estimated range. See Part II—Other Information Item 1. Legal Proceedings contained in this Quarterly Report on Form 10-Q for further information.

     As previously announced, we intend to comply with the MRC’s draft voluntary code of conduct (“VCOC”) before commercializing our PPM service in each local market and we also intend to pursue MRC accreditation of the PPM service in each local market. The VCOC requires that, at a minimum, ratings companies seeking to replace an accredited currency measurement service with a new currency measurement service, complete an independent audit of the service, share the findings of the audit with MRC members, and provide a period of pre-currency data so that customers can assess the data from the new service prior to commercialization.

     During the first quarter of 2008, the MRC decided to deny accreditation of the Philadelphia and New York local market PPM services based on audits completed in both markets in 2007, the review of the audit findings and additional information provided to the MRC PPM audit subcommittee. As part of the accreditation process, we agreed to new audits of the Philadelphia and New York local market PPM services. These audits were completed in the first half of 2008, and the audit report was presented to the MRC audit committee. The audit of the PPM services for the Los Angeles, Chicago, Riverside-San Bernardino, Chicago, San Francisco, and San Jose markets has also been completed. The MRC accreditation status in both Philadelphia and New York is unchanged at this time; the denial status remains in effect as the accreditation process continues.

     Due to a challenging radio industry environment, as well as the high penetration of our current services into the radio industry, our annual organic rate of revenue growth from our quantitative radio measurement business and related software licensing has been slower than historical trends. However, with the commercialization of our PPM service in the third quarter of 2008 in eight local markets, including New York, Nassau-Suffolk, Middlesex-Somerset-Union, Los Angeles, Riverside-San Bernardino, Chicago, San Francisco, and San Jose, our third quarter 2008 revenue growth exceeded the level of contractual price escalators in our diary-based radio ratings contracts. Despite this growth in revenue, we anticipate that we will continue to incur additional costs related to initiatives designed to improve our PPM service. We expect that our results of operations for the fourth quarter will be adversely impacted by the incremental costs incurred in building and continuously improving our PPM ratings service panels while also operating the diary-based ratings service in the local markets scheduled for commercialization in the fourth quarter of 2008 and the first quarter of 2009.

     As we have anticipated, our efforts to support the commercialization of our PPM ratings service have had a material negative impact on our results of operations. Restoration of our operating margins following completion of the PPM transition process in the PPM Markets remains our goal, although there can be no assurance that such restoration will take place.

     We continue to operate in a highly challenging business environment in the markets and industries we serve. Our future performance will be impacted by our ability to address a variety of challenges and opportunities in these markets and industries, including our ability to continue to maintain and improve both our diary service and our PPM service, and manage increased costs for data collection, arising among other ways, from increased numbers of cell-phone-only households, which historically have been more expensive to recruit than households with landline phones. We will also seek to pursue MRC accreditation in all of our PPM markets, and develop and implement effective and efficient technological solutions to measure multimedia and advertising.

26

     In December 2007, we announced a “sample size guarantee” that would provide a partial rebate to our customers for PPM radio ratings in any local market for a measurement period in which our delivered average daily in-tab among persons aged 18-54 falls below 80 percent of our published average daily in-tab target for that market. In July 2008, we announced that the sample size guarantee will now be applicable beginning with the first month of PPM currency in each local market and that, beginning on the first anniversary of PPM currency in each local market, the threshold for application of the sample size guarantee will increase to 90 percent of our published 18-54 average daily in-tab target for that local market, based on a 13-report rolling average.

     In July 2008, we also announced a new PPM sample size program designed to deliver a larger sample target for persons aged 12 and over. We plan to implement the increase in the persons aged 12 and over sample target in phases, beginning in 2009.

Impact of Hurricane Ike

     We are in the process of assessing the losses incurred from storm damage and business interruption in Houston and the surrounding areas within the Hurricane Ike impact zone. So far, as a result of the dislocation of sample respondents during the hurricane, Houston-Galveston PPM data will only be issued for three of the four weeks in the September 2008 survey and two of the four weeks in the October 2008 survey. We estimate a related revenue loss of approximately $0.5 million. Due to the closing of our Houston call center, which suffered heavy storm damage, additional labor costs are being incurred as more shifts are being run at our other call centers in order to replace the lost capacity. We estimate that the business interruption costs associated with the storm will be approximately $1.0 million.We expect that a portion of these costs will be recovered through insurance.

Scarborough Research Agreement

     Arbitron and a subsidiary of Nielsen entered into a partnership agreement dated December 31, 2004 governing Scarborough Research, a Delaware general partnership (the “Partnership”). Pursuant to the terms of the partnership agreement, the Partnership will continue in effect until December 31, 2009, with automatic three-year renewal periods, unless earlier terminated in accordance with the terms of the partnership agreement. Neither partner provided a notice of termination prior to the deadline of September 30, 2008. The Partnership has therefore been automatically renewed for another three years until December 31, 2012.

Discontinued Operation

     On January 31, 2008, we sold CSW Research Limited (“Continental”). Additional information regarding the sale of Continental is provided in Note 3 in the Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

Project Apollo LLC

     On February 25, 2008, we announced that Arbitron and Nielsen, as sole members, had agreed to the termination of Project Apollo LLC. Of the $1.9 million recognized by us for our share of the net costs incurred by Project Apollo LLC for the nine months ended September 30, 2008, $1.3 million relates to its wind-down and liquidation, which was completed by June 30, 2008. For the year ended December 31, 2008, we expect to continue investing in developing opportunities that leverage our existing PPM technologies and allow us to continue to pursue the idea of single-source, multimedia measurement.

27

Stock Repurchases

     On November 14, 2007, our Board of Directors authorized a program to repurchase up to $200.0 million in shares of our outstanding common stock through either periodic open-market or private transactions at then-prevailing market prices over a period of up to two years            through November 14, 2009. As of September 30, 2008, 2,247,400 shares of outstanding common stock had been repurchased under this program for $100.0 million.

Critical Accounting Policies and Estimates

     Critical accounting policies and estimates are those that are both important to the presentation of our financial position and results of operations, and require our most difficult, complex or subjective judgments.

     We capitalize software development costs with respect to significant internal use software initiatives or enhancements in accordance with Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. The costs are capitalized from the time that the preliminary project stage is completed and management considers it probable that the software will be used to perform the function intended, until the time the software is placed in service for its intended use. Once the software is placed in service, the capitalized costs are amortized over periods of three to five years. We perform an assessment quarterly to determine if it is probable that all capitalized software will be used to perform its intended function. If an impairment exists, the software cost is written down to estimated fair value. As of September 30, 2008, and December 31, 2007, our capitalized software developed for internal use had carrying amounts of $22.0 million and $20.1 million, respectively, including $13.0 million and $10.2 million, respectively, for software related to the PPM service.

     We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. Deferred tax liabilities and assets are established for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. We must make assumptions, judgments and estimates to determine the current provision for income taxes and also deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. Our assumptions, judgments, and estimates relative to the current provision for income taxes take into account current tax laws, interpretation of current tax laws and possible outcomes of current and future audits conducted by domestic and foreign tax authorities. Changes in tax law or interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in the consolidated financial statements. Our assumptions, judgments and estimates relative to the value of a deferred tax asset take into account forecasts of the amount and nature of future taxable income. Actual operating results and the underlying amount and nature of income in future years could differ from current assumptions, judgments and estimates of recoverable net deferred tax assets. We believe it is more likely than not that we will realize the benefits of these deferred tax assets. Any changes in the assumptions, judgments and estimates mentioned above could cause actual income tax obligations to differ from estimates, thus, impacting our financial position and results of operations.

     In accordance with FASB Interpretation (“FIN”) 48, Accounting for Uncertainty in Income Taxes (“FIN No. 48”), an interpretation of FASB Statement No. 109, Accounting for Income Taxes, we conduct an assessment of the uncertainty in income taxes by establishing recognition thresholds for our tax positions before being recognized in the financial statements. Inherent in our calculation are critical judgments by management related to the determination of the basis for our tax positions. FIN No. 48 provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. For further information, see Note 11 in the Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2008.

28

Results of Operations

     Comparison of the Three Months Ended September 30, 2008 to the Three Months Ended September 30, 2007

The following table sets forth information with respect to our consolidated statements of income:

Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Increase						Percentage of
	September 30,						(Decrease)						Revenue
	2008			2007			Dollars			Percent			2008			2007
Revenue	$	102,526		$	93,322		$	9,204			9.9	%		100.0	%		100.0	%
Costs and expenses
Cost of revenue		41,795			34,451			7,344			21.3	%		40.8	%		36.9	%
Selling, general and administrative		20,058			18,965			1,093			5.8	%		19.6	%		20.3	%
Research and development		10,274			9,587			687			7.2	%		10.0	%		10.3	%
Total costs and expenses		72,127			63,003			9,124			14.5	%		70.3	%		67.5	%
Operating income		30,399			30,319			80			0.3	%		29.7	%		32.5	%
Equity in net loss of affiliate(s)		(2,194	)		(3,263	)		1,069			(32.8	%)		(2.1	%)		(3.5	%)
Income from continuing operations before interest and tax expense		28,205			27,056			1,149			4.2	%		27.5	%		29.0	%
Interest income		127			554			(427	)		(77.1	%)		0.1	%		0.6	%
Interest expense		644			95			549			577.9	%		0.6	%		0.1	%
Income from continuing operations before income tax expense		27,688			27,515			173			0.6	%		27.0	%		29.5	%
Income tax expense		10,788			10,394			394			3.8	%		10.5	%		11.1	%
Income from continuing operations		16,900			17,121			(221	)		(1.3	%)		16.5	%		18.3	%
Discontinued operations
Income from discontinued operations, net of taxes		57			99			(42	)		(42.4	%)		0.1	%		0.1	%
Loss on sale, net of taxes		(2	)		—			(2	)	NM				(0.0	%)	NM
Total income from discontinued operations, net of taxes		55			99			(44	)		(44.4	%)		0.1	%		0.1	%
Net income	$	16,955		$	17,220		$	(265	)		(1.5	%)		16.5	%		18.5	%
Income per weighted average common share
Basic
Continuing operations	$	0.63		$	0.58		$	0.05			8.6	%
Discontinued operations		—			—			—			—
Net income per share, basic	$	0.64		$	0.58		$	0.06			10.3	%
Diluted
Continuing operations	$	0.63		$	0.57		$	0.06			10.5	%
Discontinued operations		—			—			—			—
Net income per share, diluted	$	0.63		$	0.58		$	0.05			8.6	%
Cash dividends declared per common share	$	0.10		$	0.10		$	—			—

Certain per share data and percentage amounts may not total due to rounding.

NM — not meaningful

29

Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Increase
	September 30,						(Decrease)
	2008			2007			Dollars			Percent
Other data:
EBIT (1)	$	28,205		$	27,056		$	1,149			4.2	%
EBITDA (1)	$	32,763		$	30,353		$	2,410			7.9	%
EBIT and EBITDA Reconciliation (1)
Income from continuing operations	$	16,900		$	17,121		$	(221	)		(1.3	%)
Income tax expense		10,788			10,394			394			3.8	%
Interest (income)		(127	)		(554	)		427			(77.1	%)
Interest expense		644			95			549			577.9	%
EBIT (1)		28,205			27,056			1,149			4.2	%
Depreciation and amortization		4,558			3,297			1,261			38.2	%
EBITDA (1)	$	32,763		$	30,353		$	2,410			7.9	%

(1) EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that we believe are useful to investors in evaluating our results. For further discussion of these non-GAAP financial measures, see paragraph below entitled “EBIT and EBITDA” of this quarterly report.

     Revenue. Revenue increased 9.9% for the three months ended September 30, 2008, as compared to the same period in 2007, due primarily to the commercialization of eight additional PPM markets in the third quarter of 2008 and increases related to the radio ratings subscriber base, contract renewals, and price escalations in multiyear customer contracts for our PPM service and diary-based quantitative data license business, partially offset by a $1.5 million decrease related to certain Scarborough markets delivering in June of this year compared to July of last year.

     Cost of Revenue. Cost of revenue increased by 21.3% for the three months ended September 30, 2008, as compared to the same period in 2007. The increase in cost of revenue was largely attributable to $6.0 million of increased costs related to the PPM service, which were substantially driven by commercialization costs associated with the management and recruitment of the PPM panels for the New York, Nassau-Suffolk, Middlesex-Somerset-Union, Los Angeles, Riverside-San Bernardino, Chicago, San Francisco, and San Jose markets, which were launched in the third quarter of 2008. Increased costs were also incurred during the three months ended September 30, 2008 for those markets scheduled to launch in the fourth quarter of 2008 and the first quarter of 2009, including Atlanta, Dallas-Ft. Worth, Washington, DC., Detroit, and Boston. We expect that our cost of revenue will continue to increase as a result of our efforts to support the continued commercialization of this service over the next two to three years. The increase in cost of revenue was also due to a $2.3 million increase in costs spent in support of our diary rating business, partially offset by a $0.8 million decrease in royalties, substantially related to the timing of delivery in certain Scarborough markets.

     Selling, General, and Administrative. Selling, general, and administrative expenses increased by 5.8% during the three months ended September 30, 2008, as compared to the same period in 2007, due largely to an increase in expenses related to litigation and other interactions with governmental entities, primarily regarding our PPM radio ratings services.

30

     Equity in Net Loss of Affiliate(s). Equity in net loss of affiliate(s) decreased by 32.8%. For the three months ended September 30, 2007, our share of the Project Apollo LLC’s loss was $1.2 million. However, due to the termination of the Project Apollo LLC in June 2008, there was no comparable activity during the three months ended September 30, 2008. See Note 9 in the Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for further information.

