10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2012

Or

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

9705 Patuxent Woods Drive

Columbia, Maryland 21046

(Address of principal executive offices) (Zip Code)

(410) 312-8000

(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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

The registrant had 26,161,789 shares of common stock, par value $0.50 per share, outstanding as of October 25, 2012.

ARBITRON INC.

INDEX

		Page No.
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets – September 30, 2012, and December 31, 2011		4
	Consolidated Statements of Income – Three Months Ended September 30, 2012, and 2011		5
	Consolidated Statements of Income – Nine Months Ended September 30, 2012, and 2011		6
	Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2012, and 2011		7
	Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2012, and 2011		8
	Notes to Consolidated Financial Statements – September 30, 2012		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		35
Item 4.	Controls and Procedures		35
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		36
Item 1A.	Risk Factors		37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		37
Item 4.	(Removed and Reserved)
Item 6.	Exhibits		38
Signature			40

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Arbitron owns or has the rights to various trademarks, trade names or service marks used in its radio audience ratings business and subsidiaries, including the following: the Arbitron name and logo, Arbitrends^SM , RetailDirect^®, RADAR^®, TAPSCAN^™, TAPSCAN WORLDWIDE^™, LocalMotion^®, Maximi$er^®, Maximi$er^® Plus, Arbitron PD Advantage^®, SmartPlus^®, Arbitron Mobile^™, Arbitron Mobile Index^™, Arbitron Mobile Trends Panels^™, Portable People Meter^™, PPM^™ , Arbitron PPM^™ , Arbitron PPM^®, PPM 360^™, Marketing Resources Plus^®, PrintPlus^®, MapMAKER Direct^SM, Media Professional^SM, Media Professional Plus^SM, QUALITAP^SM, Schedule-It^SM, and Zokem^™.

The trademarks Windows^®, Mscore^™, Audience Reaction^™, Media Monitors^® and Media Rating Council^® referred to in this Quarterly Report on Form 10-Q are the registered trademarks of others.

We routinely post important information on our website at www.arbitron.com. Information contained on our website is not part of this quarterly report.

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ARBITRON INC.

Consolidated Balance Sheets

(In thousands, except par value data)

	September 30, 2012			December 31, 2011
	(Unaudited)			(Audited)
Assets
Current assets
Cash and cash equivalents	$	37,051		$	19,715
Trade accounts receivable, net of allowance for doubtful accounts of $4,562 as of September 30, 2012, and $4,615 as of December 31, 2011		60,509			62,886
Prepaid expenses and other current assets		8,359			7,141
Deferred tax assets		4,586			6,398
Total current assets		110,505			96,140
Equity and other investments		7,506			14,913
Property and equipment, net		63,784			70,651
Goodwill, net		45,359			45,430
Other intangibles, net		8,669			10,526
Noncurrent deferred tax assets		1,921			—
Other noncurrent assets		1,221			1,308
Total assets	$	238,965		$	238,968
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	10,159		$	10,534
Accrued expenses and other current liabilities		23,837			32,276
Deferred revenue		49,280			37,080
Total current liabilities		83,276			79,890
Noncurrent deferred tax liabilities		—			1,302
Other noncurrent liabilities		30,967			30,960
Total liabilities		114,243			112,152
Stockholders’ equity
Preferred stock, $100.00 par value, 750 shares authorized, no shares issued		—			—
Common stock, $0.50 par value, 500,000 shares authorized, 32,338 shares issued as of September 30, 2012, and December 31, 2011		16,169			16,169
Retained earnings		126,304			128,772
Common stock held in treasury, 6,178 shares as of September 30, 2012, and 5,048 shares as of December 31, 2011		(3,089	)		(2,524	)
Accumulated other comprehensive loss		(14,662	)		(15,601	)
Total stockholders’ equity		124,722			126,816
Total liabilities and stockholders’ equity	$	238,965		$	238,968

See accompanying notes to consolidated financial statements.

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ARBITRON INC.

Consolidated Statements of Income

(In thousands, except per share data)

(unaudited)

	Three Months Ended September 30,
	2012			2011
Revenue	$	114,341		$	105,563
Costs and expenses
Cost of revenue		53,840			49,388
Selling, general and administrative		22,321			18,401
Research and development		9,913			9,444
Total costs and expenses		86,074			77,233
Operating income		28,267			28,330
Equity in net loss of affiliate		(2,364	)		(2,290	)
Income before interest and income tax expense		25,903			26,040
Interest income		15			6
Interest expense		133			109
Income before income tax expense		25,785			25,937
Income tax expense		9,998			10,586
Net income	$	15,787		$	15,351
Income per weighted-average common share
Basic	$	0.60		$	0.56
Diluted	$	0.59		$	0.55
Weighted-average common shares used in calculations
Basic		26,133			27,222
Potentially dilutive securities		529			461
Diluted		26,662			27,683
Dividends declared per common share outstanding	$	0.10		$	0.10

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,
	2012		2011
Revenue	$	325,142	$	302,169
Costs and expenses
Cost of revenue		164,493		156,092
Selling, general and administrative		61,025		54,166
Research and development		29,527		27,456
Total costs and expenses		255,045		237,714
Operating income		70,097		64,455
Equity in net income of affiliate		671		631
Income before interest and income tax expense		70,768		65,086
Interest income		46		20
Interest expense		394		377
Income before income tax expense		70,420		64,729
Income tax expense		26,863		25,547
Net income	$	43,557	$	39,182
Income per weighted-average common share
Basic	$	1.64	$	1.44
Diluted	$	1.61	$	1.42
Weighted-average common shares used in calculations
Basic		26,564		27,154
Potentially dilutive securities		503		475
Diluted		27,067		27,629
Dividends declared per common share outstanding	$	0.30	$	0.30

See accompanying notes to consolidated financial statements.

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ARBITRON INC.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Net income	$	15,787	$	15,351		$	43,557		$	39,182
Other comprehensive income (loss):
Foreign currency translation adjustment		247		(248	)		(24	)		(257	)
Retirement liabilities:
Amortization of actuarial loss, net of tax expense of $201, and $151 for the three-month periods ended September 30, 2012, and 2011, respectively; and net of tax expense of $611 and $454 for the nine-month periods ended September 30, 2012, and 2011, respectively.		323		237			963			709
Other comprehensive income (loss):		570		(11	)		939			452
Comprehensive income	$	16,357	$	15,340		$	44,496		$	39,634

See accompanying notes to consolidated financial statements.

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ARBITRON INC.

Consolidated Statements of Cash Flows

(In thousands and unaudited)

	Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities
Net income	$	43,557		$	39,182
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment		21,120			20,973
Amortization of other intangible assets		1,816			1,104
Loss on asset disposals and impairments of property and equipment		2,096			1,534
Deferred income taxes		(2,022	)		(260	)
Equity in net income of affiliate		(671	)		(631	)
Distributions from affiliate		6,375			6,200
Bad debt expense		1,290			1,555
Non-cash share-based compensation		6,779			5,860
Changes in operating assets and liabilities
Trade accounts receivable		1,087			9,335
Prepaid expenses and other assets		(890	)		2,823
Accounts payable		212			730
Accrued expenses and other current liabilities		(9,546	)		(8,657	)
Deferred revenue		12,200			8,167
Other noncurrent liabilities		2,601			1,717
Net cash provided by operating activities		86,004			89,632
Cash flows from investing activities
Additions to property and equipment		(16,900	)		(23,035	)
Proceeds from sale of cost investment		1,466			—
Payments for business acquisitions, net of cash acquired		—			(10,553	)
Net cash used in investing activities		(15,434	)		(33,588	)
Cash flows from financing activities
Proceeds from stock option exercises and stock purchase plan		4,075			2,783
Stock repurchases		(50,025	)		—
Dividends paid to stockholders		(8,064	)		(8,126	)
Payments for deferred financing costs		—			(231	)
Excess tax benefits realized from share-based awards		775			715
Debt borrowings		—			15,000
Debt repayments		—			(69,103	)
Net cash used in financing activities		(53,239	)		(58,962	)
Effect of exchange rate changes on cash and cash equivalents		5			(22	)
Net change in cash and cash equivalents		17,336			(2,940	)
Cash and cash equivalents at beginning of period		19,715			18,925
Cash and cash equivalents at end of period	$	37,051		$	15,985

See accompanying notes to consolidated financial statements.

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ARBITRON INC.

Notes to Consolidated Financial Statements

September 30, 2012

(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 (“GAAP”) 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 notes required by GAAP 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. The consolidated balance sheet as of December 31, 2011 was audited as of that date, but all of the information and notes as of December 31, 2011 required by GAAP have not been included in this Form 10-Q. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform to the current period’s presentation.

Consolidation

The consolidated financial statements of Arbitron for the nine-month period ended September 30, 2012, reflect the consolidated financial position, results of operations and cash flows of the Company and its wholly-owned subsidiaries: Arbitron Holdings Inc., Arbitron Mobile Oy, Astro West LLC, Cardinal North LLC, Ceridian Infotech (India) Private Limited, Arbitron International, LLC, and Arbitron Technology Services India Private Limited. For the nine-month period ended September 30, 2011, the consolidated financial statements reflected the results of operations and cash flows of Arbitron Mobile Oy and Cardinal North LLC incurred subsequent to the acquisition of Zokem Oy during the month ended July 31, 2011. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has one segment which meets the quantitative thresholds for being a reportable segment.

2. New Accounting Pronouncements

Testing Other Intangibles for Impairment. In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2012-02, Intangibles — Goodwill and Other (Topic 350) — Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), to allow entities to use a qualitative approach to test indefinite-lived assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to calculate the fair value of the intangible asset and perform the quantitative impairment test. Otherwise, the entity need not perform the quantitative impairment test. ASU 2012-02 is effective for the Company for interim and annual periods ended during 2013. The Company does not expect that the adoption of this guidance will have a material impact on the Company’s consolidated financial statements.

Testing Goodwill for Impairment. In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles — Goodwill and Other (Topic 350) — Testing Goodwill for Impairment (“ASU 2011-08”), to allow entities to use a qualitative approach to test goodwill for impairment. ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. ASU 2011-08 is effective for the Company for interim and annual periods ended during 2012. The adoption of this guidance had no impact on the Company’s consolidated financial statements.

Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements. In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (Topic 820) — Fair Value Measurement (“ASU 2011-04”), to provide a consistent definition of fair value and ensure that the fair value

9

measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. ASU 2011-04 is effective for the Company for interim and annual periods ended during 2012 and will be applied prospectively. The adoption of this guidance had no impact on the Company’s consolidated financial statements.

3. Debt

On November 21, 2011, 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”) expiring on November 21, 2016. The agreement contains an expansion feature to increase the total financing available under the Credit Facility by up to $75.0 million to an aggregate of $225.0 million. Such increased financing would 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, 2012 and December 31, 2011, there were no outstanding borrowings under the Credit Facility. Interest paid during the nine-month periods ended September 30, 2012, and 2011, was $0.2 million and $0.3 million, respectively.

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4. Stockholders’ Equity

Changes in stockholders’ equity for the nine-month period ended September 30, 2012, were as follows (in thousands):

	Shares Outstanding			Common Stock		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of December 31, 2011		27,290		$	16,169	$	(2,524	)	$	128,772		$	(15,601	)	$	126,816
Net income		—			—		—			43,557			—			43,557
Common stock issued from treasury stock		243			—		121			3,711			—			3,832
Common stock repurchased		(1,373	)		—		(686	)		(49,339	)		—			(50,025	)
Excess tax benefits from share-based awards		—			—		—			775			—			775
Non-cash share-based compensation		—			—		—			6,779			—			6,779
Dividends declared		—			—		—			(7,951	)		—			(7,951	)
Other comprehensive income		—			—		—			—			939			939
Balance as of September 30, 2012		26,160		$	16,169	$	(3,089	)	$	126,304		$	(14,662	)	$	124,722

A quarterly cash dividend of $0.10 per common share was paid to stockholders on October 1, 2012.

5. Net Income per Weighted-Average Common Share

The computations of basic and diluted net income per weighted-average common share for the three and nine-month periods ended September 30, 2012 and 2011, 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 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, 2012, and 2011, there were stock options to purchase 2,089,125 shares, and 2,094,214 shares of the Company’s common stock outstanding, respectively, of which stock options to purchase 1,399,252 shares, and 1,102,228 shares of the Company’s common stock, respectively, were excluded from the computation of the diluted net income per weighted-average common share for the three-month periods ended September 30, 2012, and 2011, respectively, either because the stock options’ exercise prices were greater than the average market price of the Company’s common shares or assumed repurchases from proceeds from the stock options’ exercise were antidilutive.

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6. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss as of September 30, 2012 and December 31, 2011, were as follows (in thousands):

	September 30,			December 31,
	2012			2011
Foreign currency translation adjustment	$	(2,172	)	$	(2,148	)
Retirement plan liabilities, net of tax		(12,490	)		(13,453	)
Accumulated other comprehensive loss	$	(14,662	)	$	(15,601	)

7. Prepaid Expenses and Other Current Assets

Prepaids and other current assets as of September 30, 2012, and December 31, 2011, consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Survey participant incentives and prepaid postage	$	3,298	$	1,770
Prepaid Scarborough royalties		972		—
Prepaid income taxes		1,497		1,984
Insurance recovery receivables		137		993
Other		2,455		2,394
Prepaids and other current assets	$	8,359	$	7,141

Insurance recovery receivables. During 2008, the Company became involved in two securities-law civil actions and a governmental interaction primarily related to the commercialization of the Company’s PPM service. The management of the Company believes a portion of the legal fees and costs associated with this litigation are covered by the Company’s Directors and Officers insurance policy and therefore has recognized an insurance recovery receivable. On February 3, 2012, as a result of a mediation process overseen by an independent mediator, the Company and its insurers agreed to settle the class action for $7.0 million, which was funded by insurance. From 2008 until September 30, 2012, the Company had incurred approximately $12.7 million in legal fees and costs in defense of its positions related thereto, and as of September 30, 2012, the Company had received $9.7 million in insurance reimbursements related to these legal actions.

For the nine-month periods ended September 30, 2012, and 2011, the Company incurred approximately $0.6 million, and $1.3 million, respectively, in related legal fees, which were recognized as increases to selling, general, and administrative expense. These legal fees were offset by $0.9 million, and $1.4 million in estimated insurance recoveries, respectively, which were recognized as reductions to selling, general and administrative expense during 2012 and 2011, respectively.

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8. Equity and Other Investments

The Company’s equity and cost investments as of September 30, 2012, and December 31, 2011, consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Equity investment	$	7,506	$	13,210
Cost investment		—		1,703
Equity and other investments	$	7,506	$	14,913

The Company’s 49.5% investment in Scarborough Research (“Scarborough”), a Delaware general partnership, is accounted for using the equity method of accounting. During the month ended July 31, 2012, the Company sold its $1.7 million preferred stock investment in TRA Global, Inc. (“TRA”). Prior to the sale, the TRA investment was accounted for using the cost method of accounting. The proceeds from the sale were approximately equal to the investment’s carrying value. Cash proceeds received from the sale amounted to approximately $1.5 million as of September 30, 2012, with an additional $0.2 million deposited in escrow. The escrow funds will be released to the Company in January 2014, less any claims paid from the escrow account. The escrow fund deposit is recorded on the Company’s balance sheet as a portion of the Company’s non-current assets.