     Interest Income. Interest income decreased by 77.1% due to a $36.8 million decrease in the average aggregate cash and short-term investment balance for the three months ended September 30, 2008, as compared to the same period in 2007. See “Liquidity and Capital Resources” for further information.

     Interest Expense. Interest expense increased by 577.9% due to the interest incurred on average long-term debt of $70.0 million for the three months ended September 30, 2008, as compared to no borrowings outstanding for the same period in 2007. The interest expense incurred during the three months ended September 30, 2007 was primarily related to ongoing credit facility fees and the scheduled amortization of deferred financing costs.

     Net Income. Net income decreased by 1.5% for the three months ended September 30, 2008, as compared to the same period in 2007, due primarily to our continuing efforts to further build and operate our PPM service panels for markets launched in the third quarter of 2008, including New York, Nassau-Suffolk, Middlesex-Somerset-Union, Los Angeles, Riverside-San Bernardino, Chicago, San Francisco, and San Jose; and those markets scheduled to commercialize in the fourth quarter of 2008 and the first quarter of 2009, including Atlanta, Dallas-Ft. Worth, Washington D.C., Detroit, and Boston. These efforts, including the related revenues generated, resulted in flat operating income for the third quarter of 2008, as compared to the same period in 2007. Reductions in affiliate losses were substantially offset by adverse interest income and expense fluctuations.

     EBIT and EBITDA. We believe that presenting EBIT and EBITDA, both non-GAAP financial measures, as supplemental information helps investors, analysts, and others, if they so choose, in understanding and evaluating our operating performance in some of the same manners that we do because EBIT and EBITDA exclude certain items that are not directly related to our core operating performance. We reference these non-GAAP financial measures in assessing current performance and making decisions about internal budgets, resource allocation and financial goals. EBIT is calculated by deducting interest income from continuing operations and adding back interest expense and income tax expense to income from continuing operations. EBITDA is calculated by deducting interest income from income from continuing operations and adding back interest expense, income tax expense, and depreciation and amortization to income from continuing operations. EBIT and EBITDA should not be considered substitutes either for income from continuing operations, as indicators of our operating performance, or for cash flow, as measures of our liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. EBIT increased 4.2% and EBITDA increased 7.9% for the three months ended September 30, 2008, as compared to the same period in 2007, due primarily to our increased revenues associated with the eight PPM markets launched in the third quarter of 2008, substantially offset by our continuing efforts and expenditures to build our PPM service panels for those eight markets, as well as for other markets scheduled to commercialize in the fourth quarter of 2008, and the first quarter of 2009. EBIT increased at a slower rate than EBITDA for the three months ended September 30, 2008, as compared to the same period in 2007, due to increased depreciation and amortization related to increased PPM capital expenditures.

31

Results of Operations

     Comparison of the Nine Months Ended September 30, 2008 to the Nine Months Ended September 30, 2007

The following table sets forth information with respect to our consolidated statements of income:

	Nine Months Ended						Increase						Percentage of
	September 30,						(Decrease)						Revenue
	2008			2007			Dollars			Percent			2008			2007
Revenue	$	275,246		$	258,337		$	16,909			6.5	%		100.0	%		100.0	%
Costs and expenses
Cost of revenue		129,490			107,918			21,572			20.0	%		47.0	%		41.8	%
Selling, general and administrative		58,587			59,343			(756	)		(1.3	%)		21.3	%		23.0	%
Research and development		29,802			32,023			(2,221	)		(6.9	%)		10.8	%		12.4	%
Total costs and expenses		217,879			199,284			18,595			9.3	%		79.2	%		77.1	%
Operating income		57,367			59,053			(1,686	)		(2.9	%)		20.8	%		22.9	%
Equity in net loss of affiliates		(973	)		(1,930	)		957			(49.6	%)		(0.4	%)		(0.7	%)
Income from continuing operations before interest and tax expense		56,394			57,123			(729	)		(1.3	%)		20.5	%		22.1	%
Interest income		582			1,743			(1,161	)		(66.6	%)		0.2	%		0.7	%
Interest expense		1,524			286			1,238			432.9	%		0.6	%		0.1	%
Income from continuing operations before income tax expense		55,452			58,580			(3,128	)		(5.3	%)		20.1	%		22.7	%
Income tax expense		21,615			22,211			(596	)		(2.7	%)		7.9	%		8.6	%
Income from continuing operations		33,837			36,369			(2,532	)		(7.0	%)		12.3	%		14.1	%
Discontinued operations
(Loss) income from discontinued operations, net of taxes		(438	)		134			(572	)	NM				(0.2	%)		0.1	%
Gain on sale, net of taxes		423			—			423		NM				0.2	%		0.0	%
Total (loss) income from discontinued operations, net of taxes		(15	)		134			(149	)	NM				(0.0	%)		0.1	%
Net income	$	33,822		$	36,503		$	(2,681	)		(7.3	%)		12.3	%		14.1	%
Income per weighted average common share
Basic
Continuing operations	$	1.24		$	1.22		$	0.02			1.6	%
Discontinued operations		—			—			—			—
Net income per share, basic	$	1.24		$	1.23		$	0.01			0.8	%
Diluted
Continuing operations	$	1.23		$	1.21		$	0.02			1.7	%
Discontinued operations		—			—			—			—
Net income per share, diluted	$	1.23		$	1.21		$	0.02			1.7	%
Cash dividends declared per common share	$	0.30		$	0.30		$	—			—

Certain per share data and percentage amounts may not total due to rounding.

NM — not meaningful

32

Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)

	Nine Months Ended						Increase
	September 30,						(Decrease)
	2008			2007			Dollars			Percent
Other data:
EBIT (1)	$	56,394		$	57,123		$	(729	)		(1.3	%)
EBITDA (1)	$	69,053		$	65,807		$	3,246			4.9	%
EBIT and EBITDA Reconciliation (1)
Income from continuing operations	$	33,837		$	36,369		$	(2,532	)		(7.0	%)
Income tax expense		21,615			22,211			(596	)		(2.7	%)
Interest (income)		(582	)		(1,743	)		1,161			(66.6	%)
Interest expense		1,524			286			1,238			432.9	%
EBIT (1)		56,394			57,123			(729	)		(1.3	%)
Depreciation and amortization		12,659			8,684			3,975			45.8	%
EBITDA (1)	$	69,053		$	65,807		$	3,246			4.9	%

(1) EBIT (earnings before interest and income taxes) and EBITDA (earnings before interest, income taxes, depreciation and amortization) are non-GAAP financial measures that we believe are useful to investors in evaluating our results. For further discussion of these non-GAAP financial measures, see paragraph below entitled “EBIT and EBITDA” of this quarterly report.

     Revenue. Revenue increased 6.5% for the nine months ended September 30, 2008, as compared to the same period in 2007, due primarily to the commercialization of eight additional PPM markets the third quarter of 2008, a full nine months of currency revenue associated with the Houston-Galveston and Philadelphia markets commercialized in the first half of 2007, and increases related to the radio ratings subscriber base, contract renewals, and price escalations in multiyear customer contracts for our PPM service and diary-based quantitative data license business.

     Cost of Revenue. Cost of revenue increased by 20.0% for the nine months ended September 30, 2008, as compared to the same period in 2007. The increase in cost of revenue was largely attributable to $19.1 million of increased costs related to the PPM service, which were substantially driven by commercialization costs associated with the management and recruitment of the PPM panels for the New York, Nassau-Suffolk, Middlesex-Somerset-Union, Los Angeles, Riverside-San Bernardino, Chicago, San Francisco, and San Jose markets, which were launched in the third quarter of 2008. Increased costs were also incurred during the three months ended September 30, 2008 for those markets scheduled to launch in the fourth quarter of 2008 and the first quarter of 2009, including Atlanta, Dallas-Ft. Worth, Washington, DC., Detroit, and Boston. We expect that our cost of revenue will continue to increase as a result of our efforts to support the continued commercialization of this service over the next two to three years. This increase for the nine months ended September 30, 2008, as compared to the same period of 2007, also includes a $3.4 million increase in costs spent in support of our diary rating business, partially offset by a $1.3 million decrease in PPM International costs.

     Research and Development. Research and development expenses decreased 6.9% during the nine months ended September 30, 2008, as compared to the same period in 2007. The decrease in research and development expenses resulted primarily from a $3.6 million reduction associated with development of the next generation of our client software, a $1.3 million decrease in expenses related to the development of our accounts receivable and contract management system, partially offset by a $1.6 million increase related to applications and infrastructure to support our PPM service and a $0.8 million increase in information technology overhead and labor costs incurred for the nine months ended September 30, 2008, as compared to the same period in 2007.

33

     Interest Income. Interest income decreased by 66.6% due to a $34.2 million decrease in the average aggregate cash and short-term investment balance for the nine months ended September 30, 2008, as compared to the same period in 2007. See “Liquidity and Capital Resources” for further information regarding our use of cash.

     Interest Expense. Interest expense increased by 432.9% due to the interest incurred on average long-term debt of $51.9 million for the nine months ended September 30, 2008, as compared to no borrowings outstanding for the same period in 2007. The interest expense incurred during the nine months ended September 30, 2007 was primarily related to ongoing credit facility fees and the scheduled amortization of deferred financing costs.

     Income Tax Expense. The effective tax rate from continuing operations increased to 39.0% for the nine months ended September 30, 2008, from 37.9% for the nine months ended September 30, 2007, to reflect the increase in certain non-deductible expenses and the increase in certain state income tax rates.

     Net Income. Net income decreased 7.3% for the nine months ended September 30, 2008, as compared to the same period in 2007, due primarily to our continuing efforts to further build and operate our PPM service panels for markets launched in the third quarter of 2008, including New York, Nassau-Suffolk, Middlesex-Somerset-Union, Los Angeles, Riverside-San Bernardino, Chicago, San Francisco, and San Jose; and those markets scheduled to commercialize in the fourth quarter of 2008 and the first quarter of 2009, including Atlanta, Dallas-Ft. Worth, Washington D.C., Detroit, and Boston. Also, increased interest expense associated with new borrowings and lower interest income from lower cash balances adversely impacted our results of operations for the nine months ended September 30, 2008, as compared to the same period in 2007. These decreases to net income were partially offset by cost reductions associated with research and development. We expect that the year-over-year net income reduction trend that was noted for 2008, as well as the previous two years, will reverse in 2009 as a result of the continued commercialization of our PPM service.

     EBIT and EBITDA. We believe that presenting EBIT and EBITDA, both non-GAAP financial measures, as supplemental information helps investors, analysts, and others, if they so choose, in understanding and evaluating our operating performance in some of the same manners that we do because EBIT and EBITDA exclude certain items that are not directly related to our core operating performance. We reference these non-GAAP financial measures in assessing current performance and making decisions about internal budgets, resource allocation and financial goals. EBIT is calculated by deducting interest income from income from continuing operations and adding back interest expense and income tax expense to income from continuing operations. EBITDA is calculated by deducting interest income from income from continuing operations and adding back interest expense, income tax expense, and depreciation and amortization to income from continuing operations. EBIT and EBITDA should not be considered substitutes either for income from continuing operations, as indicators of our operating performance, or for cash flow, as measures of our liquidity. In addition, because EBIT and EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. EBIT decreased slightly by 1.3% for the nine months ended September 30, 2008, as compared to the same period in 2007, due primarily to our continuing efforts and expenditures to further build our PPM service panels, partially offset by cost reductions related to research and development and lower affiliate share losses incurred due to our termination of the Project Apollo LLC in June 2008. In contrast to the decline in EBIT, EBITDA increased 4.9% because this non-GAAP financial measure excludes depreciation and amortization, which for the nine months ended September 30, 2008, experienced an increasing trend resulting from higher PPM capital expenditures in 2008, as compared to 2007.

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Liquidity and Capital Resources

     Working capital was ($39.2) million and ($45.8) million as of September 30, 2008, and December 31, 2007, respectively. Excluding the deferred revenue liability, which does not require a significant additional cash outlay, working capital was $16.6 million and $20.9 million as of September 30, 2008, and December 31, 2007, respectively. Cash and cash equivalents were $8.5 million and $21.1 million as of September 30, 2008, and December 31, 2007, respectively. We expect that our cash position as of September 30, 2008, cash flow generated from operations, and our available revolving credit facility (“Credit Facility”) will be sufficient to support our operations for the foreseeable future.

     Net cash provided by operating activities was $44.4 million and $40.4 million for the nine-month periods ended September 30, 2008, and 2007, respectively. The $4.0 million increase in net cash provided by operating activities was largely attributable to a $5.3 million increase in the change in accrued expenses and other current liabilities, resulting primarily from a $5.4 million fluctuation in accruals for payroll and benefit costs, and also a $4.0 million net increase in depreciation and amortization associated with increased PPM equipment capital expenditures for the nine months ended September 30, 2008, as compared to the same period in 2007. These increases were partially offset by a $3.0 million decrease associated with changes in deferred revenues and a $2.5 million decrease in income from continuing operations caused primarily by the scheduled commercialization of our PPM service in eight markets during the third quarter of 2008. Because PPM-derived surveys deliver more frequently than diary surveys, revenue was recognized sooner for these eight markets than historical diary trends and consequently, the reduction of deferred revenue was greater in 2008 than 2007. The commercialization of the eight markets also required increased costs to further build and operate our PPM service panels and thus adversely impacted our income from continuing operations for the nine months ended September 30, 2008, as compared to the same period in 2007.

     Net cash used in investing activities was $22.2 million for the nine-month period ended September 30, 2008. Net cash provided by investing activities was $2.1 million for the nine-month period ended September 30, 2007. This $24.2 million cash flow fluctuation related to investing activities was driven primarily by $19.5 million of net short-term investment sales made during the nine months ended September 30, 2007. No investment purchases or sales activity occurred during the nine months ended September 30, 2008. Prior to the end of 2007, all of our short-term investments were sold to supplement our cash flow from operations in the completion of our then authorized $100.0 million stock repurchase program. For further information regarding the impact to our consolidated financial statements of our stock repurchase programs, see the discussion of the net financing activities below.

     The change in cash flow associated with investing activities was also impacted by a $7.5 million decrease in cash related to increased capital spending in 2008, primarily related to PPM equipment and PPM-related software purchases paid during the nine months ended September 2008, as compared to the same period in 2007, partially offset by a $2.2 million net cash inflow related to our discontinued operation (i.e., Continental). See Note 3 — Discontinued Operations to the Notes to Consolidated Financial Statements in this Form 10-Q for further information.

     Net cash used in financing activities was $35.9 million and $57.5 million for the nine months ended September 30, 2008, and 2007, respectively. This $21.6 million decrease in net cash used in financing activities was due largely to $58.0 million in net borrowings made under our Credit Facility in 2008, partially offset by a $31.3 million increase in stock repurchases, and a $4.7 million reduction in proceeds received from stock option exercises. No net borrowings or net payments of long-term debt were made during the same period in 2007.

     On December 20, 2006, we entered into an agreement with a consortium of lenders to provide up to $150.0 million of financing to us through a five-year, unsecured revolving credit facility. The agreement contains an expansion feature for us to increase the total financing available under the Credit Facility up to $200.0 million with such increased financing to be provided by one or more existing Credit Facility lending institutions, subject to the approval of the lending banks, and/or in combination with one or more new lending institutions, subject to the approval of the Credit Facility’s administrative agent. Interest on borrowings under the Credit Facility is calculated based on a floating rate for a duration of up to six months as selected by us.

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     Our Credit Facility contains financial terms, covenants and operating restrictions that potentially restrict our financial flexibility. Under the terms of the Credit Facility, we are required to maintain certain leverage and coverage ratios and meet other financial conditions. The agreement potentially limits, among other things, our ability to sell assets, incur additional indebtedness, and grant or incur liens on its assets. Under the terms of the Credit Facility, all of our material domestic subsidiaries, if any, guarantee the commitment. Currently, we do not have any material domestic subsidiaries as defined under the terms of the Credit Facility. Although we do not believe that the terms of our Credit Facility limit the operation of our business in any material respect, the terms of the Credit Facility may restrict or prohibit our ability to raise additional debt capital when needed or could prevent us from investing in other growth initiatives. Our outstanding borrowings increased from $12.0 million at December 31, 2007, to $70.0 million at September 30, 2008 to supplement our cash flow from operations in the funding of our outstanding stock repurchase program. We have been in compliance with the terms of the Credit Facility since the agreement’s inception.

     On November 14, 2007, our Board of Directors authorized a program to repurchase up to $200.0 million in shares of our outstanding common stock through either periodic open-market or private transactions at then-prevailing market prices over a period of up to two years through November 14, 2009. As of September 30, 2008, 2,247,400 shares of outstanding common stock had been repurchased under this program for $100.0 million.

     Commercialization of our PPM radio ratings service requires and will continue to require a substantial financial investment. We believe our cash generated from operations, as well as access to our existing credit facility, is sufficient to fund such requirements. We currently estimate that annual capital expenditures will be approximately $25.0 million in total, with $20.0 million associated with the commercialization of the PPM ratings service. The amount of capital required for further deployment of our PPM ratings service and the impact on our results of operations will be greatly affected by the speed of the commercialization schedule.

     During the last three years, our efforts to support the commercialization of our PPM ratings service have had a material negative impact on our results of operations. Despite the growth in revenue for the nine months ended September 30, 2008, we anticipate that we will continue to incur additional costs related to initiatives designed to improve our PPM service. We expect that our results of operations for the fourth quarter will be adversely impacted by the incremental costs incurred in building our PPM ratings service panels while also operating the diary-based ratings service in the local markets scheduled for commercialization in the fourth quarter of 2008 and the first quarter of 2009. We currently estimate that based on the current expense rates, the related 2008 legal and governmental expenses could be in the range of $4.0 million to $6.0 million during the fourth quarter of 2008. Restoration of our operating margins following the completion of the PPM transition process in the PPM Markets remains our goal, although there can be no assurance that such restoration will take place.

Seasonality

     We recognize revenue for services over the terms of license agreements as services are delivered, and expenses are recognized as incurred. We currently gather radio-listening data in 302 U.S. local markets, including 292 diary markets and 10 PPM markets. All diary markets are measured at least twice per year (April-May-June for the “Spring Survey” and October-November-December for the “Fall Survey”). In addition, we measure all major diary markets two additional times per year (January-February-March for the “Winter Survey” and July-August-September for the “Summer Survey”). Our revenue is generally higher in the first and third quarters as a result of the delivery of the Fall Survey and Spring Survey, respectively, to all diary markets compared to revenue in the second and fourth quarters, when delivery of the Winter Survey and Summer Survey, respectively, is made only to major diary markets. Although revenue is recognized ratably over the year in both the diary and PPM services, there will be fluctuations in the depth of the seasonality pattern during the periods of transition between the services in each PPM Market.

     Our expenses are generally higher in the second and fourth quarters as the Spring Survey and Fall Survey are being conducted for our diary markets. The transition from the diary service to the PPM service in the PPM Markets will have an impact on the seasonality of costs and expenses. The larger impact on the seasonality pattern is related to the costs and expenses to produce the services. PPM costs and expenses will accelerate six to nine months in advance of the commercialization of each market as the panel is built. These preliminary costs are incremental to the costs associated with our diary-based ratings service and will adversely impact the cost pattern associated with our historical consolidated financial statements.

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     Scarborough experiences losses during the first and third quarters of each year because revenue is predominantly recognized in the second and fourth quarters when the substantial majority of services are delivered. Scarborough royalty costs, which are recognized in costs of revenue, are also higher during the second and fourth quarters.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

     The Company holds its cash and cash equivalents in highly liquid securities.

Foreign Currency Exchange Rate Risk

     The Company’s foreign operations are not significant at this time, and, therefore, its exposure to foreign currency risk is not material. If we expand our foreign operations, this exposure to foreign currency rate changes could increase.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chairman, President and Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the most recently completed fiscal quarter. Based upon that evaluation, the Company’s Chairman, President and Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Report.

Changes in Internal Control Over Financial Reporting

     There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarterly period ended September 30, 2008, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The Company is involved, from time to time, in litigation and proceedings, including with governmental taxing authorities, arising out of the ordinary course of business. Legal costs for services rendered in the course of these proceedings are charged to expense as they are incurred.

     On April 30, 2008, Plumbers and Pipefitters Local Union No. 630 Pension-Annuity Trust Fund filed a securities class action lawsuit in the United States District Court for the Southern District of New York on behalf of a purported Class of all purchasers of Arbitron common stock between July 19, 2007 and November 26, 2007. The plaintiff asserts that Arbitron, Stephen B. Morris (our Chairman, President and Chief Executive Officer), and Sean R. Creamer (our Executive Vice President, Finance and Planning & Chief Financial Officer) violated federal securities laws. The plaintiff alleges misrepresentations and omissions relating, among other things, to the delay in commercialization of our Portable People Meter (“PPM”) radio ratings service in November 2007, as well as stock sales during the period by company insiders who were not named as defendants and Messrs. Morris and Creamer. The plaintiff seeks class certification, compensatory damages plus interest and attorneys’ fees, among other remedies.

     On or about June 13, 2008, a purported shareholder derivative lawsuit was filed against Arbitron, as a nominal defendant, each of our directors, and certain of our executive officers in the Supreme Court of the State of New York for New York County. The derivative lawsuit is based on essentially the same substantive allegations as the securities class action lawsuit. The derivative lawsuit asserts claims against the defendants for misappropriation of information, breach of fiduciary duty, abuse of control, and unjust enrichment. The derivative plaintiff seeks equitable and/or injunctive relief, restitution and disgorgement of profits, plus attorneys’ fees and costs, among other remedies.

     On October 6, 2008, we commenced a civil action in the United States District Court for the Southern District of New York, seeking a declaratory judgment and injunctive relief against the New York Attorney General to prevent any attempt by the New York Attorney General to restrain our publication of our PPM listening estimates. On October 27, 2008, the United States District Court issued an order dismissing this civil action and on October 31, 2008, we filed a notice of appeal of the District Court’s order to the United States Court of Appeals for the Second Circuit.

     On October 9, 2008, the Company and certain of our executive officers received subpoenas from the New York Attorney General regarding, among other things, the commercialization of the PPM radio ratings service in New York and purchases and sales of Arbitron securities by those executive officers.

     On October 10, 2008, we commenced a civil action in the United States District Court for the District of New Jersey, seeking a declaratory judgment and injunctive relief against the New Jersey Attorney General to prevent any attempt by the New Jersey Attorney General to restrain our publication of our PPM listening estimates.

     On October 10, 2008, the State of New York commenced a civil action against the Company in the Supreme Court of New York for New York County alleging false advertising and deceptive business practices in violation of New York consumer protection and civil rights laws relating to the marketing and commercialization in New York of our PPM radio ratings service. The lawsuit seeks civil penalties and an order preventing us from continuing to publish our PPM listening estimates in New York.

     On October 10, 2008, the State of New Jersey commenced a civil action against us in the Superior Court of New Jersey for Middlesex County, alleging violations of New Jersey consumer fraud and civil rights laws relating to the marketing and commercialization in New Jersey of our PPM radio ratings service. The lawsuit seeks civil penalties and an order preventing us from continuing to publish our PPM listening estimates in New Jersey.

     The Company intends to defend itself and its interests vigorously against these allegations.

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Item 1A. Risk Factors

     See Item 1A. — Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2007 for a detailed discussion of risk factors affecting Arbitron. As of September 30, 2008, we updated the following risk factors.

     Significant legal proceedings may adversely affect our results of operations.

     We are party to a number of legal proceedings and governmental entity investigations and other interactions. It is possible that the effect of these unresolved matters or costs and expenses incurred by us in connection with such proceedings or interactions could be material to our consolidated results of operations for an individual reporting period. For a discussion of these unresolved matters, see Part II — Item 1. Legal Proceedings. These matters have resulted in, and may continue to result in, a diversion of our management’s time and attention.

     Loss of our key management or other personnel could adversely impact our business.

     Our success is largely dependent on the skills, experience, and efforts of our senior management and certain other key personnel. If, for any reason, one or more senior executives or key personnel were not to remain active in our company, our results of operations could be adversely affected.

     We are subject to extensive governmental oversight in the jurisdictions in which we conduct our business.

     Federal, state, and local governmental entities have asserted that our operations are subject to increasing oversight by them. Our ratings services have undergone a highly public change to their methodologies of audience rating measurement. In particular, our PPM radio ratings service has been subject to increasing scrutiny by governmental entities relating, among other things, to state consumer protection, business, and advertising statutes and we expect increased governmental oversight relating to this business.

     The governmental oversight environment could have a significant effect on us and our businesses. Among other things, we could be fined, prohibited from engaging in some of our business activities, or subject to limitations or conditions on our business activities. Significant governmental oversight action against us could have material adverse financial effects, cause significant reputational harm, or harm business prospects. New laws or regulations or changes in the enforcement of existing laws or regulations applicable to us may also adversely affect us and our businesses.

     If the national and world-wide financial crisis continues or intensifies it could adversely impact demand for our services.

     Continued market disruptions could cause broader economic downturns, which may lead to lower demand for our services, increased incidence of customers’ inability to pay their accounts, or insolvency of our customers, any of which could adversely affect our results of operations, liquidity, cash flows, and financial condition.

     If the national and world-wide financial crisis intensifies, potential disruptions in the credit markets may adversely affect our business, including the availability and cost of short-term funds for liquidity requirements and our ability to meet long-term commitments, which could adversely affect our results of operations, cash flows, and financial condition.

     If internal funds are not available from our operations we may be required to rely on the banking and credit markets to meet our financial commitments and short-term liquidity needs. Disruptions in the capital and credit markets, as have been experienced during 2008, could adversely affect our ability to draw on our bank revolving credit facility. Our access to funds under that credit facility is dependent on the ability of the banks that are parties to the facility to meet their funding commitments. Those banks may not be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from Arbitron and other borrowers within a short period of time.

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     Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial institutions could adversely affect our access to liquidity needed for our business. Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring capital expenditures, and reducing or eliminating future share repurchases, dividend payments or other discretionary uses of cash.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     On November 14, 2007, our Board of Directors authorized a program to repurchase up to $200.0 million in shares of our outstanding common stock through either periodic open-market or private transactions at then-prevailing market prices over a period of up to two years through November 14, 2009. The following table outlines the stock repurchase activity during the three months ended September 30, 2008.

					Total Number		Maximum Dollar Value
					of Shares Purchased		of Shares That May
	Total Number of		Average Price		as Part of		Yet Be Purchased
	Shares		Paid		Publicly		Under the
Period	Purchased		Per Share		Announced Program		Program
July 1-31		588,400	$	45.94		588,400	$	113,236,843
August 1-31		112,500		45.80		112,500		108,084,493
September 1-30		174,600		46.29		174,600		100,001,436
Total		875,500	$	45.99		875,500	$	100,001,436

ITEM 6. EXHIBITS

Exhibit No.	Description
Exhibit 10.1	Arbitron Inc. 2008 Equity Compensation Plan
Exhibit 10.2	Amended and Restated Arbitron Inc. Employee Stock Purchase Plan
Exhibit 10.3	Form of Executive Retention Agreement
Exhibit 31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

ARBITRON INC.
By:	/s/ SEAN R. CREAMER
	Sean R. Creamer
	Executive Vice President of Finance and Planning and Chief Financial Officer (on behalf of the registrant and as the registrant’s principal financial and principal accounting officer)
Date: November 4, 2008

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EX-10.1

Exhibit 10.1

ARBITRON INC.
2008 EQUITY COMPENSATION PLAN
(Effective as of May 13, 2008)

1. Purpose

     The purpose of this 2008 Equity Compensation Plan (the “Plan”) of Arbitron Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” includes any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

2. Eligibility

     All of the Company’s employees, officers, and directors are eligible to be granted options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), deferred stock units (“DSUs”) and other stock-based awards (each, an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a “Participant.”