The following table shows the investment activity and balances for each of the Company’s investments for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Three-Month Period									Three-Month Period
	September 30, 2012									September 30, 2011
	Scarborough			TRA			Total			Scarborough			TRA		Total
Beginning balance	$	11,945		$	1,703		$	13,648		$	12,076		$	5,180	$	17,256
Investment in affiliate loss		(2,364	)		—			(2,364	)		(2,290	)		—		(2,290	)
Distributions from investee		(2,075	)		—			(2,075	)		(2,150	)		—		(2,150	)
Proceeds from sale of investment		—			(1,466	)		(1,466	)		—			—		—
Receivable from sale of investment		—			(214	)		(214	)		—			—		—
Loss on sale of investment		—			(23	)		(23	)		—			—		—
Ending balance	$	7,506		$	—		$	7,506		$	7,636		$	5,180	$	12,816

	Nine-Month Period									Nine-Month Period
	September 30, 2012									September 30, 2011
	Scarborough			TRA			Total			Scarborough			TRA		Total
Beginning balance	$	13,210		$	1,703		$	14,913		$	13,205		$	5,180	$	18,385
Investment in affiliate income		671			—			671			631			—		631
Distributions from investee		(6,375	)		—			(6,375	)		(6,200	)		—		(6,200	)
Proceeds from sale of investment		—			(1,466	)		(1,466	)		—			—		—
Receivable from sale of investment		—			(214	)		(214	)		—			—		—
Loss on sale of investment		—			(23	)		(23	)		—			—		—
Ending balance	$	7,506		$	—		$	7,506		$	7,636		$	5,180	$	12,816

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9. 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 has a nonqualified, unfunded supplemental retirement plan, as well as a postretirement healthcare plan for eligible retired employees who participate in the pension plan and were hired before January 1, 1992. The components of periodic benefit costs for the defined-benefit pension, postretirement healthcare and supplemental retirement plans were as follows for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Defined-Benefit Pension Plan Three-Month Period Ended September 30,						Postretirement Healthcare Plan Three-Month Period Ended September 30,				Supplemental Retirement Plan Three-Month Period Ended September 30,
	2012			2011			2012		2011		2012		2011
Service cost	$	216		$	193		$	10	$	9	$	7	$	5
Interest cost		477			454			18		20		40		40
Expected return on plan assets		(509	)		(512	)		—		—		—		—
Amortization of net loss		471			343			5		7		48		38
Net periodic benefit cost	$	655		$	478		$	33	$	36	$	95	$	83

	Defined-Benefit Pension Plan Nine-Month Period Ended September 30,						Postretirement Healthcare Plan Nine-Month Period Ended September 30,				Supplemental Retirement Plan Nine-Month Period Ended September 30,
	2012			2011			2012		2011		2012		2011
Service cost	$	647		$	580		$	28	$	28	$	22	$	15
Interest cost		1,430			1,364			54		61		120		120
Expected return on plan assets		(1,527	)		(1,538	)		—		—		—		—
Amortization of net loss		1,414			1,028			16		21		144		114
Net periodic benefit cost	$	1,964		$	1,434		$	98	$	110	$	286	$	249

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10. Acquisitions

Zokem Oy. On July 28, 2011, a wholly-owned subsidiary of the Company acquired Zokem Oy. The purchase price was $10.6 million in cash plus a contingent consideration arrangement with an estimated fair value of approximately $0.9 million as of the acquisition date. The contingent consideration arrangement provides for possible additional cash payments to be made by the Company to the former Zokem shareholders through 2015 of up to $12.0 million, which are contingent upon Zokem reaching certain financial performance targets in the future. The acquisition date fair value estimate was determined by applying the income approach method. The key assumptions used in the fair value valuation included a probability-weighted range of performance targets for the four-year measurement period of 2012 through 2015 and an adjusted discount rate. The Company periodically reassesses the fair value of the contingent consideration. As of September 30, 2012, the Company’s estimate of the fair value of the contingent consideration was $1.1 million, recorded in other noncurrent liabilities on the Company’s consolidated balance sheet.

The following table shows the changes in goodwill for the nine-month periods ended September 30, 2012, and 2011, (in thousands):

	Nine-Month			Nine-Month
	Period Ended			Period Ended
	September 30,			September 30,
	2012			2011
Beginning balance	$	45,430		$	38,895
Zokem Oy addition		—			5,623
Translation effect		(71	)		—
Ending balance	$	45,359		$	44,518

11. Taxes

The effective tax rate decreased to 38.1% for the nine months ended September 30, 2012, from 39.5% for the nine-month period ended September 30, 2011. The effective tax rate through September 30, 2011 was impacted unfavorably by certain nondeductible Arbitron Mobile related operating losses. The effective tax rate through September 30, 2012 was reduced due to a favorable audit resolution with the Internal Revenue Service during 2012.

During the nine-month period ended September 30, 2012, the Company’s unrecognized tax benefits for certain income tax contingencies increased from $1.3 million as of December 31, 2011, to $1.6 million as of September 30, 2012. The increase is attributable to various state related issues. If recognized, the $1.6 million in unrecognized tax benefits would reduce the Company’s effective tax rate in future periods.

Income taxes paid for the nine-months ended September 30, 2012 and 2011, were $28.1 million and $21.1 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 for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Cost of revenue	$	139	$	200	$	382	$	442
Selling, general and administrative		2,196		1,734		6,136		5,164
Research and development		67		95		261		254
Share-based compensation	$	2,402	$	2,029	$	6,779	$	5,860

No share-based compensation cost was capitalized during the nine-month periods ended September 30, 2012, and 2011.

Stock Options

Stock options awarded to employees under the Company’s 2008 Equity Compensation Plan (“2008 Plan”) generally vest annually over a three-year period, have a 10-year term and have an exercise price equal to the fair market value of the Company’s common stock at the date of grant. Compensation expense for stock options is recognized on a straight-line basis over the vesting period using the fair value of each stock option estimated as of the grant date.

For the three-month period ended September 30, 2012 and 2011, the number of stock options granted was 108,871 and 81,001, respectively, and the weighted-average exercise price for those stock options granted was $36.07 and $34.83, respectively. For the nine-month periods ended September 30, 2012 and 2011, the number of stock options granted was 215,337 and 154,226, respectively, and the weighted-average exercise price for those stock options granted was $35.07 and $39.21, respectively.

As of September 30, 2012, there was $3.4 million in total unrecognized compensation cost related to unvested stock options. This aggregate unrecognized cost is expected to be recognized over a weighted-average remaining period of 2.3 years. The weighted-average exercise price and weighted-average remaining contractual term for outstanding stock options as of September 30, 2012, were $34.01 and 5.4 years, respectively.

Service and Performance Award Units

Service award units. The Company’s unvested service award units (i) were issued at the fair market value of the Company’s common stock on the date of grant, (ii) vest in four equal annual installments beginning on the first anniversary date of the grant, and (iii) expire without vesting if the employee is no longer employed by the Company. Compensation expense for service award units is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant.

As of September 30, 2012, there was $2.6 million of total unrecognized compensation cost related to unvested service award units. This aggregate unrecognized cost for service award units is expected to be recognized over a weighted-average period of approximately 3.0 years.

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Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of service award shares granted during the period		45,402		—		49,985		18,434
Weighted average grant-date fair value per share granted during the period	$	36.10		—	$	36.04	$	42.72
Fair value of service award shares vested during the period	$	266	$	322	$	2,006	$	2,536

Service award units to Board of Directors (“Board”). Beginning in 2012, the Board members have the right to elect to receive all or a portion of their annual 2012 compensation as Board service award units. These Board service award units (i) were issued at the fair market value of the Company’s common stock on the date of grant, and (ii) vest on the anniversary date of the grant. Compensation expense for Board service award units is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant.

During the three-month period ended September 30, 2012, no Board service award units were granted. During the nine-month period ended September 30, 2012, the Company granted 5,640 Board service award units at a weighted average grant-date fair value per share of $35.46. As of September 30, 2012, there was $0.1 million of total unrecognized compensation cost related to unvested Board service award units. This aggregate unrecognized cost for service award units is expected to be recognized over a weighted-average period of 0.6 years.

Performance award units. During the nine-month periods ended September 30, 2012 and 2011, the Company granted performance award units under the 2008 Plan. These performance award units (i) were issued at the fair market value of the Company’s common stock on the date of grant, (ii) will expire without vesting if the Company’s return on invested capital (“ROIC”) for the annual performance period does not exceed 12%, which is an approximation of the Company’s weighted average cost of capital, (iii) will, if the Company’s ROIC exceeds 12%, vest in four equal annual installments beginning with the first anniversary date of the grant, and (iv) for any unvested units, expire without vesting if the recipient is no longer employed by the Company.

Compensation expense for performance award units is recognized on an accelerated basis using the fair market value of the Company’s common stock on the date of grant. The Company recognizes expense for these performance award units under the assumption that the performance ROIC target will be achieved. If it appears such performance ROIC target will not be met, the Company will stop recognizing any further compensation cost and any previously recognized compensation cost would be reversed. As of September 30, 2012, there was $1.8 million of total unrecognized compensation cost related to unvested performance award units. This aggregate unrecognized cost is expected to be recognized over a weighted-average period of 2.7 years.

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Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of performance award shares granted during the period		—		29,992		34,229		52,503
Weighted average grant-date fair value per share granted during the period		—	$	41.52	$	33.87	$	42.77
Fair value of performance award shares vested during the period	$	236		—	$	1,083	$	804

Deferred Stock Units

Service DSU grants to CEO. During the nine-month periods ended September 30, 2012 and 2011, the Company granted service-based deferred stock unit awards (“Service DSUs”) under the 2008 Plan to its CEO. Service DSUs are issued at the fair market value of the Company’s stock on the date of grant, and generally vest annually over a four-year period on each anniversary date of the grant. Service DSUs also include dividend equivalent DSUs, which vest immediately upon the date of grant.

Compensation expense for Service DSUs is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant. The Service DSUs provide for accelerated vesting upon termination without cause or the CEO’s retirement as defined in his employment agreement. As of September 30, 2012, there was no unrecognized compensation cost related to Service DSUs.

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The Service DSUs will be convertible into shares of the Company’s common stock following the holder’s termination of employment. No Service DSUs were converted into shares of the Company’s common stock during the nine-month periods ended September 30, 2012, and 2011. Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
Service DSU’s Granted to CEO	2012		2011		2012		2011
Number of shares granted during the period		—		—		1,181		900
Weighted-average grant date fair value per share granted during the period		—		—	$	33.87	$	44.44
Fair value of shares vested during the period		—		—	$	568	$	704

Performance DSU grants to CEO. During the nine-month periods ended September 30, 2012 and 2011, the Company granted performance-based deferred stock unit awards (“Performance DSUs”) under the 2008 Plan to its CEO. These Performance DSUs (i) were issued at the fair market value of the Company’s common stock on the date of grant, (ii) will expire without vesting if the Company’s ROIC for the annual performance period does not exceed 12%, which is an approximation of the Company’s weighted average cost of capital, (iii) will, if the Company’s ROIC exceeds 12%, vest in four equal annual installments beginning on the first anniversary date of the grant, and (iv) provide for accelerated vesting upon termination without cause or the CEO’s retirement as defined in his employment agreement. These Performance DSUs, if vested, will be convertible into shares of the Company’s common stock, subsequent to termination of employment.

Compensation expense for Performance DSUs is recognized on an accelerated basis using the fair market value of the Company’s common stock on the date of grant. The Company recognizes expense for these Performance DSUs under the assumption that the performance target will be achieved. If it appears such performance target will not be met, the Company will stop recognizing any further compensation cost and any previously recognized compensation cost would be reversed. As of September 30, 2012, there was $0.8 million of total unrecognized compensation cost related to Performance DSUs. This aggregate unrecognized cost is expected to be recognized over the weighted-average period of 0.3 years.

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
Performance DSU’s Granted to CEO	2012		2011		2012		2011
Number of shares granted during the period		—		—		59,049		24,122
Weighted-average grant date fair value per share granted during the period		—		—	$	33.87	$	44.44
Fair value of shares vested during the period		—		—	$	396	$	227

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Service DSU grants to Board. The Company issues deferred stock units to its Board of Directors (“Board DSUs”) under the 2008 Plan. These Board DSUs (i) were issued at the fair market value of the Company’s common stock on the date of grant and (ii) if vested, will be convertible to shares of the Company’s common stock subsequent to termination of service as a director. Beginning in 2012, the Board members have the right to elect to receive all or a portion of their annual 2012 compensation as Board DSUs that vest completely on the first anniversary date of the grant. For 2011 and 2010, annual grants were issued to the Board as Board DSUs that vest annually in three equal installments over a three-year period.

In addition, the Board members have the right to elect to receive all or a portion of their retainer and meeting attendance fees as Board DSUs, which vest immediately. Board DSUs are only granted to nonemployee Directors. Board DSUs also include dividend equivalent DSUs, which vest immediately upon the date of grant.

Compensation expense for Board DSUs is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant. As of September 30, 2012, there was $1.2 million of total unrecognized compensation cost related to Board DSUs granted to nonemployee directors. This aggregate unrecognized cost is expected to be recognized over the weighted-average period of 1.1 years.

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of shares granted during the period		1,298		6,232		23,866		28,798
Weighted-average grant date fair value per share granted during the period	$	38.06	$	38.78	$	35.63	$	40.19
Fair value of shares vested during the period	$	158	$	113	$	818	$	624

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13. Concentration Risk

Arbitron is a leading media and marketing information services firm primarily serving radio, advertisers, advertising agencies, cable and broadcast television, retailers, out-of-home media, online media, mobile media, telecommunications providers, and print media.

The Company’s quantitative radio audience ratings service and related software licensing revenue accounted for the following percentages, in the aggregate, of total Company revenue:

	Three-Month			Three-Month			Nine-Month			Nine-Month
	Period Ended			Period Ended			Period Ended			Period Ended
	September 30,			September 30,			September 30,			September 30,
	2012			2011			2012			2011
Quantitative radio audience ratings service and related software licensing revenue		94	%		95	%		91	%		91	%

The Company had one customer that individually represented approximately 19% of its annual revenue for the year ended December 31, 2011. The Company had two customers that individually represented approximately 19% and 10% of its total accounts receivable balance as of September 30, 2012, and two customers that individually represented approximately 23% and 11% of its total accounts receivable balance as of December 31, 2011. The Company has historically experienced a high level of contract renewals.

14. Stock Repurchases

On February 9, 2012, the Company’s Board of Directors authorized a program to repurchase up to $100.0 million in shares of the Company’s outstanding common stock through either periodic open-market or private transactions, in accordance with applicable insider trading and other securities laws and regulations, at then-prevailing market prices over a period of up to two years ending February 9, 2014. As of September 30, 2012, the Company had repurchased 1,372,853 shares of its outstanding common stock under this program for approximately $50.0 million. No shares of the Company’s common stock were repurchased during the three-month period ended September 30, 2012.