3. Administration and Delegation

     (a) Administration by Board of Directors. The Plan will be administered by the Board. The Board has the authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it considers advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it considers expedient to carry the Plan into effect and will be the sole and final judge of such expediency. All decisions by the Board may be made in the Board’s sole discretion and will be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

     (b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.

     (c) Delegation to Officers. To the extent permitted by applicable law, the Board may delegate to one or more officers of the Company the power to grant Awards (subject to any limitations under the Plan) to employees or officers of the Company or any of its present or future subsidiary corporations and to exercise such other powers under the Plan as the Board may determine, provided that the Board must fix the terms of the Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the officers may grant; provided further, however, that no officer will be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act).

     (d) Awards to Non-Employee Directors. Discretionary Awards to non-employee directors will only be granted and administered by a Committee, all of the members of which are independent as defined by Section 303A.02 of the New York Stock Exchange Listed Company Manual.

4. Stock Available for Awards

     (a) Number of Shares; Share Counting.

     (1) Authorized Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan for up to 2,500,000 shares of common stock, $0.50 par value per share, of the Company (the “Common Stock”). Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

     (2) Share Counting. For purposes of counting the number of shares available for the grant of Awards under the Plan and under the sublimits contained in Sections 4(b)(2), 4(b)(3), 4(b)(4), and 7(b)(1) with respect to vesting of Restricted Stock Awards, (i) all shares of Common Stock covered by independent SARs must be counted against the number of shares available for the grant of Awards; (ii) if any Award (A) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part or (B) results in any Common Stock not being issued, the unused Common Stock covered by such Award will again be available for the grant of Awards; provided, however, in the case of Incentive Stock Options, the foregoing will be subject to any limitations under the Code; and provided further, in the case of independent SARs, that the full number of shares subject to any stock-settled SAR will be counted against the shares available under the Plan and against the sublimits listed in the first clause of this Section regardless of the number of shares actually used to settle such SAR upon exercise; (iii) shares of Common Stock delivered (either by actual delivery or attestation) to the Company by a Participant to (A) purchase shares of Common Stock upon the exercise of an Award or (B) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) will not be added back to the number of shares available for the future grant of Awards; and (iv) shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award cannot increase the number of shares available for future grant of Awards.

     (b) Sub-limits. Subject to adjustment under Section 9, the following sub-limits on the number of shares subject to Awards will apply:

     (1) Section 162(m) Per-Participant Limit. The maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan will be 700,000 in the aggregate during any period of three consecutive fiscal years of the Company. For purposes of the foregoing limit, the combination of an Option in tandem with a SAR (as each is hereafter defined) will be treated as a single Award. The per Participant limit described in this Section 4(b)(1) will be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).

     (2) Limit on Incentive Stock Options. The maximum number of shares with respect to which Incentive Stock Options may be granted is 2,500,000.

     (3) Limit on Awards other than Options and SARS. The maximum number of shares with respect to which Awards other than Options and SARs may be granted will be 25% of the maximum number of authorized shares set forth in Section 4(a)(1).

     (4) Limit on Awards to Directors. The maximum number of shares with respect to which Awards may be granted to directors who are not employees of the Company at the time of grant will be 25% of the maximum number of authorized shares set forth in Section 4(a)(1).

     (c) Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards do not count against the overall share limit set forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may be required by reason of Section 422 and related provisions of the Code.

5. Stock Options

     (a) General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option that is not intended to be an Incentive Stock Option (as hereinafter defined) will be designated a “Non-statutory Stock Option.”

     (b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) will only be granted to employees of Arbitron Inc., any of Arbitron Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and will be subject to and will be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board, including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option.

     (c) Exercise Price. The Board will establish the exercise price of each Option and specify the exercise price in the applicable option agreement. The exercise price will be not less than 100% of the Fair Market Value (as defined below) on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price will be not less than 100% of the Fair Market Value on such future date.

     “Fair Market Value” of a share of Common Stock for purposes of the Plan will be determined as follows:

     (1) if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or

     (2) if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant; or

     (3) if the Common Stock is not publicly traded, the Board will determine the Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Code Section 409A, except as the Board or Committee may expressly determine otherwise.

     For any date that is not a trading day, the Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the clauses above adjusted accordingly. The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Code Section 409A.

     The Board has sole discretion to determine the Fair Market Value for purposes of this Plan, and all Awards are conditioned on the participants’ agreement that the Administrator’s determination is conclusive and binding even though others might make a different determination.

     (d) Duration of Options. Each Option will be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; provided, however, that no Option will be granted with a term in excess of 10 years.

     (e) Exercise of Option. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

     (f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan will be paid for as follows:

     (1) in cash or by check, payable to the order of the Company;

     (2) except as may otherwise be provided in the applicable option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

     (3) to the extent provided for in the applicable option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their Fair Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

     (4) to the extent permitted by applicable law and provided for in the applicable option agreement or approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or

     (5) by any combination of the above permitted forms of payment.

     (g) Limitation on Repricing. Unless such action is approved by the Company’s stockholders: (1) no outstanding Option granted under the Plan may be amended to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option (other than adjustments pursuant to Section 9) and (2) the Board may not cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option.

     (h) No Reload Options. No Option granted under the Plan will contain any provision entitling the Participant to the automatic grant of additional Options in connection with any exercise of the original Option.

     (i) No Dividend Equivalents. No option will provide for the payment or accrual of the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“Dividend Equivalents”).

6. Stock Appreciation Rights.

     (a) General. The Board may grant Awards consisting of SARs entitling the holder, upon exercise, to receive an amount of Common Stock determined in whole or in part by reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock over the measurement price established pursuant to Section 6(c). The date as of which such appreciation is determined will be the exercise date.

     (b) Grants. SARs may be granted in tandem with, or independently of, Options granted under the Plan.

     (c) Measurement Price. The Board will establish the measurement price of each SAR and specify it in the applicable SAR agreement. The measurement price must not be less than 100% of the Fair Market Value on the date the SAR is granted; provided that if the Board approves the grant of a SAR with an exercise price to be determined on a future date, the exercise price must be not less than 100% of the Fair Market Value on such future date.

     (d) Duration of SARs. Each SAR will be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years.

     (e) Exercise of SARs. SARs may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board, together with any other documents required by the Board.

     (f) Limitation on Repricing. Unless such action is approved by the Company’s stockholders: (1) no outstanding SAR granted under the Plan may be amended to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding SAR (other than adjustments pursuant to Section 9) and (2) the Board may not cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled SAR.

     (g) Dividend Equivalents. No SAR will provide for the payment or accrual of Dividend Equivalents.

7. Restricted Stock; Restricted Stock Units.

     (a) General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient if conditions specified by the Board in the applicable Award are not satisfied before the end of the applicable restriction period or periods established by the Board for such Award. Instead of granting Awards for Restricted Stock, the Board may grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Restricted Stock Units”) or at a future date (“Deferred Stock Units”) (Restricted Stock, Restricted Stock Units, and Deferred Stock Units are each referred to herein as a “Restricted Stock Award”).

     (b) Limitations on Vesting.

     (1) Restricted Stock Awards that vest solely based on the passage of time will be zero percent vested before the first anniversary of the date of grant (or, in the case of Awards to non-employee directors, if earlier, the date of the first annual meeting held after the date of grant), no more than one-third vested before the second anniversary of the date of grant (or, in the case of Awards to non-employee directors, if earlier, the date of the second annual meeting held after the date of grant), and no more than two-thirds vested before the third anniversary of the date of grant (or, in the case of Awards to non-employee directors, if earlier, the date of the third annual meeting held after the date of grant). Restricted Stock Awards that do not vest solely based on the passage of time will not vest before the first anniversary of the date of grant (or, in the case of Awards to non-employee directors, if earlier, the date of the first annual meeting held after the date of grant). The two foregoing sentences will not apply to (y) Performance Awards granted pursuant to Section 10(i) or (z) Restricted Stock Awards granted, in the aggregate, for up to 20% of the maximum number of authorized shares set forth in Section 4(a)(1).

     (2) Notwithstanding any other provision of this Plan (other than Section 10(i), if applicable), the Board may, in its discretion, either at the time a Restricted Stock Award is made or at any time thereafter, waive its right to repurchase shares of Common Stock (or waive the forfeiture thereof) or remove or modify any part or all of the restrictions applicable to the Restricted Stock Award, provided that the Board may only exercise such rights in extraordinary circumstances, which will include, without limitation, death, disability or retirement of the Participant; or a merger, consolidation, sale, reorganization, recapitalization, or change in control of the Company; or any other nonrecurring significant event affecting the Company, a Participant, or the Plan.

     (c) Terms and Conditions for All Restricted Stock Awards. The Board will determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

     (d) Additional Provisions Relating to Restricted Stock.

     (1) Dividends. Participants holding shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the Board. Unless otherwise provided by the Board, if any dividends or distributions are paid in shares, or consist of a dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or other property will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid. Each dividend payment will be made no later than the end of the calendar year in which the dividends are paid to shareholders of that class of stock or, if later, the 15th day of the third month following the date the dividends are paid to shareholders of that class of stock.

     (2) Stock Certificates. The Company may require that any stock certificates issued in respect of shares of Restricted Stock must be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) will deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, “Designated Beneficiary” means the Participant’s estate.

     (e) Additional Provisions Relating to Restricted Stock Units and Deferred Stock Units.

     (1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant will be entitled to receive from the Company one share of Common Stock or an amount of cash equal to the Fair Market Value of one share of Common Stock, as provided in the applicable Award agreement. The Board may, in its discretion, provide that settlement of Restricted Stock Units will be deferred, on a mandatory basis or at the election of the Participant and become a Deferred Stock Unit.

     (2) Voting Rights. A Participant will have no voting rights with respect to any Restricted Stock Units or Deferred Stock Units.

     (3) Dividend Equivalents. To the extent provided by the Board, in its sole discretion, a grant of Restricted Stock Units or Deferred Stock Units may provide Participants with Dividend Equivalents. Dividend Equivalents may be paid currently or credited to an account for the Participants, may be settled in cash and/or shares of Common Stock and may be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units or Deferred Stock Units with respect to which paid, as determined by the Board in its sole discretion, subject in each case to such terms and conditions as the Board establishes, in each case to be set forth in the applicable Award agreement.

8. Other Stock-Based Awards.

     (a) General. Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock-Based-Awards”), including without limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other Stock-Based Awards will also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board determines.

     (b) Terms and Conditions. Subject to the provisions of the Plan, the Board will determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto.

9. Adjustments for Changes in Common Stock and Certain Other Events.

     (a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under this Plan, (ii) the sub-limits and share counting rules set forth in Sections 4(a) and 4(b) and 7(b)(1) with respect to vesting of Restricted Stock Awards, (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share- and per-share provisions and the exercise price of each SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award and (vi) the share- and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award, must be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, if the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend will be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

     (b) Reorganization Events.

     (1) Definition. A “Reorganization Event” means: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction or (c) any liquidation or dissolution of the Company.

     (2) Consequences of a Reorganization Event on Awards Other than Restricted Stock Awards. In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock Awards on such terms as the Board determines: (i) provide that Awards must be assumed, or substantially equivalent Awards must be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that the Participant’s unexercised Awards will terminate immediately before the consummation of such Reorganization Event unless exercised by the Participant within a specified period following the date of such notice, (iii) provide that outstanding Awards will become exercisable, realizable, or deliverable, or restrictions applicable to an Award will lapse, in whole or in part before or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to a Participant equal to the excess, if any, of (A) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Awards (to the extent the exercise price does not exceed the Acquisition Price) over (B) the aggregate exercise price of all such outstanding Awards and any applicable tax withholdings, in exchange for the termination of such Awards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards will convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 9(b), the Board will not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.

     For purposes of clause (i) above, an Option will be considered assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately before the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately before the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

     (3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company under each outstanding Restricted Stock Award will inure to the benefit of the Company’s successor and will, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then outstanding will automatically be deemed terminated or satisfied.

     (c) Change in Control Events.

     (1) Definition. Except to the extent defined differently in an Award, a “Change in Control Event” means:

     (a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d 3 promulgated under the Exchange Act) 25% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions will not constitute a Change in Control Event: (1) any acquisition directly from the Company or (2) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (c) of this definition; or

     (b) such time as the Continuing Directors (as defined below) do not constitute at least a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that this clause (y) excludes any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

     (c) the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately before such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which includes, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately before such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 25% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed before the Business Combination); or

     (d) the liquidation or dissolution of the Company.

     (2) Effect on Options. Notwithstanding the provisions of Section 9(b), effective immediately before a Change in Control Event, except to the extent specifically provided to the contrary in the instrument evidencing any Option or any other agreement between a Participant and the Company, all Options then outstanding will automatically become immediately exercisable in full.

     (3) Effect on Restricted Stock Awards. Notwithstanding the provisions of Section 9(b), effective immediately before a Change in Control Event, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock Awards then-outstanding will automatically be deemed terminated or satisfied.

     (4) Effect on SARs and Other Stock-Based Awards. The Board may specify in an Award at the time of the grant the effect of a Change in Control Event on any SAR and Other Stock-Based Award.

10. General Provisions Applicable to Awards

     (a) Transferability of Awards. Awards cannot be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, will be exercisable only by the Participant; provided, however, that the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if, with respect to such proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended; provided, further, that the Company will not be required to recognize any such transfer until such time as the Participant and such permitted transferee must, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee will be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, include references to authorized transferees.

     (b) Documentation. Each Award will be evidenced in such form (written, electronic or otherwise) as the Board determines. Each Award may contain terms and conditions in addition to those set forth in the Plan.

     (c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

     (d) Termination of Status. The Board may determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

     (e) Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise or release from forfeiture of an Award or, if the Company so requires, at the same time as is payment of the exercise price unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

     (f) Amendment of Award. Except as otherwise provided in Section 5(g) with respect to repricings, Section 7(b)(1) with respect to vesting of Restricted Stock Awards, Section 10(i) with respect to Performance Awards or Section 11(d) with respect to actions requiring shareholder approval, the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action will be required unless (i) the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 9 hereof.

     (g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

     (h) Acceleration. Except as otherwise provided in Section 10(i) with respect to Performance Awards or Section 11(d) with respect to actions requiring shareholder approval, the Board may at any time provide that any Award will become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be.

     (i) Performance Awards.

     (1) Grants. Restricted Stock Awards and Other Stock-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 10(i) (“Performance Awards”), subject to the limit in Section 4(b)(1) on shares covered by such grants. Subject to Section 10(i)(4), no Performance Awards will vest before the first anniversary of the date of grant. Performance Awards can also provide for cash payments of up to $2,000,000 per fiscal year per individual.

     (2) Committee. Grants of Performance Awards to any Covered Employee intended to qualify as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”) must be made only by a Committee (or subcommittee of a Committee) comprised solely of two or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m). In the case of such Awards granted to Covered Employees, references to the Board or to a Committee will be treated as referring to such Committee or subcommittee. “Covered Employee” means any person who is, or whom the Committee, in its discretion, determines may be, a “covered employee” under Section 162(m)(3) of the Code.

     (3) Performance Measures. For any Award that is intended to qualify as Performance-Based Compensation, the Committee must specify that the degree of granting, vesting and/or payout must be subject to the achievement of one or more objective performance measures established by the Committee, which will be based on the relative or absolute attainment of specified levels of one or any combination of the following: cash flow, earnings (including one or more of gross profit, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization and net earnings), earnings per share, margins (including one or more of gross, operating and net income margins), returns (including one or more of return on assets, equity, investment, capital and revenue and total stockholder return), stock price, economic value added, working capital, market share, cost reductions and strategic plan development and implementation. Such goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Committee may specify that such performance measures will be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, and (v) charges for restructuring and rationalization programs. Such performance measures: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (iii) will be set by the Committee within the time period prescribed by, and will otherwise comply with the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine.

     (4) Adjustments. Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.

     (5) Other. The Committee will have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Performance-Based Compensation.

11. Miscellaneous

     (a) No Right To Employment or Other Status. No person will have any claim or right to be granted an Award, and the grant of an Award must not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

     (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary will have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

     (c) Effective Date and Term of Plan. The Plan will become effective on the date the Plan is approved by the Company’s stockholders (the “Effective Date”). No Awards will be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.

     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment will become exercisable, realizable or vested, as applicable to such Award, unless and until the Company’s stockholders approve such amendment if required by Section 162(m) (including the vote required under Section 162(m)); (ii) no amendment that would require stockholder approval under the rules of the New York Stock Exchange (“NYSE”) may be made effective unless and until the Company’s stockholders approve such amendment; and (iii) if the NYSE amends its corporate governance rules so that such rules no longer require stockholder approval of “material revisions” to equity compensation plans, then, from and after the effective date of such amendment to the NYSE rules, no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section 4(c) or 9), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan will be effective unless stockholder approval is obtained. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(d) will apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment does not materially and adversely affect the rights of Participants under the Plan. No Award may be made that is conditioned upon stockholder approval of any amendment to the Plan.

     (e) Provisions for Foreign Participants. The Board may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

     (f) Compliance with Code Section 409A. No Award may provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code. The Company will have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for any action taken by the Board.

     (g) Governing Law. The provisions of the Plan and all Awards made hereunder will be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

EX-10.2

Exhibit 10.2

ARBITRON INC.
EMPLOYEE STOCK PURCHASE PLAN
(Amended and Restated as of May 13, 2008)

1. Purpose of Plan.

     The purpose of the Arbitron Inc. Employee Stock Purchase Plan (the “Plan”) is to advance the interests of Arbitron Inc., a Delaware corporation formerly known as Ceridian Corporation (the “Company”), and its stockholders by providing employees of the Company and certain of its subsidiaries with an opportunity to acquire an ownership interest in the Company through the purchase of common stock of the Company on favorable terms through payroll deductions. It is the intention of the Company that the Plan qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”), and provisions of the Plan shall be construed consistent with such intention.

2. Definitions.

     The following terms will have the meanings set forth below, unless the context clearly otherwise requires:

     2.1 “Agent” means the party or parties designated by the Company to provide Share Accounts and certain administrative services in connection with the Plan.

     2.2 “Applicable Dollar Limitation” means the maximum amount that a Participant can accrue for purposes of purchases within any one calendar year as provided under Section 423(b)(8) of the Code (i.e., $25,000 as of May 13, 2008, 2008).

     2.3 “Board” means the Board of Directors of the Company or any committee thereof to which the Board of Directors has delegated authority with respect to the Plan.

     2.4 “Common Stock” means the common stock, par value $.50 per share, of the Company, or the number and kind of shares of stock or other securities into which such common stock may be changed in accordance with Section 11 of the Plan.

     2.5 “Committee” means the Compensation and Human Resources Committee of the Board, or such successor committee that meets the criteria specified in Section 3.

     2.6 “Contribution Account” means an account established for each Participant to which payroll deductions under the Plan are credited in accordance with Section 7.

     2.7 “Designated Subsidiary” means a Subsidiary that has been designated by the Board from time to time, in its sole discretion, as eligible to participate in the Plan.

     2.8 “Employee” means any person, including an officer, who is employed on a full-time or part-time basis by a Participating Employer.

     2.9 “Ending Date” means the last day of each Offering Period.

     2.10 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     2.11 “Fair Market Value” means, with respect to the Common Stock, as of any date:

     (a) if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or

     (b) if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant; or

     (c) if the Common Stock is not publicly traded, the Committee will determine the Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the requirements of Section 423 of the Code.

     For any date that is not a trading day, the Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the clauses above adjusted accordingly. The Committee can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Section 423 of the Code.

     2.12 “Grant Date” means the first day of each Offering Period.

     2.13 “Insider” means any Employee who is subject to Section 16 of the Exchange Act.

     2.14 “Offering Period” means each three-month period beginning on March 16 and ending on June 15, or beginning on June 16 and ending on September 15, or beginning on September 16 and ending on December 15, or beginning on December 16 and ending on March 15.

     2.15 “Participant” means an eligible Employee who elects to participate in the Plan in accordance with Section 6.

     2.16 “Participating Employer” means the Company and any Designated Subsidiary that has elected to participate in the Plan.

     2.17 “Share Account” means the brokerage account established by the Agent for each Participant to which shares of Common Stock purchased under the Plan are credited in accordance with Section 9. The Share Account will be established pursuant to a separate agreement between each Participant and the Agent.

     2.18 “Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

3. Administration.

     The Plan shall be administered by the Committee (or any successor thereto appointed by the Board consisting of not less than three members, all of whom must be members of the Board who are “Non-Employee Directors” as defined in Rule 16b-3 under the Exchange Act). Members of the Committee shall be appointed from time to time by the Board, shall serve at the pleasure of the Board, and may resign at any time upon written notice to the Board. A majority of the members of the Committee shall constitute a quorum. The Committee shall act by majority approval of the members, but action may be taken by the Committee without a meeting if unanimous written consent is given. In accordance with and subject to the provisions of the Plan, the Committee shall have authority to interpret the Plan, to make, amend and rescind rules and regulations regarding the Plan (including rules and regulations intended to insure that operation of the Plan complies with Section 16 of the Exchange Act), and to make all other determinations necessary or advisable in administering the Plan, all of which determinations shall be final and binding upon all persons. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. To the extent consistent with corporate law, the Committee may delegate to any directors or officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to Insiders. The Committee may request advice or assistance or retain the services of such other persons as are necessary for the proper administration of the Plan.

4. Eligibility.

     Any person who is (a) an Employee on the last day of the calendar month immediately preceding a Grant Date, (b) is not on long-term disability or unpaid leave status at that time, and (c) has reached the age of majority in the state or province in which he or she resides shall be eligible to participate in the Plan for the Offering Period beginning on such Grant Date, subject to the limitations imposed by Section 423(b) of the Code.

5. Offering Periods.

     Options to purchase shares of Common Stock shall be granted to Participants under the Plan through a series of consecutive Offering Periods. The first Offering Period under the Plan began on September 16, 1995. Offering Periods under the Plan shall continue until either (a) the Committee decides, in its sole discretion, to cancel future Offering Periods because the Common Stock remaining available under the Plan is insufficient to grant options to all eligible Employees, or (b) the Plan is terminated in accordance with Section 17 below. Notwithstanding the foregoing, and without limiting the authority of the Committee under Section 3, 11.2 and 17 of the Plan, the Committee, in its sole discretion, may (a) accelerate the Ending Date of the then current Offering Period and provide for the exercise of Options thereunder by Participants in accordance with Section 9 of the Plan, or (b) accelerate the Ending Date of the then current Offering Period and provide that all payroll deductions credited to the accounts of Participants will be paid to Participants as soon as practicable after such Ending Date and that all Options for such Offering Period will automatically be canceled and will no longer be exerciable.

6. Participation.

     Participation in the Plan is voluntary. An eligible Employee may become a Participant in the Plan by completing an enrollment form provided by the Company authorizing payroll deductions and the establishment of a Share Account, and filing the enrollment form with the Company’s Organization Effectiveness department not later than the last business day of the month immediately preceding the Grant Date of the first Offering Period in which the Participant wishes to participate. Any election to participate must be made in a manner that complies with the Company’s Insider Trading Policy.

7. Payroll Deductions.

     7.1 Each Employee electing to participate in the Plan shall designate on the enrollment form the amount of money which he or she wishes to have deducted from his or her paycheck each pay day to purchase Common Stock pursuant to the Plan. The aggregate amount of such payroll deductions shall not be less than $25.00 per month, and shall not be more than 85% of one quarter of the Applicable Dollar Limitation (currently, $5,312.50 (85% of $6,250)) per Offering Period, pro-rated equally over the number of pay days applicable to a Participant during each such Offering Period. Deductions for Plan purposes will not be withheld from compensation amounts, such as annual bonus or gain sharing payments, that are not part of a Participant’s normal and recurring compensation each payday.

     7.2 Payroll deductions for a Participant shall commence on the first pay day on or after the Grant Date of the applicable Offering Period and shall continue until the termination date of the Plan, unless participation in the Plan is sooner terminated as provided in Section 10, the deduction amount is increased or decreased by the Participant as provided in Section 7.4, deductions are suspended as provided in Section 7.4 or the Offering Period is adjusted by the Committee as provided in Section 5. Except for a Participant’s rights to change the amount of, suspend or discontinue deductions pursuant to Sections 7.4 and 10, the same deduction amount shall be utilized for each pay day during subsequent Offering Periods, whether or not the Participant’s compensation level increases or decreases. If the pay period of any Participant changes, such as from weekly to semi-monthly, an appropriate adjustment shall be made to the deduction amount for each pay day corresponding to the new pay period, if necessary, so as to ensure the deduction of the proper amount as specified by the Participant in his or her enrollment form for that Offering Period.

     7.3 All payroll deductions authorized by a Participant shall be credited to the Participant’s Contribution Account. A Participant may not make any separate cash payment or contribution to such Contribution Account. Contribution Accounts shall be solely for bookkeeping purposes, and no separate fund or trust shall be established for payroll deductions. Until utilized to purchase shares of Common Stock, funds from payroll deductions shall be held as part of the Participating Employers’ general assets, and the Participating Employers shall not be obligated to segregate such funds. No interest shall accrue on a Participant’s payroll deductions under the Plan.

     7.4 No increases or decreases in the amount of payroll deductions for a Participant may be made during an Offering Period. A Participant may increase or decrease the amount of his or her payroll deductions under the Plan, or may suspend such payroll deductions, for subsequent Offering Periods by completing a change form and filing it with the Company’s Organization Effectiveness department not later than the last business day of the month immediately preceding the Grant Date for the Offering Period as of which such increase, decrease or suspension is to be effective. Any change to the payroll deductions must be made in a manner that complies with the Company’s Insider Trading Policy.

     7.5 Payroll deductions which are authorized by Participants who are paid other than in U.S. currency shall be withheld in Contribution Accounts in the country in which such Participant is employed until exercise of an option granted hereunder. Upon exercise of the option granted to such Participant, the amount so withheld shall be converted into U.S. dollars on the basis of the rate of exchange, as published in the Wall Street Journal or provided by a generally recognized source, for such currency into U.S. dollars as of the business day immediately preceding the Ending Date for such Offering Period. The purchase price shall thereupon be paid to the Company in U.S. dollars following such conversion, the extent to which the Participant may exercise an option therefore being dependent, in part, upon the applicable rate of currency exchange. If, as a result of fluctuations in the exchange rate between the U.S. dollar and a foreign currency during an Offering Period, a Participant who is paid in such foreign currency has less than the minimum permitted amount deducted during an Offering Period, the amount deducted will, nevertheless, be used to purchase Common Stock in accordance with the Plan.