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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.

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,” “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 actual results to differ materially from results implied by such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to:

• successfully obtain and/or maintain Media Rating Council, Inc. (“MRC”) accreditation for our audience ratings services;

• renew contracts with key customers;

• collect, manage, and process the consumer information we utilize in our media marketing and information services in compliance with applicable data protection and privacy statutes, regulations, and other requirements;

• successfully execute and maintain our cross platform and mobile measurement initiatives;

• support our current and future services by designing, recruiting, and maintaining research samples that appropriately balance quality, size and operational cost;

• successfully develop, implement, and fund initiatives designed to enhance sample quality;

• successfully manage costs associated with cell phone household recruitment, targeted in-person recruitment, and address-based sampling;

• successfully maintain and promote industry usage of our media and marketing information services, a critical mass of broadcaster encoding, and the proper understanding of our services and methodologies in light of governmental actions, including investigation, regulation, legislation or litigation, customer or industry group activism, or adverse community or public relations efforts;

• successfully manage the impact on our business of the current economic environment generally, and in the advertising market, including, without limitation, the insolvency of any of our customers or the impact of the economic environment on our customers’ ability to fulfill their payment obligations to us;

• successfully integrate acquired operations, including differing levels of management and internal control effectiveness at the acquired entity;

• effectively respond to rapidly changing technologies by creating proprietary systems to support our research initiatives and by developing new services that meet marketplace demands in a timely manner;

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

• successfully develop and implement technology solutions to identify and report consumer use of new and existing forms of media content and delivery, and advertising in an increasingly competitive environment; and

• compete with companies that may have financial, marketing, sales, technical or other advantages over us.

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 factors set forth in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011, and elsewhere, and any subsequent periodic or current reports filed by us with the Securities and Exchange Commission (the “SEC”).

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

Overview

We are a leading media and marketing information services firm primarily serving radio, advertisers, advertising agencies, cable and broadcast television, retailers, out-of-home media, online media, mobile media, telecommunications providers, and print media. We currently provide four main services:

• estimating the size and composition of radio audiences in local markets and of audiences to network radio programming and commercials in the United States;

• estimating the size and composition of audiences to media other than radio, including television viewed out-of-home, and content distributed on multiple platforms; we also analyze the behavior of smartphone and tablet users;

• providing qualitative information about consumers, including their lifestyles, shopping patterns, and use of media; and

• providing software to access and analyze media audience and marketing information data.

We have commercialized our Arbitron Portable People Meter^TM (“PPM^®”) ratings service in 48 of the largest United States radio markets. We may choose to commercialize our PPM ratings service in additional markets in the future. We refer to each of the 48 United States radio markets in which we have commercialized our PPM service as a “PPM Market” and collectively, as the “PPM Markets.”

Historically, our quantitative radio ratings services and related software have accounted for a substantial majority of our revenue. For each of the nine-month periods ended September 30, 2012, and 2011, our quantitative radio ratings services and related software accounted for approximately 91% of our revenue. Approximately 80% of our total revenue for the nine-month period ended September 30, 2012, was derived from local radio ratings services, of which approximately 70% was from the PPM Markets and 30% was from our Diary markets.

We expect for the year ending December 31, 2012, our quantitative radio ratings services and related software licensing will account for approximately 89% of our revenue. We also expect approximately 78% of our total revenue for the year ending December 31, 2012 will be derived from local radio ratings services, of which we estimate approximately 75% will be from the PPM Markets and 25% will be from the Diary markets. Quarterly fluctuations in these percentages are reflective of the seasonal delivery schedule of our quantitative radio ratings service and our Scarborough reports. For further information regarding seasonality trends, see “Seasonality.”

While we expect our quantitative radio ratings services and related software licensing will account for the majority of our revenue for the foreseeable future, we continue to seek opportunities to diversify our revenue base by, among other things, leveraging the investment we have made in our PPM ratings service and technology.

With the commercialization of our PPM ratings service complete in 48 of the largest U.S. radio markets, our future performance will be impacted by our ability, and the costs required, to address a variety of challenges and opportunities in the markets and industries we serve. See “— Ratings Trends and Initiatives for our Syndicated Radio Ratings Services” below. Protecting and supporting our existing customer base, and ensuring our services are competitive from a price, quality, and service perspective are critical components to these overall goals, although there can be no guarantee we will be successful in our efforts.

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Ratings Trends and Initiatives for our Syndicated Radio Ratings Services

Challenges

We face a number of challenges in our syndicated radio audience ratings services. Response rates are one measure of our effectiveness in obtaining consent from persons to participate in our surveys and panels. Overall response rates for survey research, in general, have declined over the past several decades, and it has become increasingly difficult and more costly for us to obtain consent from persons to participate in our surveys and panels. We have been adversely impacted by these industry trends. Another measure often employed by users of our data to assess quality in our ratings is sample proportionality, which refers to how well the distribution of the group participating in any individual survey compares to the distribution of the population in the local market. We strive to achieve a level of both response rates and sample proportionality in our surveys sufficient to maintain marketplace confidence in our ratings and acceptance by the industry, and to support accreditation by the MRC.

If response rates decline or we are unable to maintain sample proportionality in our surveys or the costs of recruitment initiatives significantly increase, our radio audience ratings business could be adversely affected.

Quality Improvement Initiatives

In an effort to address the above challenges, we established internal benchmarks we strive to achieve for response rates and sample proportionality and have instituted a number of methodological enhancements, including cell phone household recruiting, targeted in-person recruiting, and address-based sampling. It is more expensive for us to recruit cell phone households and to conduct targeted in-person recruiting and address-based sampling. Because we intend to continue to increase the number of cell phone households in our samples and the level of address-based and targeted in-person recruiting, we expect the expenditures required to support these methods will be material. We currently anticipate the aggregate cost of cell phone household recruitment for the PPM and Diary services, and address-based and targeted in-person recruiting for the PPM service will be approximately $18.5 million in 2012, as compared to $15.5 million in 2011.

Portable People Meter Service. In operating our PPM ratings service, we have experienced and expect to continue to experience challenges, including those related to response rates and sample proportionality as described above in “— Ratings Trends and Initiatives for our Syndicated Radio Ratings Services — Challenges.” We expect to continue to implement additional measures to address these challenges. Since launching our PPM ratings service, we have implemented a number of initiatives and announced additional initiatives. We believe these steps reflect our commitment to ongoing improvement and our responsiveness to feedback from customers and governmental entities. We believe these commitments and enhancements are consistent with our efforts to continuously improve our radio ratings services and to obtain and maintain MRC accreditation. We expect these initiatives will likely require expenditures that will be material in the aggregate.

Diary Service. We strive to achieve representative samples. We believe that additional expenditures will be required in the future as we continue to research and test new measures associated with improving response rates and sample proportionality as described above in “— Ratings Trends and Initiatives for our Syndicated Radio Ratings Services — Challenges.”

MRC Accreditation

On July 18, 2012, the MRC accredited the radio average-quarter-hour monthly ratings data produced by the PPM ratings service in five markets: Los Angeles, Tampa-St. Petersburg-Clearwater, Baltimore, Riverside-San Bernardino, and San Antonio. Three of the markets, including Los Angeles, Baltimore and San Antonio, were granted MRC accreditation for the first time. Two of the markets, including Riverside-San Bernardino and Tampa-St. Petersburg-Clearwater, regained accreditation, which had been withdrawn by the MRC in January 2012. The MRC has also voted to continue accreditation in nine other markets: Atlanta, Cincinnati, Houston, Kansas City, Milwaukee-Racine, Minneapolis-St. Paul, Philadelphia, Phoenix, and St. Louis. The MRC voted to not grant accreditation at this time in the remaining 34 PPM markets, and therefore PPM data in those markets continue to be unaccredited.

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As of the date we filed this Quarterly Report on Form 10-Q with the SEC, the quarter-hour-based radio ratings data produced by the PPM ratings service is accredited by the MRC in 14 local markets: Atlanta; Cincinnati; Houston-Galveston; Kansas City; Milwaukee-Racine; Minneapolis-St. Paul; Philadelphia; Phoenix; St. Louis; Los Angeles; Tampa-St. Petersburg-Clearwater; Baltimore; Riverside-San Bernardino; and San Antonio. We have applied for accreditation in all PPM Markets. We continue to seek accreditation in all unaccredited PPM Markets. For additional information regarding the status of MRC accreditation of our ratings services, see “Item 1. Business — Media Rating Council Accreditation” in our Annual Report on Form 10-K for the year ended December 31, 2011.

Privacy and Data Security

We are currently subject to U.S. and international data protection and privacy statutes, rules, and regulations, and may in the future become subject to additional such statutes, rules, and regulations. Complying with these laws may require us to make certain investments, make modifications to existing services, or prohibit us from offering certain types of services, any of which may be material and adversely impact our financial results. Failure to comply could result in civil and criminal liability, negative publicity, data being blocked from use, and liability under contracts with our customers, vendors, and partners.

Sale of TRA Investment

During July 2012, we sold our investment in TRA for approximately $1.7 million, which was approximately equal to its $1.7 million carrying value at the time of the sale. Cash proceeds received from the sale amounted to approximately $1.5 million with an additional $0.2 million deposited in escrow. The escrow funds will be released to us in January 2014, less any claims paid from the escrow account. The escrow fund deposit is recorded on our balance sheet as a portion of our non-current assets.

Stock Repurchases

On February 9, 2012, our Board of Directors authorized a program to repurchase up to $100.0 million in shares of our outstanding common stock through either periodic open-market or private transactions, in accordance with applicable insider trading and other securities laws and regulations, at then-prevailing market prices over a period of up to two years ending February 9, 2014. As of October 25, 2012, we have repurchased 1,372,853 shares of outstanding common stock under this program for approximately $50.0 million.

General Economic Conditions

Many of our customers derive most of their revenue from transactions involving the sale or purchase of advertising. During recent challenging economic times, advertisers reduced advertising expenditures, impacting advertising agencies and media. As a result, advertising agencies and media companies have been and may continue to be less likely to purchase our services, which has and could continue to adversely impact our business, financial position, and operating results. If the recovery from the recent economic downturn slows or if the economy experiences another downturn in the foreseeable future, it may also lead to an increase of incidences of customers’ inability to pay their accounts, an increase in our provision for doubtful accounts, and a further increase in collection cycles for accounts receivable or insolvency of our customers.

We depend on a limited number of key customers for our ratings services and related software. For example, in 2011, Clear Channel represented approximately 19% of our total revenue. If one or more key customers do not renew all or part of their contracts as they expire, we could experience a significant decrease in our operating results.

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Critical Accounting Policies and Estimates

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

Software development costs. We capitalize software development costs with respect to significant internal use software initiatives or enhancements from the time the preliminary project stage is completed and management considers it probable 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 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, 2012, and December 31, 2011, our capitalized software developed for internal use had carrying amounts of $28.4 million and $28.9 million, respectively, including $10.0 million and $10.4 million, respectively, of software related to the PPM service.

Deferred income taxes. 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 and for deferred tax assets and liabilities 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 render current assumptions, judgments and estimates of recoverable net deferred tax assets inaccurate. We believe it is more likely than not that we will realize the benefits of these deferred tax assets. Any of 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.

We include, in our tax calculation methodology, an assessment of the uncertainty in income taxes by establishing recognition thresholds for our tax positions. Inherent in our calculation are critical judgments by management related to the determination of the basis for our tax positions. For further information regarding our unrecognized tax benefits, see Note 11 in the Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

Insurance Receivables. During 2008, we became involved in two securities-law civil actions and a governmental interaction primarily related to the commercialization of our PPM service. Since 2008, we have incurred a total of $12.7 million in legal fees and expenses in connection with these matters. As of September 30, 2012, an aggregate of $9.7 million in insurance reimbursements related to these legal actions has been received. As of September 30, 2012, and December 31, 2011, our insurance claims receivable related to these legal actions was $0.1 million and $1.0 million, respectively, and these amounts are included in our prepaid expenses and other current assets on our balance sheet. See Note 7 in our Notes to Consolidated Financial Statements for additional information concerning our insurance recovery receivables.

Contingent consideration. The agreement governing the 2011 acquisition of Zokem Oy, now Arbitron Mobile Oy (“Arbitron Mobile”), provides for possible additional cash payments to be made by us to the former Zokem shareholders through 2015 of up to $12.0 million, contingent upon Arbitron Mobile reaching certain financial performance targets in the future. We estimated the fair value of this contingent consideration to be approximately $0.9 million as of the July 28, 2011 acquisition date. We periodically estimate the fair value of the contingent consideration and any change in fair value will be recognized in our consolidated financial results of operations. An increase in the contingent consideration expected to be paid will result in a charge to operations in the quarter the anticipated fair value of contingent consideration increases, while a decrease in the contingent consideration expected to be paid will result in a credit to operations in the quarter the anticipated fair value of contingent consideration decreases. The estimate of the fair

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value of contingent consideration requires subjective assumptions to be made of future operating results. We estimated that the fair value of the contingent consideration as of September 30, 2012 to be $1.1 million. Future revisions to our assumptions could materially change our estimate of the fair value of contingent consideration and therefore materially affect our future financial results and financial condition.

27

Results of Operations

Comparison of the Three Months Ended September 30, 2012 to the Three Months Ended September 30, 2011

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 September 30,						Increase (Decrease)						Percentage of Revenue
	2012			2011			Dollars			Percent			2012			2011
Revenue	$	114,341		$	105,563		$	8,778			8.3	%		100.0	%		100.0	%
Costs and expenses
Cost of revenue		53,840			49,388			4,452			9.0	%		47.1	%		46.8	%
Selling, general and administrative		22,321			18,401			3,920			21.3	%		19.5	%		17.4	%
Research and development		9,913			9,444			469			5.0	%		8.7	%		8.9	%
Total costs and expenses		86,074			77,233			8,841			11.4	%		75.3	%		73.2	%
Operating income		28,267			28,330			(63	)		(0.2	%)		24.7	%		26.8	%
Equity in net loss of affiliate		(2,364	)		(2,290	)		(74	)		3.2	%		(2.1	%)		(2.2	%)
Income before interest and tax expense		25,903			26,040			(137	)		(0.5	%)		22.7	%		24.7	%
Interest income		15			6			9			150.0	%		0.0	%		0.0	%
Interest expense		133			109			24			22.0	%		0.1	%		0.1	%
Income before income tax expense		25,785			25,937			(152	)		(0.6	%)		22.6	%		24.6	%
Income tax expense		9,998			10,586			(588	)		(5.6	%)		8.7	%		10.0	%
Net income	$	15,787		$	15,351		$	436			2.8	%		13.8	%		14.5	%
Income per weighted average common share
Basic	$	0.60		$	0.56		$	0.04			7.1	%
Diluted	$	0.59		$	0.55		$	0.04			7.3	%
Cash dividends declared per common share	$	0.10		$	0.10		$	—			—
Other data:
EBIT (1)	$	25,903		$	26,040		$	(137	)		(0.5	%)
EBITDA (1)	$	33,482		$	33,562		$	(80	)		(0.2	%)
EBIT Margin (1)		22.7	%		24.7	%
EBITDA Margin (1)		29.3	%		31.8	%
EBIT and EBITDA Reconciliation (1)
Net income	$	15,787		$	15,351		$	436			2.8	%
Income tax expense		9,998			10,586			(588	)		(5.6	%)
Interest (income)		(15	)		(6	)		9			150.0	%
Interest expense		133			109			24			22.0	%
EBIT (1)		25,903			26,040			(137	)		(0.5	%)
Depreciation and amortization		7,579			7,522			57			0.8	%
EBITDA (1)	$	33,482		$	33,562		$	(80	)		(0.2	%)
Certain percentage amounts may not total due to rounding.