8. Grant of Option.

     8.1 Subject to Section 8.2, on each Grant Date, each eligible Employee who is then a Participant shall be granted (by operation of the Plan) an option to purchase the number of whole and fractional shares (computed to the fourth decimal place) of Common Stock equal to the lesser of (a) the amount determined by dividing the amount of payroll deductions credited to his or her Contribution Account during the Offering Period beginning on such Grant Date by the Purchase Price specified in the following sentence, or (b) the amount determined by dividing one quarter of the Applicable Dollar Limitation (currently $6,250) by the Fair Market Value of one share of Common Stock on the applicable Grant Date. The purchase price per share of such shares (the “Purchase Price”) shall be the lesser of (i) 85% of the Fair Market Value of one share of Common Stock on the applicable Grant Date, or (ii) 85% of the Fair Market Value of one share of Common Stock on the applicable Ending Date.

     8.2 Despite any provisions of the Plan that may provide or suggest otherwise:

     (a) no Employee shall be granted an option under the Plan to the extent that immediately after the grant, such Employee (or any other person whose stock ownership would be attributed to such Employee pursuant to Section 424(d) of the Code) would own shares of Common Stock and/or hold outstanding options to purchase shares of Common Stock that would in the aggregate represent 5% or more of the total combined voting power or value of all classes of shares of the Company or of any Subsidiary;

     (b) no Employee shall be granted an option under the Plan to the extent that the Employee’s rights to purchase shares of Common Stock under all “employee stock purchase plans” (within the meaning of Section 423 of the Code) of the Company and its Subsidiaries would accrue (i.e., become exercisable) at a rate that exceeds the Applicable Dollar Limitation of Fair Market Value of such shares of Common Stock (determined at the time such option is granted, which is the Grant Date) for each calendar year in which such option is outstanding at any time; or

     (c) no Participant may purchase more than 6,000 shares of Common Stock under the Plan in any given Offering Period.

9. Exercise of Option.

     9.1 Unless a Participant withdraws from the Plan pursuant to Section 10, his or her option for the purchase of shares of Common Stock granted for an Offering Period will be exercised automatically and in full at the applicable Purchase Price as soon as practicable following the Ending Date of such Offering Period. If the full amount credited to a Participant’s Contribution Account during an Offering Period is not required to exercise such Participant’s option for that Offering Period in full (due to the applicability of clause (b) of Section 8.1 and/or fluctuations in the exchange rate between the U.S. dollar and the foreign currency in which such Participant is paid), the amount not required to exercise such option shall promptly be refunded to the Participant following the Ending Date of such Offering Period.

     9.2 No Participant (or any person claiming through such Participant) shall have any interest in any Common Stock subject to an option under the Plan until such option has been exercised and the shares of Common Stock purchased, at which point such Participant shall have all of the rights and privileges of a stockholder of the Company with respect to shares purchased under the Plan. During his or her lifetime, a Participant’s option to purchase shares of Common Stock under the Plan is exercisable only by the Participant.

     9.3 Shares of Common Stock purchased pursuant to the exercise of options hereunder shall be held in Share Accounts maintained for and in the name of each Participant by the Agent, such Agent or its nominee to be the record holder of such shares for the benefit of the Participant. The Agent shall provide each Participant with a quarterly statement of his or her Share Account.

     9.4 Dividends paid with respect to shares credited to each Share Account will be themselves credited to such Account and, if paid in cash, will automatically be reinvested in whole and fractional shares of Common Stock.

     9.5 A Participant may request that the Agent cause a stock certificate representing some or all of the number of whole shares of Common Stock credited to the Participant’s Share Account be issued in the name of the Participant. The Agent shall cause such certificate to be issued as soon as practicable after its receipt of such request and the payment by the Participant of any applicable issuance fees. From and after the date of the issuance of any such certificate, the number of shares credited to the Participant’s Share Account shall be reduced by the number of shares represented by such certificate, and the Participant shall thereafter be the record holder of the shares represented by such certificate.

10. Withdrawal; Termination of Employment.

     10.1 A Participant may terminate his or her participation in the Plan and withdraw all, but not less than all, of the payroll deductions credited to his or her Contribution Account under the Plan at any time on or before the last business day of an Offering Period by giving written notice to the Company. The timing of any withdrawal must comply with the Company’s Insider Trading Policy. The notice shall (a) state that the Participant wishes to terminate participation in the Plan, (b) specify the withdrawal date, and (c) request the withdrawal of all of the Participant’s payroll deductions held under the Plan. All of the Participant’s payroll deductions credited to his or her Contribution Account will be paid to the Participant as soon as practicable after the withdrawal date specified in the notice of withdrawal (or, if no such date is specified, as soon as practicable after receipt of the notice of withdrawal), the Participant’s option for such Offering Period will be automatically canceled, and no further payroll deductions for the purchase of shares of Common Stock will be made for such Offering Period or for any subsequent Offering Period, except pursuant to a re-enrollment in the Plan as provided in Section 10.2.

     10.2 If a Participant’s suspension of payroll deductions under the Plan pursuant to Section 7.4 continues for four consecutive Offering Periods, such suspension shall be deemed an election by the Participant to terminate his or her participation in the Plan, and such termination shall be effective as of the Ending Date of the fourth consecutive Offering Period during which no payroll deductions occurred. If, for any reason, a Participant’s net pay after withholding taxes and other applicable deductions not related to the Plan (such as for health and welfare benefits) each pay day becomes less than the amount the Participant has designated be deducted each pay day for contribution to the Plan, such occurrence shall be deemed an election by the Participant to terminate his or her participation in the Plan, and such termination shall be effective immediately. Following such termination, all of the Participant’s payroll deductions credited to his or her Contribution Account will be paid to the Participant as soon as practicable, the Participant’s option for such Offering Period will be automatically canceled, and no further payroll deductions for the purchase of shares of Common Stock will be made for such Offering Period or for any subsequent Offering Period, except pursuant to a re-enrollment in the Plan as provided in Section 10.4.

     10.3 Upon termination of a Participant’s employment with all Participating Employers for any reason, including retirement or death, his or her participation in the Plan will automatically cease and the payroll deductions accumulated in his or her Contribution Account will be returned to the Participant as soon as practicable after such employment termination or, in the case of death, to the person or persons entitled thereto under Section 12 below, and the Participant’s option for the current Offering Period will be automatically canceled. For purposes of the Plan, the termination date of employment shall be the Participant’s last date of actual employment and shall not include any period during which such Participant receives any severance payments. A transfer of employment between the Company and a Designated Subsidiary or between one Designated Subsidiary and another Designated Subsidiary, or leave of absence approved by the Participating Employer, shall not be deemed a termination of employment under this Section 10.3.

     10.4 A Participant’s termination of participation in the Plan pursuant to Section 10.1 or 10.2 will not have any effect upon his or her eligibility to participate in a subsequent Offering Period by completing and filing a new enrollment form in accordance with Section 6 or in any similar plan that may hereafter be adopted by the Company.

11. Stock Subject to the Plan.

     11.1 The maximum number of shares of Common Stock that shall be reserved for sale under the Plan shall be 850,000 shares, subject to adjustment as provided in Sections 11.2 and 11.3. The shares to be sold to Participants under the Plan may be, at the election of the Company, either treasury shares or shares authorized but unissued. If the total number of shares of Common Stock that would otherwise be subject to options granted pursuant to Section 8 on any Ending Date exceeds the number of shares then available under the Plan (after deduction of all shares for which options have been exercised or are then outstanding), the Committee shall make a pro rata allocation of the shares of Common Stock remaining available for issuance in as uniform and equitable a manner as is practicable, as determined in the Committee’s sole discretion. In such event, the Company shall give written notice of such reduction of the number of shares subject to the option to each Participant affected thereby and shall return any excess funds accumulated in each Participant’s Contribution Account as soon as practicable after the Ending Date of such Offering Period.

     11.2 In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin-off) or any other similar change in the corporate structure or shares of the Company, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) will make appropriate adjustments (which determination will be conclusive) as to the number and kind of securities or other property (including cash) available for issuance or payment under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, (a) the number and kind of securities or other property (including cash) subject to each outstanding option, and (b) the Purchase Price of outstanding options.

     11.3 Subject to the following provisions of this Section 11.3, if the Company is the surviving corporation in any reorganization, merger or consolidation with or involving one or more other corporations, each outstanding option under the Plan shall apply to the amount and kind of securities to which a holder of the number of shares of Common Stock subject to such option would have been entitled immediately following such reorganization, merger or consolidation, with a corresponding proportionate adjustment of the Purchase Price. If there is a (a) dissolution or liquidation of the Company, (b) merger, consolidation or reorganization of the Company with one or more other corporations in which the Company is not the surviving corporation, (c) sale of all or substantially all of the assets of the Company to another person or entity, or (d) transaction (including a merger or reorganization in which the Company is the surviving corporation) approved by the Board that results in any person or entity owning more than 50% of the combined voting power of all classes of stock of the Company, then the Plan and all options outstanding thereunder shall terminate, except as provided in the following sentence. If provision is made in writing in connection with such transaction for the continuation of the Plan and either the assumption of the options theretofore granted or the substitution for such options of new options covering the stock of a successor corporation (or a parent or subsidiary thereof), in either case with appropriate adjustments as to the number and kinds of shares and exercise prices, then the Plan shall continue in the manner and under the terms provided. If the Plan is terminated as provided in this Section 11.3, the current Offering Period shall be deemed to have ended as of a date selected by the Committee prior to such termination, and the options of each Participant then outstanding shall be deemed to have been automatically exercised in accordance with Section 9.1 on such last trading day. The Committee shall cause written notice to be sent of an event that will result in such a termination to all Participants not later than the time the Company gives notice thereof to its stockholders. Adjustments under this Section 11.3 shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.

12. Designation of Beneficiary.

     12.1 A Participant may file a written designation of a beneficiary who is to receive a cash refund of the amount, if any, from the Participant’s Contribution Account under the Plan in the event of such Participant’s death at a time when cash is held for his or her account. Disposition of shares of Common Stock in a Participant’s Share Account upon the Participant’s death shall be in accordance with the agreement governing the Share Account.

     12.2 A designation of beneficiary pursuant to Section 12.1 may be changed by the Participant at any time by written notice. In the event of the death of a Participant in the absence of a valid designation of a beneficiary who is living at the time of such Participant’s death, the Company shall deliver such cash to the executor or administrator of the estate of the Participant; or, if no such executor or administrator has been appointed (to the knowledge of the Company), the Company in its discretion, may deliver such cash to the spouse or to any one or more dependents or relatives of the Participant; or, if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

13. No Right to Employment.

     Nothing in the Plan will interfere with or limit in any way the right of the Company or any Participating Employer to terminate the employment of any Employee or Participant at any time, nor confer upon any Employee or Participant any right to continue in the employ of the Company or any Participating Employer.

14. Rights As a Stockholder.

     As a holder of an Option under the Plan, a Participant will have no rights as a stockholder unless and until such Option is exercised and the Participant becomes the holder of record of shares of Common Stock. Except as otherwise provided in the Plan, no adjustment will be made for dividends or distributions with respect to Options as to which there is a record date preceding the date the Participant becomes the holder of record of such shares, except as the Committee may determine in its sole discretion.

15. Transferability.

     Neither payroll deductions credited to a Participant’s Contribution Account nor any rights with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will or the laws of descent and distribution) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect.

16. No Right to Employment.

     Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any shares of Common Stock under the Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to Options granted under the Plan, unless (a) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable state or foreign securities laws or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other regulatory body that the Committee, in its sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

17. Amendment or Termination.

     The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Options under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no amendments to the Plan will be effective without approval of the stockholders of the Company if stockholder approval of the amendment is then required pursuant to Section 423 of the Code or the rules of any stock exchange or similar regulatory body. Upon termination of the Plan, the Committee, in its sole discretion, may take any of the actions described in Section 5 of the Plan.

18. Notices.

     All notices or other communications by a Participant to the Company in connection with the Plan shall be deemed to have been duly given when received by the Company’s Organization Effectiveness department or by any other person designated by the Company for the receipt of such notices or other communications, in the form and at the location specified by the Company.

19. Effective Date of Plan.

     The Plan was originally effective on June 29, 1995, subject to stockholder approval, which was obtained on May 8, 1996. The Plan has been subsequently amended. This 2008 restatement will be effective only on and after stockholder approval.

20. Miscellaneous.

     The headings to sections of the Plan have been included for convenience of reference only. The Plan shall be interpreted and construed in accordance with the laws of the State of Delaware. References in the Plan to “$” or “dollars” shall be deemed to refer to United States dollars unless the context clearly indicates otherwise.

EX-10.3

Exhibit 10.3

ARBITRON INC.
FORM OF EXECUTIVE RETENTION AGREEMENT

     THIS EXECUTIVE RETENTION AGREEMENT is entered into as of August 26, 2008 (the “Effective Date”), by and between Arbitron Inc., a Delaware corporation (the “Company ”), and                      (the “Executive”). This Agreement amends and supersedes the Executive Retention Agreement between the Company and the Executive dated November 9, 2001, as further amended May 24, 2006. This Agreement is effective only with respect to an employment cessation under Sections 2.1 through 2.4, a Leadership Change, or a Change of Control that occurs after the Effective Date and on or before August 25, 2013 (the “Agreement Expiration Date”).

     WHEREAS, the Executive is currently employed by the Company and is an executive officer of the Company;

     WHEREAS, the Company has implemented a severance program for executive officers and wishes to document under this Agreement the provisions applicable to the Executive in the event of his or her termination of employment;

     WHEREAS, in addition, the Company recognizes that a Change of Control or Leadership Change may result in material alteration or diminishment of the Executive’s position and responsibilities and substantially frustrate the purpose of Executive’s commitment to the Company and forbearance of career options, and has determined therefore to provide enhanced severance and other benefits in the event of a Change of Control or Leadership Change; and

     WHEREAS, the parties wish to replace any and all prior agreements and undertakings with respect to the Executive’s termination of employment, non-competition, non-recruitment, and non-disparagement obligations, and Change of Control occurrences and compensation, other than the agreements governing the Executive’s equity participation in the Company (as the same are modified by Section 2.5(a)(iii), Section 3, and Section 6 of this Agreement).

     NOW THEREFORE, in consideration of the Executive’s acceptance of and continuance in Executive’s employment, the parties agree to be bound by the terms contained in this agreement as follows:

          1. “At-Will” Employment. The Company may terminate the Executive’s employment at any time for any reason pursuant to a Notice of Termination. The Executive may terminate his or her employment with the Company at any time for any reason pursuant to a Notice of Termination. If the Executive dies while still an employee of the Company, the Executive’s death shall be a termination of employment from the Company. Any termination of the Executive’s employment by the Company or the Executive (other than because of the Executive’s death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7.1 below. For purposes of this Agreement, a “Notice of Termination” shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. The Company’s notice shall be given in writing by the Chief Executive Officer. Termination of the Executive’s employment shall take effect on the Date of Employment Termination, the setting of which shall require the minimum notice period described under the definition of “Date of Employment Termination.”

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          2. Compensation Upon Termination.

               2.1. Death. Except as provided in Section 2.5, if the Executive’s employment is terminated as a result of the Executive’s death, the Company shall pay to the Executive’s estate, or as may be directed by the legal representatives of such estate, the Executive’s then current base salary through the Date of Employment Termination and all other unpaid amounts, if any, to which Executive is entitled as of the Date of Employment Termination. The payments contemplated by this Section 2.1 shall be paid at the time they are due in accordance with the regular payroll schedule, and the Company shall have no further obligations to the Executive or his or her estate under this Agreement.

               2.2. Disability. Except as provided in Section 2.5, if the Company terminates the Executive’s employment because of the Executive’s Disability, the Company shall pay the Executive the Executive’s then current base salary through the Date of Employment Termination and all other unpaid amounts, if any, to which Executive is entitled as of the Date of Employment Termination. The payments contemplated by this Section 2.2 shall be paid at the time they are due in accordance with the regular payroll schedule, and the Company shall have no further obligations to the Executive under this Agreement; provided, however, that the base salary shall be reduced by the amount of any disability benefit payments made to the Executive during a period of Disability from any insurance or other policies provided by the Company.

               2.3. By the Company for Cause or by the Executive Other than for Position Diminishment. Except as provided in Section 2.5, if the Executive’s employment with the Company is terminated in accordance with this Section 2.3, the Company shall pay the Executive the Executive’s then current base salary through the Date of Employment Termination and all other unpaid amounts, if any, to which Executive is entitled as of the Date of Employment Termination. The Executive’s termination is covered by this Section 2.3 (i) if the Executive voluntarily terminates his or her employment other than during the Window Period as described in Section 2.5 or for Position Diminishment, or (ii) if the Company terminates the Executive’s employment for Cause. The payments contemplated by this Section 2.3 shall be paid at the time such payments are due in accordance with the regular payroll schedule, and the Company shall have no further obligations to the Executive under this Agreement.

               2.4. By the Company other than for Cause or by the Executive for Position Diminishment. Except as provided in Section 2.5, if the Company terminates the Executive’s employment other than for Cause or Disability or the Executive resigns as a result of Position Diminishment, the Company shall pay the Executive the Executive’s then current base salary through the Date of Employment Termination and all other unpaid amounts, if any, to which the Executive is entitled as of the Date of Employment Termination, plus the following amounts:

                    (a) Severance Amount. The Executive shall receive a severance payment equal to the sum of (i) 18 times the Executive’s Reference Compensation and (ii) the product of (x) [0.40][0.45] [0.50][0.55] times the Executive’s Annual Salary divided by twelve and (y) the number of full months elapsed in the calendar year before the Executive’s Date of Employment Termination. This severance payment amount shall be paid in a lump sum, within 90 days following the Executive’s Date of Employment Termination in accordance with Section 7.2; provided, however, that the severance payment amount shall not be paid prior to the Company’s receipt of a duly executed Waiver and Release Agreement that is not revoked during the applicable regulatory revocation period and, if the 90^th day is in the calendar year following the Date of Employment Termination, not before the first day of that subsequent calendar year.

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                    (b) Health and Welfare Benefits Continuation. Commencing on his or her Date of Employment Termination, and except as next provided, for the duration of the Benefit Continuation Period, the Executive shall be entitled to receive from the Company the same or equivalent health, dental, accidental death and dismemberment, short and long-term disability, life insurance coverages, and all other insurance policies and health and welfare benefits programs, policies or arrangements, at the same levels and coverages as Executive was receiving on the day immediately prior to his or her Date of Employment Termination, if and to the extent such coverage is available from the Company’s benefit plans with respect to former employees (such as through continuation of health coverage for 18 months). If and to the extent such coverage is not available or ceases (such as through expiration of the continued health coverage), the Company shall take commercially reasonable steps to arrange for coverage under individual or conversion policies and shall, in any event, pay as premiums (or to Executive if coverage cannot reasonably be obtained), the same dollar level of premiums as it paid for Executive as an active employee, with the premium payments grossed up for taxes to the extent that providing the coverage post-employment under an employer’s insured plan would be tax free if such coverage were available. With respect to any particular benefit, the benefit’s continuation described in this paragraph shall end earlier than the end of the Benefit Continuation Period if the Executive (or in the case of dependent coverage, the Executive’s dependent), becomes eligible for the benefit under a plan, program or arrangement of a subsequent employer that provides the same type of benefit.

                    (c) Outplacement. Commencing on his or her Date of Employment Termination, the Company shall reimburse expenses reasonably incurred by the Executive in securing outplacement services through a professional person or entity of the Company’s choice, at a level commensurate with the Executive’s position, during the Benefit Continuation Period, provided that the cost therefor to the Company shall not exceed $50,000 nor extend beyond the earlier to occur of (i) the end of the Executive’s second taxable year following the taxable year in which the termination date occurs and (ii) the date on which the Executive commences other full time employment. The Company shall reimburse the Executive for any such permitted expenses on or before the end of the Executive’s third taxable year following the taxable year in which the termination date occurs.

                    (d) The Executive may only resign as a result of a Position Diminishment under this Section 2.4 if (i) the Date of Position Diminishment occurs outside a Window Period; and (ii) he or she (x) provides notice to the Company within 90 days following the Date of Position Diminishment that he or she considers the Position Diminishment to be grounds to resign; (y) provides the Company a period of 30 days to cure the Position Diminishment, and (z) actually ceases employment, if the Position Diminishment is not cured, by six months following the Date of Position Diminishment.

               2.5. Termination During Window Period Following a Change of Control or Leadership Change.

                    (a) If the Executive’s employment with the Company terminates (x) during a Window Period, or (y) on or before the Position Diminishment Termination Date (as defined in Section 2.5(b)), other than by (i) a termination by the Company for Cause, (ii) the Executive’s resignation other than for Position Diminishment, or (iii) the Executive’s death or Disability, the Executive shall be entitled to payment of the Executive’s then current base salary through the Date of Employment Termination and all other unpaid amounts, if any, to which the Executive is entitled as of the Date of Employment Termination, plus the following amounts and benefits:

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                         (i) Severance Amount. The Executive shall receive a severance payment equal to the sum of (i) 24 times the Executive’s Reference Compensation and (ii) the product of (x) [0.40][0.45] [0.50][0.55] times the Executive’s Annual Salary divided by twelve and (y) the number of full months elapsed in the calendar year before the Executive’s Date of Employment Termination. This payment shall be paid in a lump sum within 90 days following the Executive’s Date of Employment Termination in accordance with Section 7.2; provided, however, that the severance payment amount shall not be paid prior to the Company’s receipt of a duly executed Waiver and Release Agreement that is not revoked during the applicable regulatory revocation period and, if the 90^th day is in the calendar year following the Date of Employment Termination, not before the first day of that subsequent calendar year.

                         (ii) Health and Welfare Benefits Continuation; Outplacement. The Executive shall have the benefits specified in Sections 2.4(b) and (c), extended where permissible under the terms of the plans or applicable law, for the longer Benefit Continuation Period applicable under Section 2.5.

                         (iii) Special Vesting Rules for New Stock Incentives. Notwithstanding any contrary provision of the Arbitron Inc. 1999 Stock Incentive Plan (the “1999 Plan”) or the Arbitron 2008 Equity Compensation Plan (the “2008 Plan,” and, with the 1999 Plan, the “Plans”) and notwithstanding any contrary provision in an award agreement under the Plans, the Executive’s awards under the Plans granted on or after June 1, 2008 and before the Agreement Expiration Date (including, but not limited to, the Executive’s stock option and restricted stock awards, if any) shall fully and immediately vest upon a cessation of employment described in Section 2.5(a), provided that the Board shall have the right to suspend exercises or sales with respect to such equity compensation pending satisfaction of the release requirement in Section 4. This Section 2.5(a)(iii) shall not be changed or otherwise modified without the written consent of the Executive.

                    (b) The Executive may only resign as a result of a Position Diminishment under this Section 2.5 if (i) the Date of Position Diminishment occurs during the Window Period; and (ii) he or she (x) provides notice to the Company within 90 days following the Date of Position Diminishment that he or she considers the Position Diminishment to be grounds to resign; (y) provides the Company a period of 30 days to cure the Position Diminishment, and (z) actually ceases employment, if the Position Diminishment is not cured, by the later to occur of: (1) six months following the Date of Position Diminishment and (2) the end of the Window Period (the “Position Diminishment Termination Date”).

          3. Vesting Rule for Prior Stock Incentives. Notwithstanding any contrary provision of the Plans and notwithstanding any contrary provision in an award agreement under the Plans, the Executive’s awards under the Plans received before May 31, 2008 (including, but not limited to, the Executive’s stock option and restricted stock awards, if any) shall fully and immediately vest if a Change of Control occurs, without regard to whether the Executive’s employment ends (unless the equity incentive cannot be so accelerated under Section 409A because the event that falls within the definition of Change of Control is not within Section 409A’s definition of “change in control,” in which case acceleration will occur only in accordance with Section 2.5(a)), provided that the Board shall have the right to suspend exercises or sales with respect to such equity compensation pending satisfaction of the release requirement in Section 4. This Section 3 shall not be changed or otherwise modified without the written consent of the Executive.

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          4. Waiver and Release Agreement. In consideration of the severance payments described in Section 2.4 or Section 2.5 and the acceleration provided in Section 3, to which severance payments and acceleration the Executive would otherwise not be entitled, and as a pre-condition to the Executive becoming entitled to such severance payments or accelerations under this Agreement, the Executive agrees to execute at the time of Executive’s termination (and/or acceleration event under Section 3) a Waiver and Release Agreement in exactly the form provided to the Executive by the Company without alteration or addition (the “Waiver and Release Agreement”), attached hereto as Exhibit A , the terms and conditions of which are specifically incorporated herein by reference (with such modifications as the Company determines appropriate if Section 3 applies but Section 2.5 does not).

          5. Certain Additional Payments by the Company.

               (a) Notwithstanding anything in this Agreement to the contrary and except as set forth in this Section 5, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 5 ) (a “Payment”) would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes, including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax (including any interest or penalties imposed with respect to such taxes) imposed upon the Payments. The Gross-Up Payment provided for in this Section 5 shall be made upon the earlier of (a) the payment to the Executive of any Payment or (b) the imposition upon the Executive, or any payment by the Executive, of any Excise Tax; provided that all such Gross-Up Payments shall be made prior to the end of the Executive’s taxable year next following the taxable year in which the taxes are remitted to the taxing authority.

               (b) Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s external auditors (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to the Executive within five business days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

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               (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he or she gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

                    (i) give the Company any information reasonably requested by the Company relating to such claim,

                    (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by attorneys reasonably selected by the Company,

                    (iii) cooperate with the Company in good faith in order effectively to contest such claim, and

                    (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; further provided, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and, further provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

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                    (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 5(c) ) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

          6. Non-Competition, Non-Recruitment, and Non-Disparagement.

               6.1. General. The parties hereto recognize and agree that (a) the Executive is a senior executive of the Company and is a key executive of the Company, (b) the Executive has received, and will in the future receive, substantial amounts of the Company’s confidential information, (c) the Company’s business is conducted on a worldwide basis, and (d) provision for non-competition, non-recruitment and non-disparagement obligations by the Executive is critical to the Company’s continued economic well-being and protection of the Company’s confidential information. In light of these considerations, this Section 6 sets forth the terms and conditions of the Executive’s obligations of non-competition, non-recruitment and non-disparagement during and subsequent to the termination of this Agreement and/or the cessation of the Executive’s employment for any reason.