(1) EBIT (earnings before interest and income taxes), EBIT Margin (EBIT divided by revenue), EBITDA (earnings before interest, income taxes, depreciation and amortization), and EBITDA Margin (EBITDA divided by revenue) are non-GAAP financial measures we believe are useful to investors in evaluating our results. See “—EBIT and EBITDA” below for further discussion of these non-GAAP financial measures.

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Revenue. Revenue increased by 8.3% or $8.8 million for the three-month period ended September 30, 2012, as compared to the same period in 2011, due primarily to a $4.9 million increase in PPM-based ratings service revenue, in particular the nearly completed phase-in of contracted PPM price increases, and a $2.3 million increase in Diary rating service revenue, a $0.9 million increase in custom service revenue and a $0.7 million increase in PPM International revenue.

Cost of Revenue. Cost of revenue increased by 9.0% or $4.5 million for the three-month period ended September 30, 2012, as compared to the same period in 2011. Cost of revenue increased primarily due to a $1.4 million increase in PPM variable costs, including higher survey participant incentives and panel management costs resulting from a higher average number of panelists for the three-month period ended September 30, 2012, as compared to the same period of 2011, a $1.4 million increase in aggregate costs associated with address based sampling, in-person recruiting and cell-phone household recruiting, and a $0.8 million increase associated with our Arbitron Mobile service.

Selling, General, and Administrative. Selling, general, and administrative expense increased by 21.3% or $3.9 million for the three-month period ended September 30, 2012, as compared to the same period in 2011. Selling, general, and administrative costs increased primarily due to a $1.2 million increase in Arbitron Mobile and cross-platform service related costs, a $0.9 million impairment charge incurred during the third quarter 2012 associated with certain internal use software deemed impaired as a result of enhancements to our cross-platform methodologies, a $0.7 million increase in short-term executive incentive compensation expense, a $0.5 million increase in legal fees, net of insurance recoveries, and a $0.5 million increase in share-based compensation expense incurred during the three-month period ended September 30, 2012, as compared to the same period of 2011.

EBIT and EBITDA. We believe presenting EBIT and EBITDA, both non-GAAP financial measures, as supplemental information helps investors, analysts and others, if they so choose, understand and evaluate our operating performance in some of the same ways we do because EBIT and EBITDA exclude certain items 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 net income and adding back interest expense and income tax expense to net income. EBITDA is calculated by deducting interest income from net income and adding back interest expense, income tax expense, and depreciation and amortization to net income. EBIT and EBITDA margins are calculated as percentages of revenue. EBIT and EBITDA should not be considered substitutes either for net income, 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.

Both EBIT and EBITDA were flat for the three-month period ended September 30, 2012, as compared to the same period of 2011. Both EBIT and EBITDA for the three-month period ended September 30, 2012 were reduced by a $0.9 million software impairment charge incurred during the third quarter of 2012.

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Comparison of the Nine months Ended September 30, 2012 to the Nine months Ended September 30, 2011

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)

	Nine Months Ended September 30,						Increase (Decrease)					Percentage of Revenue
	2012			2011			Dollars		Percent			2012			2011
Revenue	$	325,142		$	302,169		$	22,973		7.6	%		100.0	%		100.0	%
Costs and expenses
Cost of revenue		164,493			156,092			8,401		5.4	%		50.6	%		51.7	%
Selling, general and administrative		61,025			54,166			6,859		12.7	%		18.8	%		17.9	%
Research and development		29,527			27,456			2,071		7.5	%		9.1	%		9.1	%
Total costs and expenses		255,045			237,714			17,331		7.3	%		78.4	%		78.7	%
Operating income		70,097			64,455			5,642		8.8	%		21.6	%		21.3	%
Equity in net income of affiliate		671			631			40		6.3	%		0.2	%		0.2	%
Income before interest and tax expense		70,768			65,086			5,682		8.7	%		21.8	%		21.5	%
Interest income		46			20			26		130.0	%		0.0	%		0.0	%
Interest expense		394			377			17		4.5	%		0.1	%		0.1	%
Income before income tax expense		70,420			64,729			5,691		8.8	%		21.7	%		21.4	%
Income tax expense		26,863			25,547			1,316		5.2	%		8.3	%		8.5	%
Net income	$	43,557		$	39,182		$	4,375		11.2	%		13.4	%		13.0	%
Income per weighted average common share
Basic	$	1.64		$	1.44		$	0.20		13.9	%
Diluted	$	1.61		$	1.42		$	0.19		13.4	%
Cash dividends declared per common share	$	0.30		$	0.30		$	—		—
Other data:
EBIT (1)	$	70,768		$	65,086		$	5,682		8.7	%
EBITDA (1)	$	93,704		$	87,162		$	6,542		7.5	%
EBIT Margin (1)		21.8	%		21.5	%
EBITDA Margin (1)		28.8	%		28.8	%
EBIT and EBITDA Reconciliation (1)
Net income	$	43,557		$	39,182		$	4,375		11.2	%
Income tax expense		26,863			25,547			1,316		5.2	%
Interest (income)		(46	)		(20	)		26		130.0	%
Interest expense		394			377			17		4.5	%
EBIT (1)		70,768			65,086			5,682		8.7	%
Depreciation and amortization		22,936			22,076			860		3.9	%
EBITDA (1)	$	93,704		$	87,162		$	6,542		7.5	%
Certain percentage amounts may not total due to rounding.

(1) EBIT (earnings before interest and income taxes), EBIT Margin (EBIT divided by revenue), EBITDA (earnings before interest, income taxes, depreciation and amortization), and EBITDA Margin (EBITDA divided by revenue) are non-GAAP financial measures we believe are useful to investors in evaluating our results. See “—EBIT and EBITDA” below for further discussion of these non-GAAP financial measures.

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Revenue. Revenue increased by 7.6% or $23.0 million for the nine-month period ended September 30, 2012, as compared to the same period in 2011, due primarily to a $17.3 million increase in PPM-based ratings service revenue, in particular the nearly completed phase-in of contracted PPM price increases, a $3.0 million increase in Diary-based ratings service revenue, a $1.8 million increase in our Scarborough qualitative service revenue, and a $0.8 million increase associated with our Arbitron Mobile service.

Cost of Revenue. Cost of revenue increased by 5.4% or $8.4 million for the nine-month period ended September 30, 2012, as compared to the same period in 2011. Cost of revenue increased primarily due to a $2.1 million increase in PPM variable costs, including higher survey participant incentives and panel management costs resulting from a higher average number of panelists for the nine-month period ended September 30, 2012, as compared to the same period of 2011, a $2.0 million increase in aggregate costs associated with address based sampling, in-person recruiting and cell-phone household recruiting, a $1.6 million increase in costs associated with Arbitron Mobile, which was acquired in July 2011, and a $1.4 million increase in Scarborough royalty costs associated with higher Scarborough revenue for the nine-month period ended September 30, 2012, as compared to the same period in 2011.

Selling, General, and Administrative. Selling, general, and administrative expense increased by 12.7% or $6.9 million for the nine-month period ended September 30, 2012, as compared to the same period in 2011. Selling, general, and administrative costs increased primarily due to a $2.7 million increase in Arbitron Mobile related costs, a $1.1 million increase in cross-platform service related costs, a $1.0 million increase in share-based compensation, $0.8 million of executive separation costs incurred during the first half of 2012, a $0.7 million increase in amortization expense associated with back-office systems implemented during the last half of 2011, and a $0.7 million increase in certain internal use software impairment charges incurred during the nine-month period ended September 30, 2012, as compared with the same period of 2011.

Research and Development. Research and development increased by 7.5% or $2.1 million for the nine-month period ended September 30, 2012, as compared to the same period in 2011. Research and development increased primarily due to a $0.8 million increase in engineering development expense related to our PPM service for the nine-month period ended September 30, 2012, as compared to the same period in 2011, as well as a $0.7 million increase in costs associated with Arbitron Mobile, which was acquired during the third quarter of 2011.

EBIT and EBITDA. We believe presenting EBIT and EBITDA, both non-GAAP financial measures, as supplemental information helps investors, analysts and others, if they so choose, understand and evaluate our operating performance in some of the same ways we do because EBIT and EBITDA exclude certain items 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 net income and adding back interest expense and income tax expense to net income. EBITDA is calculated by deducting interest income from net income and adding back interest expense, income tax expense, and depreciation and amortization to net income. EBIT and EBITDA margins are calculated as percentages of revenue. EBIT and EBITDA should not be considered substitutes either for net income, 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 and EBITDA increased by $5.7 million and $6.5 million, respectively, for the nine-month period ended September 30, 2012, as compared to the same period in 2011, primarily due to an increase in PPM service revenue.

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Liquidity and Capital Resources

	As of September  30, 2012		As of December  31, 2011		Change
Cash and cash equivalents	$	37,051	$	19,715	$	17,336
Working capital	$	27,229	$	16,250	$	10,979
Working capital, excluding deferred revenue which does not require a significant additional cash outlay	$	76,509	$	53,330	$	23,179
Total debt	$	—	$	—	$	—

We have historically relied upon our cash flow from operations, supplemented by borrowings under our available revolving credit facility as needed, to fund our dividends, common stock repurchases, capital expenditures, and contractual obligations. We expect, based on current and anticipated levels of operating performance, our cash flow from operations, cash and cash equivalents, and availability under our Credit Facility will be sufficient to support our operations for the next 12 to 24 months. See “— Credit Facility” below for further discussion of the relevant terms and covenants.

Cash flow from operating activities. For the nine-month period ended September 30, 2012, the net cash provided by operating activities was $86.0 million, which was primarily due to $93.7 million of EBITDA, increased by $6.8 million of non-cash share-based compensation and $1.3 million of non-cash bad debt expense, partially offset by $28.1 million in income taxes paid for the nine-month period ended September 30, 2012. EBITDA is discussed and reconciled to net income in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”

Net cash provided by operating activities for the nine-month period ended September 30, 2012, was also positively impacted by a $12.2 million increase in deferred revenue primarily due to price escalators associated with our PPM ratings service and a $2.4 million increase in long-term retirement and employee incentive liabilities, partially offset by a $5.1 million decrease in Scarborough royalty accruals and a $3.1 million decrease in payroll, bonus, and benefit accruals for the nine-month period ended September 30, 2012.

Cash flow from investing activities. Net cash used in investing activities for the nine-month periods ended September 30, 2012, and 2011, was $15.4 million and $33.6 million, respectively. This $18.2 million decrease in cash used in investing activities was due largely to the $10.6 million cash outlay for the purchase of Zokem Oy during 2011. There were no acquisitions paid for during the nine-month period ended September 30, 2012. The decrease in cash investing activities also included a $4.0 million decrease in metering equipment and other PPM-related capital expenditures, and a $2.9 million decrease in purchased and internally developed software expenditures for the nine-month period ended September 30, 2012, as compared to the same period in 2011. During the nine-month period ended September 30, 2012, we also received $1.5 million in proceeds from the sale of our TRA cost investment.

Cash flow from financing activities. Net cash used in financing activities for the nine-month periods ended September 30, 2012, and 2011, was $53.2 million and $59.0 million, respectively. During the nine-month period ended September 30, 2012, we had no outstanding borrowings or repayments under our current Credit Facility, and we repurchased $50.0 million of our common stock. During the nine-month period ended September 30, 2011, we made no repurchases of our common stock, and we repaid $54.1 million of net repayments of our then outstanding obligations under our prior credit facility. In addition, there was a $1.3 million increase in proceeds from stock option exercises and stock purchase plans for the nine-month period ended September 30, 2012, when a large number of stock options were nearing their expiration, as compared to the same period of 2011.

Repatriation of Foreign Earnings

We have provided for U.S. taxes on all of our foreign earnings, consistent with the U.S. Internal Revenue Code’s taxation of world-wide income. We do not have material amounts of unrepatriated earnings in foreign jurisdictions and do not expect to permanently reinvest these current or future foreign earnings outside of the U.S.

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Credit Facility

On November 21, 2011, we entered into the Credit Facility, a new agreement with a consortium of lenders to provide up to $150.0 million of financing through a five-year, unsecured revolving credit facility expiring on November 21, 2016. The agreement contains an expansion feature to increase the total financing available under the Credit Facility by up to $75.0 million to an aggregate of $225.0 million. Such increased financing would 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 nine months (or, with the consent of each lender, nine or 12 months), at which time the interest rate is reset based upon the LIBOR.

Our Credit Facility contains financial terms, covenants and operating restrictions that potentially restrict our financial flexibility. The material debt covenants under our Credit Facility include both a maximum leverage ratio and a minimum interest coverage ratio. The leverage ratio is a non-GAAP financial measure equal to the amount of our consolidated total indebtedness, as defined in our Credit Facility, divided by a contractually defined adjusted Earnings Before Interest, Taxes, Depreciation and Amortization and non- cash compensation (“Consolidated EBITDA”) for the trailing four-quarter period. The interest coverage ratio is a non-GAAP financial measure equal to Consolidated EBITDA divided by total interest expense. Both ratios are designed as measures of our ability to meet current and future debt obligations. The following table presents the actual ratios and their threshold limits as defined by the Credit Facility as of September 30, 2012:

Covenant	Threshold		Actual
Maximum leverage ratio		3.25		0.00
Minimum interest coverage ratio		3.00		232.0

As of September 30, 2012, based upon these financial covenants, there was no default or limit on our ability to borrow the unused portion of our Credit Facility.

Our Credit Facility contains customary events of default, including nonpayment and breach covenants. In the event of default, repayment of borrowings under the Credit Facility could be accelerated. Our Credit Facility also contains cross default provisions whereby a default on any material indebtedness, as defined in the Credit Facility, could result in the acceleration of our outstanding debt and the termination of any unused commitment under the Credit Facility. The agreement potentially limits, among other things, our ability to sell assets, incur additional indebtedness, and grant or incur liens on our assets. Under the terms of the Credit Facility, all of our material domestic subsidiaries, if any, must 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 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 when needed or could prevent us from investing in other growth initiatives. We have been in compliance with the terms of the Credit Facility since the inception of the agreement. As of October 25, 2012, we had no outstanding borrowings under the Credit Facility.

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Seasonality

Revenue

We recognize revenue for services over the term of license agreements as services are delivered while expenses are recognized as incurred. As of Fall 2012, we gather radio-listening data in 275 U.S. local markets, including 227 Diary markets and 48 PPM Markets.

In PPM Markets, we deliver ratings 13 times per year, with four PPM ratings reports delivered in the fourth quarter of a given year. As a result, we expect to recognize more revenue in PPM Markets in the fourth quarter than in each of the first three quarters of the year.

All 227 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 47 larger Diary markets an additional two times per year (January-February-March for the “Winter Survey” and July-August-September for the “Summer Survey”). We generally deliver our Diary ratings reports and recognize the related revenue in the quarter after the survey is measured. Consequently, our Diary revenue is generally higher in the first and third quarters as a result of the delivery of the Fall Survey and Spring Survey 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 47 larger Diary markets.

Revenue related to the sale of Scarborough services by Arbitron is recognized predominantly in the second and fourth quarters when the substantial majority of services are delivered.

As a result of the various seasonal impacts mentioned above, consolidated revenue is typically highest in the fourth quarter and lowest in the second quarter of each year.

Costs and expenses

Now that all our planned PPM Markets are commercialized, and because we conduct our PPM services continuously throughout the year, we do not expect significant seasonality in PPM costs and expenses. In our Diary service, our expenses are generally higher in the second and fourth quarters as we conduct the Spring and Fall Surveys for all of our Diary Markets.

Equity earnings/losses in Scarborough Research

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

Our interest income and expense are sensitive to fluctuations in the general level of interest rates. As such, changes in interest rates affect the interest earned on the Company’s cash and cash equivalents and other highly liquid investments, as well as the value of those investments.

In November 2011, we entered into our Credit Facility with a consortium of lenders to provide us up to $150.0 million of financing. Interest on borrowings under the Credit Facility is calculated based on a floating rate for a duration of up to nine months, at which time the interest rate is reset based upon the LIBOR. As of September 30, 2012, we had no outstanding borrowings under the Credit Facility. Therefore, a hypothetical market interest rate change of 1% would have zero impact on our results of operations over a 12-month period. A hypothetical market interest rate change of 1% would have no impact on either the carrying amount or the fair value of the Credit Facility. We do not use derivatives for speculative or trading purposes.

Foreign Currency Risk

We are exposed to the translation of foreign currency earnings to the U.S. dollar. Our principal exposures are to the euro via our Finnish subsidiary and the Indian rupee via our Indian subsidiary. If we expand our foreign operations in both Finland and India, our exposure to foreign currency exchange rate trends could increase, resulting in higher or lower translation impacts to our financial results and position.

As of September 30, 2012, we had $7.9 million in recorded intercompany balances on our Finnish and Indian subsidiary balance sheets, which are impacted by fluctuations in currency exchange rates. As the exchange rates increase or decrease, our intercompany balances will be exposed to translation adjustment charges and/or credits, which will be recognized in our financial results.

Financial statements of foreign subsidiaries are translated into U.S. dollars at current rates at the end of the period except that revenue and expenses are translated at average current exchange rates during each reporting period. The translation adjustments are recorded in accumulated other comprehensive income (loss) on our consolidated balance sheet until the net investment in such foreign subsidiaries is liquidated. As of September 30, 2012, the cumulative net currency translation adjustment recorded on our balance sheet reduced our shareholders’ equity by $2.2 million.

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 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 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, 2012, 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

We are involved, from time to time, in litigation and proceedings, including with governmental 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 former Chairman, President and Chief Executive Officer), and Sean R. Creamer (currently our Executive Vice President, and Chief Operating Officer) violated federal securities laws. The plaintiff alleges misrepresentations and omissions relating, among other things, to the delay in commercialization of our PPM 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 sought class certification, compensatory damages plus interest and attorneys’ fees, among other remedies. On September 22, 2008 the plaintiff filed an Amended Class Action Complaint. On November 25, 2008, Arbitron, Mr. Morris, and Mr. Creamer each filed Motions to Dismiss the Amended Class Action Complaint. In September 2009, the plaintiff sought leave to file a Second Amended Class Action Complaint in lieu of oral argument on the pending Motions to Dismiss. The court granted leave to file a Second Amended Class Action Complaint and denied the pending Motions to Dismiss without prejudice. On or about October 19, 2009, the plaintiff filed a Second Amended Class Action Complaint. Arbitron and each of Mr. Morris and Mr. Creamer again moved to dismiss the Second Amended Class Action Complaint. Briefing on motions to dismiss the Second Amended Class Action Complaint was completed in March 2010. On September 24, 2010, the Court granted Mr. Creamer’s motion to dismiss the plaintiff’s claims against him, and all claims against Mr. Creamer were dismissed with prejudice. The motions to dismiss the Second Amended Class Action Complaint by Arbitron and Mr. Morris were denied. Arbitron and Mr. Morris each then filed answers denying the claims. On September 6, 2011, the Court entered an order granting the plaintiff’s motion to certify the action as a class action, to appoint the lead plaintiff as class representative, and to appoint its counsel as lead counsel. The court defined the class as all purchasers of common stock of the Company who were damaged through purchasing stock during the period July 19, 2007 through November 26, 2007. On February 3, 2012, as a result of a mediation process overseen by an independent mediator, the Company and its insurers agreed to settle the case for $7 million, which will be funded by insurance. Because this is a class action, settlements of this type are subject to preliminary and final review by the Court with an opportunity for class members to respond to the proposed settlement and object if they so desire. In May 2012, the Court issued an order preliminarily approving the settlement and Notice of the settlement was sent to the class members. None of the defendants in the settlement admitted any wrongdoing with respect to the allegations in the case. The Court held a hearing on final approval of the settlement on October 19, 2012 and issued its Order of Final Approval of the Settlement on October 23, 2012, which also terminated the case.

On or about June 13, 2008, a purported stockholder derivative lawsuit, Pace v. Morris, et al., was filed against Arbitron, as a nominal defendant, each of our directors, and certain of our current and former 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. On July 28, 2011 the derivative plaintiff filed an amended complaint that reiterates, in large part, the claims of the original complaint filed in 2008. The amended complaint also adds claims for breach of fiduciary duty related to the retirement of Mr. Morris in 2009 and the resignation of Mr. Skarzynski in 2010. The derivative plaintiff seeks equitable and/or injunctive relief, restitution and disgorgement of profits, plus attorneys’ fees and costs, among other remedies.

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

We are involved from time to time in a number of judicial and administrative proceedings considered ordinary with respect to the nature of our current and past operations, including employment-related disputes, contract disputes, government proceedings, customer disputes, and tort claims. In some proceedings, the claimant seeks damages as well as other relief, which, if granted, would require substantial expenditures on our part. Some of these matters raise difficult and complex factual and legal issues, and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular action, and the jurisdiction, forum and law under which each action is pending. Because of this complexity, final disposition of some of these proceedings may not occur for several years. As such, we are not

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always able to estimate the amount of our possible future liabilities. There can be no certainty that we will not ultimately incur charges in excess of present or future established accruals or insurance coverage. Although occasional adverse decisions (or settlements) may occur, we believe that the likelihood that final disposition of these proceedings will, considering the merits of the claims, have a material adverse impact on our financial position or results of operations is remote.

Item 1A. Risk Factors

See “Item 1A. — Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011 for a detailed discussion of risk factors affecting Arbitron.

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

On February 9, 2012, our Board of Directors authorized a program to repurchase up to $100.0 million in shares of our outstanding common stock through either periodic open-market or private transactions, in accordance with applicable insider trading and other securities laws and regulations, at then-prevailing market prices over a period of up to two years ending February 9, 2014. The following table outlines the stock repurchase activity during the three months ended September 30, 2012:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as as Part of Publicly Announced Program		Total Amount of Dollars Purchased		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
July 1-31		—	$	—		—	$	—	$	49,975,155
August 1-31		—		—		—		—		49,975,155
September 1-30		—		—		—		—		49,975,155
Total		—	$	—		—	$	—	$	49,975,155

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ITEM 6. EXHIBITS

		Form	Incorporated by Reference			Filed Herewith
Exhibit No.	Exhibit Description		SEC File No.	Exhibit	Filing Date
10.1	Separation and Release Agreement, dated as of July 13, 2012, by and between Richard Surratt and Arbitron Inc.					*
10.2	Offer Letter, dated as of July 26, 2012, between Arbitron Inc. and Debra Delman					*
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a – 14(a)					*
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a – 14(a)					*
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002					*
101+	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011; (ii) Condensed Consolidated Statement of Income for the Three and Nine months Ended September 30, 2012 and 2011; (iii) Condensed Consolidated Statements of Comprehensive Income for the Three and Nine months Ended September 30, 2012 and 2011; (iv) Condensed Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2012 and 2011; and (v) Notes to Condensed Consolidated Financial Statements.*					*

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* Filed or furnished herewith

+ Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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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/ Debra L. Delman
	Debra L. Delman
	Executive Vice President, Chief Financial Officer (on behalf of the registrant and as the registrant’s principal financial and principal accounting officer)
Date: November 6, 2012

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EX-10.1

Exhibit 10.1

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Agreement”) is made by and between Richard Surratt (“Individual”) and Arbitron Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

RECITALS

WHEREAS, Individual was employed by the Company as its Executive Vice President, Finance and Chief Financial Officer;

WHEREAS, the Company and Individual entered into an Executive Retention Agreement, dated February 6, 2011attached hereto as Exhibit A (the “Retention Agreement”);

WHEREAS, Individual’s employment with the Company terminated effective June 8, 2012 (the “Termination Date”) and the Parties agree that such termination constitutes a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance issued thereunder; and

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Individual may have against the Company, including, but not limited to, any and all claims arising out of or in any way related to Individual’s employment with or separation from the Company.

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Individual hereby agree as follows:

COVENANTS

1. Consideration. Provided that the seven (7) day revocation period described in Section 4(b) of this Agreement has expired without revocation, the Company shall provide the following consideration to Individual.

a. The Company shall pay Individual the amounts described in Sections 2(a) and 2(b)(i)-(iii) of the Retention Agreement. The Parties agree that the amount due under Section 2(b)(i) (twelve (12) times Individual’s Reference Compensation) is equal to $620,000 and that the Bonus Component is intended to be an Exempt Bonus with payment made as though Individual had remained employed by the Company. The Parties further agree that, provided the Compensation Committee determines an annual bonus will be payable to other executives under the 2012 non-equity incentive plan, the Bonus Component will be determined based on the Committee’s assessment of corporate performance under the plan.

b. With respect to the amounts described in Section 2(b)(iv) of the Retention Agreement, provided that Individual and his qualified beneficiaries are eligible to continue coverage under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall pay the employer-equivalent premiums for such COBRA coverage directly to the COBRA administrator as they become due at the level in effect at the time of the Termination Date for a period of twelve (12) months following such date, or until the expiration of the COBRA continuation period, whichever occurs first, provided Individual timely elects and pays for the employee-equivalent premiums for COBRA coverage.

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2. Resignation from All Positions. Individual confirms that he has resigned, effective as of the Termination Date, from all positions including all officer and director positions, if any, that he held with the Company, and, without further compensation, Individual agrees to sign any documents requested by the Company to accomplish such purpose.

3. Benefits. Individual’s health insurance benefits shall cease on the last day of June 2012, subject to Individual’s right to continue his health insurance under COBRA. Individual’s participation in all benefits and incidents of employment, including, but not limited to, vesting in equity awards, and the accrual of bonuses, vacation, and paid time off, ceased as of the Termination Date.

4. Release of Claims.

a. In exchange for the consideration under this Agreement to which Individual would not otherwise be entitled, and except as otherwise set forth in this Agreement, Individual hereby releases, acquits and forever discharges the Company, its parents and subsidiaries, and its and their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date Individual signs this Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with Individual’s employment with the Company or the termination of that employment; claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law, statute or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended, including without limitation claims for attorneys’ fees; the Federal Age Discrimination in Employment Act, as amended (“ADEA”); the federal Americans with Disabilities Act of 1990; the Maryland Fair Employment Practices Act, as amended; tort law; contract law; wrongful discharge; discrimination; harassment; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing. Individual represents that he has not filed any complaints or claims against the Company with the Equal Employment Opportunity Commission, or with any federal, state or local agency or court, and covenants that he will not seek to recover on any claim released in this Agreement.

b. Individual acknowledges that he has been advised that he has twenty-one (21) days to consider this Agreement (but may sign it at any time beforehand if he so desires). Individual acknowledges that he has been advised that he can consult an attorney in considering this Agreement. Individual acknowledges that this Agreement does not release any rights or claims that arise after the date of this Agreement. Individual further acknowledges that he can revoke this Agreement within seven (7) days of signing it by sending a certified letter to that effect to the Company’s Chief Legal Officer. Notwithstanding the foregoing, Individual understands and agrees that the portion of this Agreement that pertains to the release of claims under the ADEA shall not become effective or enforceable and no consideration shall be paid until the seven (7) day revocation period has expired without revocation, but that all other provisions of this Agreement will become effective upon its execution by the parties.

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c. INDIVIDUAL UNDERSTANDS THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. Individual acknowledges that he waives any rights under the laws of the State of Maryland that are similar to those provided in Section 1542 of the California Civil Code, which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

5. Application for Employment. Individual understands and agrees that, as a condition of this Agreement, Individual shall not be entitled to any employment with the Company, and Individual hereby waives any right, or alleged right, of employment or re-employment with the Company. Individual further agrees not to apply for employment with the Company.

6. No Cooperation. Individual agrees that he will not encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company, unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement. Individual agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish to the Company, within three (3) business days of its receipt, a copy of such subpoena or other court order. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against the Company, Individual shall state no more than that he cannot provide counsel or assistance.

7. Confidentiality, Non-Competition, Non-Recruitment, Non-Disparagement and Clawback. Individual reaffirms and agrees to observe and abide by the obligations regarding confidentiality, non-competition, non-recruitment, non-disparagement, additional post-employment provisions and clawback set forth in Sections 4 through 6 of the Retention Agreement. In the event Individual breaches this Section, all continuing payments and benefits to which Individual otherwise may be entitled pursuant to this Agreement will cease immediately. Individual shall direct any inquiries by potential future employers to the Company’s human resources department. Individual’s signature below constitutes his certification under penalty of perjury that he has returned all documents and other items provided to Individual by the Company, developed or obtained by Individual in connection with his employment with the Company, or otherwise belonging to the Company.

8. Breach. In addition to the rights provided in the “Attorneys’ Fees” section below, Individual acknowledges and agrees that any material breach of this Agreement, unless such breach constitutes a legal action by Individual challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, shall entitle the Company immediately to recover and/or cease providing the consideration provided to Individual under this Agreement and to obtain damages, except as provided by law.

9. No Admission of Liability. Individual understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Individual. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Individual or to any third party.

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10. Future Assistance. Individual agrees to (a) respond to requests from the Company and its counsel for information needed to prepare such operational, financial and other reports, filings and documents that relate to the time period during which Individual was employed with the Company and (b) otherwise cooperate as requested by the Company in connection with customers or Company business. For purposes of clarity, any assistance provided by Individual pursuant to the preceding sentence will be on a voluntary basis for no consideration and in no way shall be construed as providing assistance as an employee, consultant, independent contractor or other advisor or service provider to the Company.

11. Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.

12. WAIVER OF JURY TRIAL. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE GOVERNED BY SECTION 7(c) OF THE RETENTION AGREEMENT.

13. Section 409A. The Company shall delay the payment of any benefits payable under this Agreement as required to comply with Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended, relating to payments made to certain “specified employees” of certain publicly-traded companies, and in such event, any such amount to which Individual would otherwise be entitled during the six (6) month period immediately following the Termination Date shall instead be accumulated through and paid in a lump sum (together with simple interest at the short-term applicable federal rate in effect on the Termination Date in the first payroll period following the expiration of such six (6) month period, or if earlier, the tenth (10^th) day after the date of his death. Any remaining payments will be paid on their original schedule.

14. Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of the payments and any other consideration provided to Individual or made on his behalf under the terms of this Agreement. Individual agrees and understands that he is responsible for payment, if any, of local, state, and/or federal taxes on the payments and any other consideration provided hereunder by the Company and any penalties or assessments thereon. Individual further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of (a) Individual’s failure to pay or delayed payment of federal or state taxes, or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs.

15. Authority. Individual represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. Individual warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

16. No Company Representations. Individual represents that he has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Individual has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

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17. Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

18. Attorneys’ Fees. Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either Party brings an action to enforce or effect its rights under this Agreement, each Party shall bear its own costs and expenses, including attorneys’ fees incurred in connection with such an action.

19. Entire Agreement. This Agreement represents the entire agreement and understanding between the Company and Individual concerning the subject matter of this Agreement and Individual’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Individual’s relationship with the Company, with the exception of the Retention Agreement. The language of this agreement shall be construed as to its fair meaning and not strictly for or against either Party.

20. No Oral Modification. This Agreement may only be amended in a writing signed by Individual and a duly authorized officer or agent of the Company.

21. Governing Law. This Agreement shall be governed by the laws of the State of Maryland, without regard for choice-of-law provisions. Individual consents to personal and exclusive jurisdiction and venue in the State of Maryland.

22. Counterparts. This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

23. Voluntary Execution of Agreement. Individual understands and agrees that he executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of his claims against the Company. Individual acknowledges that:

a. he has read this Agreement;

b. he has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice;

c. he understands the terms and consequences of this Agreement and of the releases it contains; and

d. he is fully aware of the legal and binding effect of this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

	RICHARD SURRATT, an individual
Dated as of: 7/13/12	/s/ Richard Surratt
	Richard Surratt
	ARBITRON INC.
Dated as of: 7/16/12	By:	/s/ Marilou Legge
	Name:	Marilou Legge
	Title:	EVP, Organization Effectiveness and Corporate Communications

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EX-10.2

Exhibit 10.2

July 26, 2012

Ms. Debra Delman

Dear Debra,

On behalf of Arbitron, I am delighted to offer you the position of Executive Vice President, Finance, with the intent of transitioning you into the Chief Financial Officer role as soon as is practicable. You will report to Chief Executive Officer, William T. Kerr, and have a starting base salary of $400,000. Your effective start date will be no later than August 27, 2012.

Upon meeting the applicable performance criteria established by the Compensation and Human Resources Committee of Arbitron’s Board of Directors (the “Compensation Committee”) in its sole discretion, you will be eligible to receive an annual incentive bonus in an amount equal to 55% of base salary. For performance exceeding such applicable performance criteria in the sole judgment of the Compensation Committee, the annual incentive bonus may be increased to an amount up to 110% of base salary. Any bonus paid for 2012 will be prorated to reflect 4 months of service.

Subject to the approval of the Compensation Committee, as soon as practicable on or after your start date Arbitron will grant you a Long Term Incentive award to be valued at 125% of your base salary on the date of grant, with the award to be determined by the Compensation Committee as a mix of: (i) 50% restricted stock units, and (ii) 50% stock options, each with respect to the company’s common stock, par value $0.50 (the “Common Stock”). The value for the restricted stock units will be determined by dividing the target value for the restricted stock units by the Common Stock’s fair market value on the date of grant and the value of the options will be determined using the company’s standard Black-Scholes assumptions applied as of the date of grant.

Employment will be contingent on meeting Arbitron’s standard employment requirements, and passing a routine background check. Arbitron employees must adhere to our Policy on Alcohol and other Drugs. As a condition of your employment, you must read and sign the Employee Disclosure Assignment Agreement and also the Company’s Code of Conduct.

In compliance with the Immigration Reform and Control Act of 1986, you will be required to complete the Employment Eligibility Verification Form I-9. You will need to provide the necessary documents to establish your identity and employment eligibility. For clarification and protection of both you and the Company, your acceptance of this offer represents the sole agreement between you and Arbitron. No prior promises, representations and understandings relative to any terms and conditions of your employment are to be considered part of this agreement unless expressed in this letter.

Please confirm your acceptance of this offer by signing and returning a copy of this letter.

Debra, I could not be more pleased that you will be joining Arbitron and very much look forward to seeing you at the Board meeting in Los Angeles.

Sincerely,

/s/ Marilou Legge

Marilou Legge

Executive Vice President,

Organization Effectiveness
and Corporate Communications

EX-31.1

Exhibit 31.1

302(a) CERTIFICATION

I, William T. Kerr, 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 6, 2012
	/s/ William T. Kerr
	William T. Kerr
	Chief Executive Officer, President, and Director

EX-31.2

Exhibit 31.2

302(a) CERTIFICATION

I, Debra L. Delman, 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 6, 2012
	/s/ Debra L. Delman
	Debra L. Delman
	Executive Vice President, 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 Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2012, 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/ William T. Kerr

William T. Kerr

Chief Executive Officer

Date: November 6, 2012

/s/ Debra L. Delman

Debra L. Delman

Chief Financial Officer

Date: November 6, 2012

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Equity and Other Investments - Additional information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended		1 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Sep. 30, 2012 Scarborough	Jul. 31, 2012 TRA Investment
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage			49.50%
Sale of investment				$ 1,703
Proceeds from sale of investment	1,466	1,466
Receivable from sale of investment	$ 214	$ 214

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Quantitative Radio Audience Ratings Service and Related Software Licensing Revenue Accounted Aggregate Percentages of Total Company Revenue (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Concentration Risk [Abstract]
Quantitative radio audience ratings service and related software licensing revenue	94.00%	95.00%	91.00%	91.00%

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Share-Based Compensation - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Capitalized share-based compensation cost			$ 0	$ 0
Number of stock options granted	108,871	81,001	215,337	154,226
Weighted-average exercise price for stock options granted	$ 36.07	$ 34.83	$ 35.07	$ 39.21
Weighted-average exercise price for outstanding stock options	$ 34.01		$ 34.01
Weighted-average remaining contractual term for outstanding stock options			5 years 4 months 24 days
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation awarded, vesting period			3 years
Stock options term (in years)			10 years
Unrecognized compensation cost	3.4		3.4
Weighted-average period for which cost is expected to be recognized, in years			2 years 3 months 18 days
Service Award Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	2.6		2.6
Weighted-average period for which cost is expected to be recognized, in years			3 years
Share-based compensation options awarded, number of installments			4
Number of shares granted during the period	45,402		49,985	18,434
Weighted average grant-date fair value per share granted during the period	$ 36.10		$ 36.04	$ 42.72
Performance Award Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	1.8		1.8
Weighted-average period for which cost is expected to be recognized, in years			2 years 8 months 12 days
Share-based compensation options awarded, number of installments			4
Number of shares granted during the period		29,992	34,229	52,503
Weighted average grant-date fair value per share granted during the period		$ 41.52	$ 33.87	$ 42.77
Maximum percentage to return on invested capital for annual performance period			12.00%
Board DSUs And Dividend Equivalents Granted To Board
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation awarded, vesting period			3 years
Share-based compensation options awarded, number of installments			3
Number of shares granted during the period	1,298	6,232	23,866	28,798
Weighted average grant-date fair value per share granted during the period	$ 38.06	$ 38.78	$ 35.63	$ 40.19
Board Dsus Granted To Nonemployee Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	1.2		1.2
Weighted-average period for which cost is expected to be recognized, in years			1 year 1 month 6 days
Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period	5,640		5,640
Weighted average grant-date fair value per share granted during the period	$ 35.46		$ 35.46
Board of Directors | Service Award Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	0.1		0.1
Weighted-average period for which cost is expected to be recognized, in years			7 months 6 days
Chief Executive Officer | DSU Service Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation awarded, vesting period			4 years
Number of shares granted during the period			1,181	900
Weighted average grant-date fair value per share granted during the period			$ 33.87	$ 44.44
Chief Executive Officer | Dsu Performance Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 0.8		$ 0.8
Weighted-average period for which cost is expected to be recognized, in years			3 months 18 days
Share-based compensation options awarded, number of installments			4
Number of shares granted during the period			59,049	24,122
Weighted average grant-date fair value per share granted during the period			$ 33.87	$ 44.44
Maximum percentage to return on invested capital for annual performance period			12.00%

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Stockholders' Equity - Additional Information (Detail) (Subsequent Event, Dividend Paid, USD $)	1 Months Ended
	Oct. 01, 2012
Subsequent Event | Dividend Paid
Stockholders' Equity [Line Items]
Cash dividend paid for common shares	$ 0.10

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Equity and Other Investments (Tables)

9 Months Ended

Sep. 30, 2012

Equity and Cost Investments

The Company’s equity and cost investments as of September 30, 2012, and December 31, 2011, consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Equity investment	$	7,506	$	13,210
Cost investment		—		1,703
Equity and other investments	$	7,506	$	14,913

Investment Activity

The following table shows the investment activity and balances for each of the Company’s investments for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Three-Month Period									Three-Month Period
	September 30, 2012									September 30, 2011
	Scarborough			TRA			Total			Scarborough			TRA		Total
Beginning balance	$	11,945		$	1,703		$	13,648		$	12,076		$	5,180	$	17,256
Investment in affiliate loss		(2,364	)		—			(2,364	)		(2,290	)		—		(2,290	)
Distributions from investee		(2,075	)		—			(2,075	)		(2,150	)		—		(2,150	)
Proceeds from sale of investment		—			(1,466	)		(1,466	)		—			—		—
Receivable from sale of investment		—			(214	)		(214	)		—			—		—
Loss on sale of investment		—			(23	)		(23	)		—			—		—
Ending balance	$	7,506		$	—		$	7,506		$	7,636		$	5,180	$	12,816

	Nine-Month Period									Nine-Month Period
	September 30, 2012									September 30, 2011
	Scarborough			TRA			Total			Scarborough			TRA		Total
Beginning balance	$	13,210		$	1,703		$	14,913		$	13,205		$	5,180	$	18,385
Investment in affiliate income		671			—			671			631			—		631
Distributions from investee		(6,375	)		—			(6,375	)		(6,200	)		—		(6,200	)
Proceeds from sale of investment		—			(1,466	)		(1,466	)		—			—		—
Receivable from sale of investment		—			(214	)		(214	)		—			—		—
Loss on sale of investment		—			(23	)		(23	)		—			—		—
Ending balance	$	7,506		$	—		$	7,506		$	7,636		$	5,180	$	12,816

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Stock Repurchases - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended	9 Months Ended
	Feb. 09, 2012	Sep. 30, 2012	Sep. 30, 2012
Stock Repurchase Programs [Line Items]
Maximum prevailing market price period, years	2 years
Common stock repurchased, shares outstanding		0	1,372,853
Stock repurchases during period value			$ 50,025,000
Maximum
Stock Repurchase Programs [Line Items]
Amount of authorized repurchase of outstanding common stock	100,000,000

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Acquisitions - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Y	Jul. 28, 2011
Business Acquisition [Line Items]
Business acquisition, cash paid		$ 10.6
Fair value of contingent consideration		0.9
Contingent consideration expiration year	2015
Period for performance evaluation, years	4
Business acquisition, effective date	Jul. 28, 2011
Other Noncurrent Liabilities
Business Acquisition [Line Items]
Fair value of contingent consideration	1.1
Maximum
Business Acquisition [Line Items]
Potential cash payment to shareholders	12.0

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Prepaid Expenses and Other Current Assets - Additional Information (Detail) (Securities-Law Civil Actions And A Governmental Interaction, USD $) In Millions, unless otherwise specified	9 Months Ended		57 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Feb. 03, 2012
Securities-Law Civil Actions And A Governmental Interaction
Prepaid And Other Current Assets [Line Items]
Class action settlement				$ 7.0
Cumulative legal fees and costs			12.7
Insurance reimbursements	9.7		9.7
Legal fees	0.6	1.3
Estimated Gross insurance recoveries	$ 0.9	$ 1.4

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Share-Based Compensation Activity Other Than Stock Option (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Service Award Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period	45,402		49,985	18,434
Weighted average grant-date fair value per share granted during the period	$ 36.10		$ 36.04	$ 42.72
Fair value of shares vested during the period	$ 266	$ 322	$ 2,006	$ 2,536
Performance Award Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period		29,992	34,229	52,503
Weighted average grant-date fair value per share granted during the period		$ 41.52	$ 33.87	$ 42.77
Fair value of shares vested during the period	236		1,083	804
Board DSUs And Dividend Equivalents Granted To Board
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period	1,298	6,232	23,866	28,798
Weighted average grant-date fair value per share granted during the period	$ 38.06	$ 38.78	$ 35.63	$ 40.19
Fair value of shares vested during the period	158	113	818	624
Chief Executive Officer | DSU Service Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period			1,181	900
Weighted average grant-date fair value per share granted during the period			$ 33.87	$ 44.44
Fair value of shares vested during the period			568	704
Chief Executive Officer | Dsu Performance Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted during the period			59,049	24,122
Weighted average grant-date fair value per share granted during the period			$ 33.87	$ 44.44
Fair value of shares vested during the period			$ 396	$ 227

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

New Accounting Pronouncements

2. New Accounting Pronouncements

Testing Other Intangibles for Impairment. In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2012-02, Intangibles — Goodwill and Other (Topic 350) — Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”), to allow entities to use a qualitative approach to test indefinite-lived assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to calculate the fair value of the intangible asset and perform the quantitative impairment test. Otherwise, the entity need not perform the quantitative impairment test. ASU 2012-02 is effective for the Company for interim and annual periods ended during 2013. The Company does not expect that the adoption of this guidance will have a material impact on the Company’s consolidated financial statements.

Testing Goodwill for Impairment. In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles — Goodwill and Other (Topic 350) — Testing Goodwill for Impairment (“ASU 2011-08”), to allow entities to use a qualitative approach to test goodwill for impairment. ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. ASU 2011-08 is effective for the Company for interim and annual periods ended during 2012. The adoption of this guidance had no impact on the Company’s consolidated financial statements.

Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements. In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (Topic 820) — Fair Value Measurement (“ASU 2011-04”), to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. ASU 2011-04 is effective for the Company for interim and annual periods ended during 2012 and will be applied prospectively. The adoption of this guidance had no impact on the Company’s consolidated financial statements.