               6.2. Non-Competition.

                    (a) Unless the obligation is waived or limited by the Company in accordance with subsection (b) of this Section 6.2, the Executive agrees that during employment and for the longest of 12 months following the cessation of employment for any reason not covered by Section 2.4 or 2.5, 18 months if Section 2.4 applies, and 24 months if Section 2.5 applies (“Non-Compete Period”), the Executive will not directly or indirectly, alone or as a partner, officer, director, shareholder or employee of any other firm or entity, engage in any commercial activity in competition with any part of the Company’s business as conducted as of the date of such termination of employment or with any part of the Company’s contemplated business with respect to which the Executive has confidential information. For purposes of this subsection (a), “shareholder” shall not include beneficial ownership of less than five percent (5%) of the combined voting power of all issued and outstanding voting securities of a publicly held corporation whose stock is traded on a major stock exchange. Also for purposes of this subsection (a), “the Company’s business” shall include business conducted by the Company or its affiliates and any partnership or joint venture in which the Company or its affiliates is a partner or joint venturer; provided that, “affiliate” as used in this sentence shall not include any entity in which the Company has ownership of less than one third (1/3) of the voting equity.

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                    (b) At its sole option the Company may, by written notice to the Executive at any time within the Non-Compete Period, waive or limit the time and/or geographic area in which the Executive cannot engage in competitive activity.

                    (c) During the Non-Compete Period, prior to accepting employment with or agreeing to provide consulting services to, any firm or entity that offers competitive products or services, the Executive shall give 30 days’ prior written notice to the Company. Such written notice shall describe the firm and the employment or consulting services to be rendered to the firm or entity, and shall include a copy of the written offer of employment or engagement of consulting services. The Company’s failure to respond or object to such notice shall not in any way constitute acquiescence or waiver of the Company’s rights under this Section 6.

                    (d) In the event the Executive fails to provide notice to the Company pursuant to subsection (c) of this Section 6.2 and/or in anyway violates its non-competition obligation pursuant to Section 6.2, the Company may enforce all of its rights and remedies provided to it under this Agreement, in law and in equity, without the requirement to post a bond, and the Executive shall be deemed to have expressly waived any rights he or she may have had to payments under Sections 2.4 or 2.5 or acceleration under Section 3.

               6.3. Non-Recruitment. During employment and for a period of 12 months following cessation of employment for any reason, the Executive will not initiate or actively participate in any other employer’s recruitment or hiring of the Company’s employees.

               6.4. Non-Disparagement. The Executive will not, during the term or after the termination or expiration of this Agreement or the Executive’s employment, make disparaging statements, in any form, about the Company, its officers, directors, agents, employees, products or services that the Executive knows, or has reason to believe, are false or misleading.

               6.5. Survival. The obligations of this Article VI shall survive the expiration or termination of this Agreement and Executive’s employment.

          7. Miscellaneous.

               7.1. Notices. All notices, demands, requests or other communications required or permitted to be given or made hereunder shall be in writing and shall be delivered, telecopied or mailed by first class registered or certified mail, postage prepaid, addressed as follows:

If to the Company:	Arbitron Inc.
	9705 Patuxent Woods Drive
	Columbia, MD 21046
	Attention: Office of Chief Legal Officer
If to the Executive:	At his or her last address on file with the Company

or to such other address as may be designated by either party in a notice to the other. Each notice, demand, request or other communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes three days after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

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               7.2. Tax Withholding; Section 409A Compliance. All payments under this Agreement are subject to any required tax or other withholdings. If and to the extent any portion of any payment, compensation or other benefit provided to the Executive in connection with his or her employment termination is determined to constitute “nonqualified deferred compensation” within the meaning of Code Section 409A and the Executive is a specified employee as defined in Section 409A(a)(2)(B)(i), as determined by the Company in accordance with its procedures, by which determination the Executive hereby agrees that he is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A) (the “New Payment Date”), except as Section 409A may then permit. The aggregate of any payments that otherwise would have been paid to the Executive during the period between the date of separation from service and the New Payment Date shall be paid to the Executive in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule. For purposes of this Agreement, each amount to be paid or benefit to be provided shall be construed as a separate identified payment for purposes of Section 409A, and any payments that are due within the “short term deferral period” as defined in Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise. Neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A. This Agreement is intended to comply with the provisions of Section 409A and the Agreement shall, to the extent practicable, be construed in accordance therewith. Terms defined in the Agreement shall have the meanings given such terms under Section 409A if and to the extent required to comply with Section 409A. In any event, the Company makes no representations or warranty and shall have no liability to the Executive or any other person, other than with respect to payments made by the Company in violation of the provisions of this Agreement, if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Code Section 409A but not to satisfy the conditions of that section.

               7.3. Representations. The Executive agrees to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. The Executive represents that performance of all the terms of this Agreement and the Waiver and Release Agreement will not breach any similar agreement. Executive has not entered into, and Executive agrees not to enter into, any oral or written agreement in conflict herewith.

               7.4. Severability. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.

               7.5. Survival. It is the express intention and agreement of the parties hereto that the provisions of Section 2 hereof shall survive the termination of employment of the Executive. In addition, all obligations of the Company to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.

               7.6. Assignment. The rights and obligations of the parties to this Agreement shall not be assignable or delegable, except that (i) in the event of the Executive’s death, the personal representative or legatees or distributees of the Executive’s estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder and (ii) the rights and obligations of the Company hereunder shall be assignable and delegable in connection with any subsequent merger, consolidation, sale of all or substantially all of the assets of the Company or similar reorganization to a successor entity. In connection with a transaction described in item (ii) of the preceding sentence under which the Executive’s employment is transferred to a successor in the transaction, the Company’s failure to obtain the agreement of its successor to perform the Company’s obligations under this Agreement shall be treated as a termination by the Company without Cause and during the Window Period following a Change of Control under Section 2.5 of this Agreement and under the Executive’s Company equity agreements provided that the Executive’s employment ends in accordance with such nonassignment.

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               7.7. Binding Effect. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.

               7.8. Amendment; Waiver. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the parties hereto. Neither the waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.

               7.9. Headings. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

               7.10. Governing Law. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Maryland (but not including the choice of law rules thereof).

               7.11 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE RELEASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, THE PARTIES AGREE THAT ANY PARTY MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THEIR RIGHTS TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS RELEASE OR TO ANY OF THE MATTERS CONTEMPLATED UNDER THIS AGREEMENT, RELATING TO THE EXECUTIVE’S EMPLOYMENT, OR COVERED BY THE ATTACHED RELEASE.

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               7.12. Entire Agreement. This Agreement, the Waiver and Release Agreement, and any agreements entered into in connection with the Executive’s equity participation in the Company (as modified by Sections 2.5(a)(iii) and 3 of this Agreement) constitute the entire agreement between the parties respecting the employment of Executive, there being no representations, warranties or commitments except as set forth herein.

               7.13. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.

               7.14. No Right to Continued Employment. Nothing in this Agreement shall be deemed to give the Executive the right to be retained in the employ of the Company, or to interfere with the right of the Company to discharge the Executive at any time and for any lawful reason, subject in all cases to the terms of this Agreement.

               7.15 Further Effect of Termination on Board and Officer Positions. If Executive’s employment ends for any reason, Executive agrees that he/she will cease immediately to hold any and all officer or director positions he then has with the Company or any affiliate, absent a contrary direction from the Board of Directors of the Company (which may include either a request to continue such service or a direction to cease serving upon notice without regard to whether his employment has ended), except to the extent that Executive reasonably and in good faith determines that ceasing to serve as a director would breach his/her fiduciary duties to the Company. Executive hereby irrevocably appoints the Company to be his/her attorney to execute any documents and do anything in his name to effect his/her ceasing to serve as a director and officer of the Company and any subsidiary, should he/she fail to resign following a request from the Company to do so. A written notification signed by a director or duly authorized officer of the Company that any instrument, document or act falls within the authority conferred by this clause will be conclusive evidence that it does so. The Company will prepare any documents, pay any filing fees, and bear any other expenses related to this section.

               7.16. No Mitigation. The Executive is not required to mitigate the payments under this Agreement by seeking other employment or otherwise, and the Company will not offset its obligations under this Agreement to reflect compensation he/she receives from other employers or service recipients.

               7.17. Definitions.

                    “Annual Salary” means the greatest of the annual rate of the Executive’s base salary from the Company and its subsidiaries in effect as of the date of this Agreement, immediately prior to the Date of Employment Termination, or, if applicable, immediately prior to the first day of the Window Period..

                    “Benefit Continuation Period” means the applicable 18 or 24 month period upon which the Executive’s severance payment under Section 2.4 or 2.5 is based, treating the period as though it runs from the Date of Employment Termination.

                    “Cause” means (i) fraud; (ii) misrepresentation; (iii) theft or embezzlement of assets of the Company; (iv) intentional violations of law involving moral turpitude; (v) material failure to follow the Company’s conduct and ethics policies; and/or (vi) the continued failure by the Executive to attempt in good faith to perform his or her duties as reasonably assigned by the Chief Executive Officer to the Executive for a period of 60 days after a written demand for such performance which specifically identifies the manner in which it is alleged the Executive has not attempted in good faith to perform such duties.

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                    “Code” means the Internal Revenue Code of 1986, as amended from time to time.

                    “Change of Control” means any of the following events:

                    (i) a merger or consolidation to which the Company is a party if the individuals and entities who were stockholders of the Company immediately prior to the effective date of such merger or consolidation have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of less than 50% of the total combined voting power for election of directors of the surviving Company immediately following the effective date of such merger or consolidation;

                    (ii) the direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) in the aggregate of securities of the Company representing 51% or more of the total combined voting power of the Company’s then issued and outstanding securities by any person or entity, or group of associated persons or entities acting in concert; provided, however, that for purposes hereof, any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company shall not constitute a Change of Control;

                    (iii) the direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) in the aggregate of securities of the Company representing 25% or more of the total combined voting power of the Company’s then issued and outstanding securities by any person or entity, or group of associated persons or entities acting in concert if such acquisition is not approved by the Board of Directors of the Company prior to any such acquisition; provided, however, that for purposes hereof, any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company shall not constitute a Change of Control;

                    (iv) the sale of the properties and assets of the Company, substantially as an entirety, to any person or entity which is not a wholly-owned subsidiary of the Company;

                    (v) the liquidation of the Company; or

                    (vi) a change in the composition of the Board at any time during any consecutive 24-month period such that the “Continuity Directors” cease for any reason to constitute at least a 70% majority of the Board. For purposes of this clause, “Continuity Directors” means those members of the Board who either (A) were directors at the beginning of such consecutive 24-month period, or (B) were elected by, or on the nomination or recommendation of, at least a two-thirds majority of the then-existing Board of Directors.

                    “Date of Employment Termination” means (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because of the Executive’s Disability, 30 days after Notice of Termination, provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such 30-day period; (iii) if the Executive’s employment is terminated by the Company for Cause, the date immediately following the Notice of Termination; (iv) if the Executive’s employment is terminated by the Company, 30 days after the Notice of Termination; or (v) if the Executive voluntarily terminates his or her employment, the date 21 days after the Notice of Termination. Nothing in this provision shall prevent the Company from immediately removing the Executive from his or her position.

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                    “Date of Position Diminishment” means the effective date of the Executive’s Position Diminishment.

                    “Disability” means the Executive’s inability to perform all of the Executive’s duties hereunder by reason of illness, physical or mental disability or other similar incapacity, as determined by the Chief Executive Officer in his or her sole discretion, which inability shall continue for more than three consecutive months; provided, however, that the Executive does not hereby waive any rights under the Americans with Disabilities Act or other applicable law.

                    “Leadership Change” means Stephen B. Morris ceases to be Chief Executive Officer of the Company.

                    “Position Diminishment” means (i) a change in the Executive’s reporting responsibilities, titles, duties, or offices as in effect immediately prior to a Leadership Change or a Change of Control (or, for purposes of Section 2.4, as in effect as of the date of this Agreement), or any removal of Executive from, or any failure to re-elect Executive to, any of such positions, that has the effect of materially diminishing Executive’s responsibility, duties, or authority, (ii) a relocation of the Executive’s principal place of employment to a location more than 25 miles from its then current location and that increases the distance from Executive’s primary residence by more than 25 miles, or (iii) a material reduction in the Executive’s Annual Salary.

                    “Reference Compensation” means [1.40][1.45][1.50][1.55] times the Executive’s Annual Salary divided by twelve.

                    “Window Period” means the one-year period commencing on the date of a Leadership Change or a Change of Control. Furthermore, only the first Change of Control shall be counted in determining whether there is a Window Period, and, as a result, while there could be more than one Window Period (given the occurrence of a Leadership Change), there will not be multiple Window Periods under this Agreement triggered by Changes of Control.

               IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the day and year first herein above written.

ARBITRON INC.	EXECUTIVE:
By:
Name:
Title:

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EX-31.1

Exhibit 31.1

302(a) CERTIFICATION

I, Stephen B. Morris, Chairman, President and Chief Executive Officer of Arbitron Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Arbitron Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2008

/s/ Stephen B. Morris  

Stephen B. Morris 

Chairman, President and Chief Executive Officer 

EX-31.2

Exhibit 31.2

302(a) CERTIFICATION

I, Sean R. Creamer, Executive Vice President of Finance and Planning and Chief Financial Officer of Arbitron Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Arbitron Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2008

/s/ Sean R. Creamer  

Sean R. Creamer 

Executive Vice President of Finance and Planning
and Chief Financial Officer 

EX-32.1

Exhibit 32.1

WRITTEN STATEMENT OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
(18 U.S.C. Section 1350)

The undersigned, the Chief Executive Officer and the Chief Financial Officer of Arbitron Inc. (the “Company”), each hereby certifies that, to his knowledge, on the date hereof:

(a)	the Form 10-Q of the Company for the quarter ended September 30, 2008, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen B. Morris  

Stephen B. Morris 

Chief Executive Officer 

Date: November 4, 2008 

/s/ Sean R. Creamer  

Sean R. Creamer 

Chief Financial Officer 

Date: November 4, 2008