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Changes in Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Goodwill [Abstract]
Beginning balance	$ 45,430	$ 38,895
Zokem Oy addition		5,623
Translation effect	(71)
Ending balance	$ 45,359	$ 44,518

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Concentration Risk (Tables)

9 Months Ended

Sep. 30, 2012

Quantitative Radio Audience Ratings Service and Related Software Licensing Revenue Accounted Aggregate Percentages of Total Company Revenue

The Company’s quantitative radio audience ratings service and related software licensing revenue accounted for the following percentages, in the aggregate, of total Company revenue:

	Three-Month			Three-Month			Nine-Month			Nine-Month
	Period Ended			Period Ended			Period Ended			Period Ended
	September 30,			September 30,			September 30,			September 30,
	2012			2011			2012			2011
Quantitative radio audience ratings service and related software licensing revenue		94	%		95	%		91	%		91	%

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Income Statement Recognition of Share-Based Compensation

The following table sets forth information with regard to the income statement recognition of share-based compensation for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Cost of revenue	$	139	$	200	$	382	$	442
Selling, general and administrative		2,196		1,734		6,136		5,164
Research and development		67		95		261		254
Share-based compensation	$	2,402	$	2,029	$	6,779	$	5,860

Service Award Units

Share-Based Compensation Activity Other Than Stock Option

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of service award shares granted during the period		45,402		—		49,985		18,434
Weighted average grant-date fair value per share granted during the period	$	36.10		—	$	36.04	$	42.72
Fair value of service award shares vested during the period	$	266	$	322	$	2,006	$	2,536

Performance Award Units

Share-Based Compensation Activity Other Than Stock Option

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of performance award shares granted during the period		—		29,992		34,229		52,503
Weighted average grant-date fair value per share granted during the period		—	$	41.52	$	33.87	$	42.77
Fair value of performance award shares vested during the period	$	236		—	$	1,083	$	804

DSU Service Award | Chief Executive Officer

Share-Based Compensation Activity Other Than Stock Option

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
Service DSU’s Granted to CEO	2012		2011		2012		2011
Number of shares granted during the period		—		—		1,181		900
Weighted-average grant date fair value per share granted during the period		—		—	$	33.87	$	44.44
Fair value of shares vested during the period		—		—	$	568	$	704

Dsu Performance Award | Chief Executive Officer

Share-Based Compensation Activity Other Than Stock Option

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
Performance DSU’s Granted to CEO	2012		2011		2012		2011
Number of shares granted during the period		—		—		59,049		24,122
Weighted-average grant date fair value per share granted during the period		—		—	$	33.87	$	44.44
Fair value of shares vested during the period		—		—	$	396	$	227

Board DSUs And Dividend Equivalents Granted To Board

Share-Based Compensation Activity Other Than Stock Option

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of shares granted during the period		1,298		6,232		23,866		28,798
Weighted-average grant date fair value per share granted during the period	$	38.06	$	38.78	$	35.63	$	40.19
Fair value of shares vested during the period	$	158	$	113	$	818	$	624

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Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Income Tax Contingency [Line Items]
Effective tax rate	38.10%	39.50%
Unrecognized tax benefits	$ 1.6		$ 1.3
Unrecognized tax benefits if recognized would reduce effective tax rate in future periods	1.6
Income taxes paid	$ 28.1	$ 21.1

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Basis of Presentation and Consolidation - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2012 Segment
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of reportable segments	1

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Debt - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	9 Months Ended
	Nov. 21, 2011 Y	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Debt Instrument [Line Items]
Finance through unsecured revolving credit facility	$ 150.0
Maturity period of unsecured revolving credit facility, in years	5
Expiration date of unsecured revolving credit facility	Nov. 21, 2016
Increase in the total financing available under the Credit Facility	75.0
Aggregate total finance under Credit Facility	225.0
Outstanding borrowings under the Credit Facility		0		0
Interest paid, maximum		$ 0.2	$ 0.3

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Basis of Presentation and Consolidation

9 Months Ended

Sep. 30, 2012

Basis of Presentation and Consolidation

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 (“GAAP”) 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 notes required by GAAP 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. The consolidated balance sheet as of December 31, 2011 was audited as of that date, but all of the information and notes as of December 31, 2011 required by GAAP have not been included in this Form 10-Q. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform to the current period’s presentation.

Consolidation

The consolidated financial statements of Arbitron for the nine-month period ended September 30, 2012, reflect the consolidated financial position, results of operations and cash flows of the Company and its wholly-owned subsidiaries: Arbitron Holdings Inc., Arbitron Mobile Oy, Astro West LLC, Cardinal North LLC, Ceridian Infotech (India) Private Limited, Arbitron International, LLC, and Arbitron Technology Services India Private Limited. For the nine-month period ended September 30, 2011, the consolidated financial statements reflected the results of operations and cash flows of Arbitron Mobile Oy and Cardinal North LLC incurred subsequent to the acquisition of Zokem Oy during the month ended July 31, 2011. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has one segment which meets the quantitative thresholds for being a reportable segment.

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Changes in Stockholders' Equity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Stockholders' Equity [Line Items]
Balance as of December 31, 2011			$ 126,816
Net income	15,787	15,351	43,557	39,182
Common stock issued from treasury stock			3,832
Common stock repurchased			(50,025)
Common stock repurchased, shares outstanding	0		(1,372,853)
Excess tax benefits from share-based awards			775
Non-cash share-based compensation			6,779
Dividends declared			(7,951)
Other comprehensive income	570	(11)	939	452
Balance as of September 30, 2012	124,722		124,722
Common Stock
Stockholders' Equity [Line Items]
Balance as of December 31, 2011			16,169
Balance as of December 31, 2011, shares outstanding			27,290,000
Common stock issued from treasury stock, shares outstanding			243,000
Common stock repurchased, shares outstanding			(1,373)
Balance as of September 30, 2012	16,169		16,169
Balance as of September 30, 2012, shares outstanding	26,160,000		26,160,000
Treasury Stock
Stockholders' Equity [Line Items]
Balance as of December 31, 2011			(2,524)
Common stock issued from treasury stock			121
Common stock repurchased			(686)
Balance as of September 30, 2012	(3,089)		(3,089)
Retained Earnings
Stockholders' Equity [Line Items]
Balance as of December 31, 2011			128,772
Net income			43,557
Common stock issued from treasury stock			3,711
Common stock repurchased			(49,339)
Excess tax benefits from share-based awards			775
Non-cash share-based compensation			6,779
Dividends declared			(7,951)
Balance as of September 30, 2012	126,304		126,304
Accumulated Other Comprehensive Loss
Stockholders' Equity [Line Items]
Balance as of December 31, 2011			(15,601)
Other comprehensive income			939
Balance as of September 30, 2012	$ (14,662)		$ (14,662)

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Investment Activity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended				3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 TRA Preferred Stock	Sep. 30, 2012 TRA Preferred Stock	Sep. 30, 2011 TRA Preferred Stock	Jun. 30, 2011 TRA Preferred Stock	Dec. 31, 2010 TRA Preferred Stock	Sep. 30, 2012 Scarborough	Sep. 30, 2011 Scarborough	Sep. 30, 2012 Scarborough	Sep. 30, 2011 Scarborough
Schedule Of Equity And Other Investments [Line Items]
Beginning balance, equity and other investments	$ 13,648	$ 17,256	$ 14,913	$ 18,385
Beginning balance, cost method investments			1,703		1,703	1,703	5,180	5,180	5,180
Beginning balance, equity method investments			13,210							11,945	12,076	13,210	13,205
Investment in affiliate (loss) income	(2,364)	(2,290)	671	631						(2,364)	(2,290)	671	631
Distributions from investee	(2,075)	(2,150)	(6,375)	(6,200)						(2,075)	(2,150)	(6,375)	(6,200)
Proceeds from sale of investment	(1,466)		(1,466)		(1,466)	(1,466)
Receivable from sale of investment	(214)		(214)		(214)	(214)
Loss on sale of investment	(23)		(23)		(23)	(23)
Ending balance at September 30, equity and other investments	7,506	12,816	7,506	12,816
Ending balance at September 30, cost method investments							5,180	5,180	5,180
Ending balance at September 30, equity method investments	$ 7,506		$ 7,506							$ 7,506	$ 7,636	$ 7,506	$ 7,636

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 37,051	$ 19,715
Trade accounts receivable, net of allowance for doubtful accounts of $4,562 as of September 30, 2012, and $4,615 as of December 31, 2011	60,509	62,886
Prepaid expenses and other current assets	8,359	7,141
Deferred tax assets	4,586	6,398
Total current assets	110,505	96,140
Equity and other investments	7,506	14,913
Property and equipment, net	63,784	70,651
Goodwill, net	45,359	45,430
Other intangibles, net	8,669	10,526
Noncurrent deferred tax assets	1,921
Other noncurrent assets	1,221	1,308
Total assets	238,965	238,968
Liabilities and Stockholders' Equity
Accounts payable	10,159	10,534
Accrued expenses and other current liabilities	23,837	32,276
Deferred revenue	49,280	37,080
Total current liabilities	83,276	79,890
Noncurrent deferred tax liabilities		1,302
Other noncurrent liabilities	30,967	30,960
Total liabilities	114,243	112,152
Stockholders' equity
Preferred stock, $100.00 par value, 750 shares authorized, no shares issued
Common stock, $0.50 par value, 500,000 shares authorized, 32,338 shares issued as of September 30, 2012, and December 31, 2011	16,169	16,169
Retained earnings	126,304	128,772
Common stock held in treasury, 6,178 shares as of September 30, 2012, and 5,048 shares as of December 31, 2011	(3,089)	(2,524)
Accumulated other comprehensive loss	(14,662)	(15,601)
Total stockholders' equity	124,722	126,816
Total liabilities and stockholders' equity	$ 238,965	$ 238,968

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Income Statement Recognition of Share-Based Compensation (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 2,402	$ 2,029	$ 6,779	$ 5,860
Cost of Revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	139	200	382	442
Selling, General And Administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	2,196	1,734	6,136	5,164
Research and Development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 67	$ 95	$ 261	$ 254

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Amortization of actuarial loss, tax expense	$ 201	$ 151	$ 611	$ 454

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Accumulated Other Comprehensive Loss (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accumulated Other Comprehensive Loss [Abstract]
Foreign currency translation adjustment	$ (2,172)	$ (2,148)
Retirement plan liabilities, net of tax	(12,490)	(13,453)
Accumulated other comprehensive loss	$ (14,662)	$ (15,601)

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2012

Changes in Stockholders' Equity

Changes in stockholders’ equity for the nine-month period ended September 30, 2012, were as follows (in thousands):

	Shares Outstanding			Common Stock		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of December 31, 2011		27,290		$	16,169	$	(2,524	)	$	128,772		$	(15,601	)	$	126,816
Net income		—			—		—			43,557			—			43,557
Common stock issued from treasury stock		243			—		121			3,711			—			3,832
Common stock repurchased		(1,373	)		—		(686	)		(49,339	)		—			(50,025	)
Excess tax benefits from share-based awards		—			—		—			775			—			775
Non-cash share-based compensation		—			—		—			6,779			—			6,779
Dividends declared		—			—		—			(7,951	)		—			(7,951	)
Other comprehensive income		—			—		—			—			939			939
Balance as of September 30, 2012		26,160		$	16,169	$	(3,089	)	$	126,304		$	(14,662	)	$	124,722

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Prepaid Expenses and Other Current Assets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Prepaid Expenses And Other Current Assets [Abstract]
Survey participant incentives and prepaid postage	$ 3,298	$ 1,770
Prepaid Scarborough royalties	972
Prepaid income taxes	1,497	1,984
Insurance recovery receivables	137	993
Other	2,455	2,394
Prepaids and other current assets	$ 8,359	$ 7,141

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Prepaid Expenses and Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2012

Prepaid Expenses and Other Current Assets

Prepaids and other current assets as of September 30, 2012, and December 31, 2011, consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Survey participant incentives and prepaid postage	$	3,298	$	1,770
Prepaid Scarborough royalties		972		—
Prepaid income taxes		1,497		1,984
Insurance recovery receivables		137		993
Other		2,455		2,394
Prepaids and other current assets	$	8,359	$	7,141

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities
Net income	$ 43,557	$ 39,182
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment	21,120	20,973
Amortization of other intangible assets	1,816	1,104
Loss on asset disposals and impairments of property and equipment	2,096	1,534
Deferred income taxes	(2,022)	(260)
Equity in net income of affiliate	(671)	(631)
Distributions from affiliate	6,375	6,200
Bad debt expense	1,290	1,555
Non-cash share-based compensation	6,779	5,860
Changes in operating assets and liabilities
Trade accounts receivable	1,087	9,335
Prepaid expenses and other assets	(890)	2,823
Accounts payable	212	730
Accrued expenses and other current liabilities	(9,546)	(8,657)
Deferred revenue	12,200	8,167
Other noncurrent liabilities	2,601	1,717
Net cash provided by operating activities	86,004	89,632
Cash flows from investing activities
Additions to property and equipment	(16,900)	(23,035)
Proceeds from sale of cost investment	1,466
Payments for business acquisitions, net of cash acquired		(10,553)
Net cash used in investing activities	(15,434)	(33,588)
Cash flows from financing activities
Proceeds from stock option exercises and stock purchase plan	4,075	2,783
Stock repurchases	(50,025)
Dividends paid to stockholders	(8,064)	(8,126)
Payments for deferred financing costs		(231)
Excess tax benefits realized from share-based awards	775	715
Debt borrowings		15,000
Debt repayments		(69,103)
Net cash used in financing activities	(53,239)	(58,962)
Effect of exchange rate changes on cash and cash equivalents	5	(22)
Net change in cash and cash equivalents	17,336	(2,940)
Cash and cash equivalents at beginning of period	19,715	18,925
Cash and cash equivalents at end of period	$ 37,051	$ 15,985

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Allowance for doubtful accounts receivable	$ 4,562	$ 4,615
Preferred stock, par value	$ 100.00	$ 100.00
Preferred stock, shares authorized	750	750
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	500,000	500,000
Common stock, shares issued	32,338	32,338
Treasury stock, shares	6,178	5,048

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Acquisitions

9 Months Ended

Sep. 30, 2012

Acquisitions

10. Acquisitions

Zokem Oy. On July 28, 2011, a wholly-owned subsidiary of the Company acquired Zokem Oy. The purchase price was $10.6 million in cash plus a contingent consideration arrangement with an estimated fair value of approximately $0.9 million as of the acquisition date. The contingent consideration arrangement provides for possible additional cash payments to be made by the Company to the former Zokem shareholders through 2015 of up to $12.0 million, which are contingent upon Zokem reaching certain financial performance targets in the future. The acquisition date fair value estimate was determined by applying the income approach method. The key assumptions used in the fair value valuation included a probability-weighted range of performance targets for the four-year measurement period of 2012 through 2015 and an adjusted discount rate. The Company periodically reassesses the fair value of the contingent consideration. As of September 30, 2012, the Company’s estimate of the fair value of the contingent consideration was $1.1 million, recorded in other noncurrent liabilities on the Company’s consolidated balance sheet.

The following table shows the changes in goodwill for the nine-month periods ended September 30, 2012, and 2011, (in thousands):

	Nine-Month			Nine-Month
	Period Ended			Period Ended
	September 30,			September 30,
	2012			2011
Beginning balance	$	45,430		$	38,895
Zokem Oy addition		—			5,623
Translation effect		(71	)		—
Ending balance	$	45,359		$	44,518

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 25, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	ARB
Entity Registrant Name	ARBITRON INC
Entity Central Index Key	0000109758
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		26,161,789

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Taxes

9 Months Ended

Sep. 30, 2012

Taxes

11. Taxes

The effective tax rate decreased to 38.1% for the nine months ended September 30, 2012, from 39.5% for the nine-month period ended September 30, 2011. The effective tax rate through September 30, 2011 was impacted unfavorably by certain nondeductible Arbitron Mobile related operating losses. The effective tax rate through September 30, 2012 was reduced due to a favorable audit resolution with the Internal Revenue Service during 2012.

During the nine-month period ended September 30, 2012, the Company’s unrecognized tax benefits for certain income tax contingencies increased from $1.3 million as of December 31, 2011, to $1.6 million as of September 30, 2012. The increase is attributable to various state related issues. If recognized, the $1.6 million in unrecognized tax benefits would reduce the Company’s effective tax rate in future periods.

Income taxes paid for the nine-months ended September 30, 2012 and 2011, were $28.1 million and $21.1 million, respectively.

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue	$ 114,341	$ 105,563	$ 325,142	$ 302,169
Costs and expenses
Cost of revenue	53,840	49,388	164,493	156,092
Selling, general and administrative	22,321	18,401	61,025	54,166
Research and development	9,913	9,444	29,527	27,456
Total costs and expenses	86,074	77,233	255,045	237,714
Operating income	28,267	28,330	70,097	64,455
Equity in net income (loss) of affiliate	(2,364)	(2,290)	671	631
Income before interest and income tax expense	25,903	26,040	70,768	65,086
Interest income	15	6	46	20
Interest expense	133	109	394	377
Income before income tax expense	25,785	25,937	70,420	64,729
Income tax expense	9,998	10,586	26,863	25,547
Net income	$ 15,787	$ 15,351	$ 43,557	$ 39,182
Income per weighted-average common share
Basic	$ 0.60	$ 0.56	$ 1.64	$ 1.44
Diluted	$ 0.59	$ 0.55	$ 1.61	$ 1.42
Weighted-average common shares used in calculations
Basic	26,133	27,222	26,564	27,154
Potentially dilutive securities	529	461	503	475
Diluted	26,662	27,683	27,067	27,629
Dividends declared per common share outstanding	$ 0.10	$ 0.10	$ 0.30	$ 0.30

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Net Income per Weighted-Average Common Share

9 Months Ended

Sep. 30, 2012

Net Income per Weighted-Average Common Share

5. Net Income per Weighted-Average Common Share

The computations of basic and diluted net income per weighted-average common share for the three and nine-month periods ended September 30, 2012 and 2011, 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 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, 2012, and 2011, there were stock options to purchase 2,089,125 shares, and 2,094,214 shares of the Company’s common stock outstanding, respectively, of which stock options to purchase 1,399,252 shares, and 1,102,228 shares of the Company’s common stock, respectively, were excluded from the computation of the diluted net income per weighted-average common share for the three-month periods ended September 30, 2012, and 2011, respectively, either because the stock options’ exercise prices were greater than the average market price of the Company’s common shares or assumed repurchases from proceeds from the stock options’ exercise were antidilutive.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Stockholders' Equity

4. Stockholders’ Equity

Changes in stockholders’ equity for the nine-month period ended September 30, 2012, were as follows (in thousands):

	Shares Outstanding			Common Stock		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of December 31, 2011		27,290		$	16,169	$	(2,524	)	$	128,772		$	(15,601	)	$	126,816
Net income		—			—		—			43,557			—			43,557
Common stock issued from treasury stock		243			—		121			3,711			—			3,832
Common stock repurchased		(1,373	)		—		(686	)		(49,339	)		—			(50,025	)
Excess tax benefits from share-based awards		—			—		—			775			—			775
Non-cash share-based compensation		—			—		—			6,779			—			6,779
Dividends declared		—			—		—			(7,951	)		—			(7,951	)
Other comprehensive income		—			—		—			—			939			939
Balance as of September 30, 2012		26,160		$	16,169	$	(3,089	)	$	126,304		$	(14,662	)	$	124,722

A quarterly cash dividend of $0.10 per common share was paid to stockholders on October 1, 2012.

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2012

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss as of September 30, 2012 and December 31, 2011, were as follows (in thousands):

	September 30,			December 31,
	2012			2011
Foreign currency translation adjustment	$	(2,172	)	$	(2,148	)
Retirement plan liabilities, net of tax		(12,490	)		(13,453	)
Accumulated other comprehensive loss	$	(14,662	)	$	(15,601	)

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Share-Based Compensation

9 Months Ended

Sep. 30, 2012

Share-Based Compensation

12. Share-Based Compensation

The following table sets forth information with regard to the income statement recognition of share-based compensation for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Cost of revenue	$	139	$	200	$	382	$	442
Selling, general and administrative		2,196		1,734		6,136		5,164
Research and development		67		95		261		254
Share-based compensation	$	2,402	$	2,029	$	6,779	$	5,860

No share-based compensation cost was capitalized during the nine-month periods ended September 30, 2012, and 2011.

Stock Options

Stock options awarded to employees under the Company’s 2008 Equity Compensation Plan (“2008 Plan”) generally vest annually over a three-year period, have a 10-year term and have an exercise price equal to the fair market value of the Company’s common stock at the date of grant. Compensation expense for stock options is recognized on a straight-line basis over the vesting period using the fair value of each stock option estimated as of the grant date.

For the three-month period ended September 30, 2012 and 2011, the number of stock options granted was 108,871 and 81,001, respectively, and the weighted-average exercise price for those stock options granted was $36.07 and $34.83, respectively. For the nine-month periods ended September 30, 2012 and 2011, the number of stock options granted was 215,337 and 154,226, respectively, and the weighted-average exercise price for those stock options granted was $35.07 and $39.21, respectively.

As of September 30, 2012, there was $3.4 million in total unrecognized compensation cost related to unvested stock options. This aggregate unrecognized cost is expected to be recognized over a weighted-average remaining period of 2.3 years. The weighted-average exercise price and weighted-average remaining contractual term for outstanding stock options as of September 30, 2012, were $34.01 and 5.4 years, respectively.

Service and Performance Award Units

Service award units. The Company’s unvested service award units (i) were issued at the fair market value of the Company’s common stock on the date of grant, (ii) vest in four equal annual installments beginning on the first anniversary date of the grant, and (iii) expire without vesting if the employee is no longer employed by the Company. Compensation expense for service award units is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant.

As of September 30, 2012, there was $2.6 million of total unrecognized compensation cost related to unvested service award units. This aggregate unrecognized cost for service award units is expected to be recognized over a weighted-average period of approximately 3.0 years.

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of service award shares granted during the period		45,402		—		49,985		18,434
Weighted average grant-date fair value per share granted during the period	$	36.10		—	$	36.04	$	42.72
Fair value of service award shares vested during the period	$	266	$	322	$	2,006	$	2,536

Service award units to Board of Directors (“Board”). Beginning in 2012, the Board members have the right to elect to receive all or a portion of their annual 2012 compensation as Board service award units. These Board service award units (i) were issued at the fair market value of the Company’s common stock on the date of grant, and (ii) vest on the anniversary date of the grant. Compensation expense for Board service award units is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant.

During the three-month period ended September 30, 2012, no Board service award units were granted. During the nine-month period ended September 30, 2012, the Company granted 5,640 Board service award units at a weighted average grant-date fair value per share of $35.46. As of September 30, 2012, there was $0.1 million of total unrecognized compensation cost related to unvested Board service award units. This aggregate unrecognized cost for service award units is expected to be recognized over a weighted-average period of 0.6 years.

Performance award units. During the nine-month periods ended September 30, 2012 and 2011, the Company granted performance award units under the 2008 Plan. These performance award units (i) were issued at the fair market value of the Company’s common stock on the date of grant, (ii) will expire without vesting if the Company’s return on invested capital (“ROIC”) for the annual performance period does not exceed 12%, which is an approximation of the Company’s weighted average cost of capital, (iii) will, if the Company’s ROIC exceeds 12%, vest in four equal annual installments beginning with the first anniversary date of the grant, and (iv) for any unvested units, expire without vesting if the recipient is no longer employed by the Company.

Compensation expense for performance award units is recognized on an accelerated basis using the fair market value of the Company’s common stock on the date of grant. The Company recognizes expense for these performance award units under the assumption that the performance ROIC target will be achieved. If it appears such performance ROIC target will not be met, the Company will stop recognizing any further compensation cost and any previously recognized compensation cost would be reversed. As of September 30, 2012, there was $1.8 million of total unrecognized compensation cost related to unvested performance award units. This aggregate unrecognized cost is expected to be recognized over a weighted-average period of 2.7 years.

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of performance award shares granted during the period		—		29,992		34,229		52,503
Weighted average grant-date fair value per share granted during the period		—	$	41.52	$	33.87	$	42.77
Fair value of performance award shares vested during the period	$	236		—	$	1,083	$	804

Deferred Stock Units

Service DSU grants to CEO. During the nine-month periods ended September 30, 2012 and 2011, the Company granted service-based deferred stock unit awards (“Service DSUs”) under the 2008 Plan to its CEO. Service DSUs are issued at the fair market value of the Company’s stock on the date of grant, and generally vest annually over a four-year period on each anniversary date of the grant. Service DSUs also include dividend equivalent DSUs, which vest immediately upon the date of grant.

Compensation expense for Service DSUs is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant. The Service DSUs provide for accelerated vesting upon termination without cause or the CEO’s retirement as defined in his employment agreement. As of September 30, 2012, there was no unrecognized compensation cost related to Service DSUs.

The Service DSUs will be convertible into shares of the Company’s common stock following the holder’s termination of employment. No Service DSUs were converted into shares of the Company’s common stock during the nine-month periods ended September 30, 2012, and 2011. Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
Service DSU’s Granted to CEO	2012		2011		2012		2011
Number of shares granted during the period		—		—		1,181		900
Weighted-average grant date fair value per share granted during the period		—		—	$	33.87	$	44.44
Fair value of shares vested during the period		—		—	$	568	$	704

Performance DSU grants to CEO. During the nine-month periods ended September 30, 2012 and 2011, the Company granted performance-based deferred stock unit awards (“Performance DSUs”) under the 2008 Plan to its CEO. These Performance DSUs (i) were issued at the fair market value of the Company’s common stock on the date of grant, (ii) will expire without vesting if the Company’s ROIC for the annual performance period does not exceed 12%, which is an approximation of the Company’s weighted average cost of capital, (iii) will, if the Company’s ROIC exceeds 12%, vest in four equal annual installments beginning on the first anniversary date of the grant, and (iv) provide for accelerated vesting upon termination without cause or the CEO’s retirement as defined in his employment agreement. These Performance DSUs, if vested, will be convertible into shares of the Company’s common stock, subsequent to termination of employment.

Compensation expense for Performance DSUs is recognized on an accelerated basis using the fair market value of the Company’s common stock on the date of grant. The Company recognizes expense for these Performance DSUs under the assumption that the performance target will be achieved. If it appears such performance target will not be met, the Company will stop recognizing any further compensation cost and any previously recognized compensation cost would be reversed. As of September 30, 2012, there was $0.8 million of total unrecognized compensation cost related to Performance DSUs. This aggregate unrecognized cost is expected to be recognized over the weighted-average period of 0.3 years.

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
Performance DSU’s Granted to CEO	2012		2011		2012		2011
Number of shares granted during the period		—		—		59,049		24,122
Weighted-average grant date fair value per share granted during the period		—		—	$	33.87	$	44.44
Fair value of shares vested during the period		—		—	$	396	$	227

Service DSU grants to Board. The Company issues deferred stock units to its Board of Directors (“Board DSUs”) under the 2008 Plan. These Board DSUs (i) were issued at the fair market value of the Company’s common stock on the date of grant and (ii) if vested, will be convertible to shares of the Company’s common stock subsequent to termination of service as a director. Beginning in 2012, the Board members have the right to elect to receive all or a portion of their annual 2012 compensation as Board DSUs that vest completely on the first anniversary date of the grant. For 2011 and 2010, annual grants were issued to the Board as Board DSUs that vest annually in three equal installments over a three-year period.

In addition, the Board members have the right to elect to receive all or a portion of their retainer and meeting attendance fees as Board DSUs, which vest immediately. Board DSUs are only granted to nonemployee Directors. Board DSUs also include dividend equivalent DSUs, which vest immediately upon the date of grant.

Compensation expense for Board DSUs is recognized on a straight-line basis over the vesting period using the fair market value of the Company’s common stock on the date of grant. As of September 30, 2012, there was $1.2 million of total unrecognized compensation cost related to Board DSUs granted to nonemployee directors. This aggregate unrecognized cost is expected to be recognized over the weighted-average period of 1.1 years.

Additional information for the three and nine-month periods ended September 30, 2012, and 2011, is noted in the following table (dollars in thousands, except per share amounts):

	Three-Month		Three-Month		Nine-Month		Nine-Month
	Period Ended		Period Ended		Period Ended		Period Ended
	September 30,		September 30,		September 30,		September 30,
	2012		2011		2012		2011
Number of shares granted during the period		1,298		6,232		23,866		28,798
Weighted-average grant date fair value per share granted during the period	$	38.06	$	38.78	$	35.63	$	40.19
Fair value of shares vested during the period	$	158	$	113	$	818	$	624

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Equity and Other Investments

9 Months Ended

Sep. 30, 2012

Equity and Other Investments

8. Equity and Other Investments

The Company’s equity and cost investments as of September 30, 2012, and December 31, 2011, consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Equity investment	$	7,506	$	13,210
Cost investment		—		1,703
Equity and other investments	$	7,506	$	14,913

The Company’s 49.5% investment in Scarborough Research (“Scarborough”), a Delaware general partnership, is accounted for using the equity method of accounting. During the month ended July 31, 2012, the Company sold its $1.7 million preferred stock investment in TRA Global, Inc. (“TRA”). Prior to the sale, the TRA investment was accounted for using the cost method of accounting. The proceeds from the sale were approximately equal to the investment’s carrying value. Cash proceeds received from the sale amounted to approximately $1.5 million as of September 30, 2012, with an additional $0.2 million deposited in escrow. The escrow funds will be released to the Company in January 2014, less any claims paid from the escrow account. The escrow fund deposit is recorded on the Company’s balance sheet as a portion of the Company’s non-current assets.

The following table shows the investment activity and balances for each of the Company’s investments for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Three-Month Period									Three-Month Period
	September 30, 2012									September 30, 2011
	Scarborough			TRA			Total			Scarborough			TRA		Total
Beginning balance	$	11,945		$	1,703		$	13,648		$	12,076		$	5,180	$	17,256
Investment in affiliate loss		(2,364	)		—			(2,364	)		(2,290	)		—		(2,290	)
Distributions from investee		(2,075	)		—			(2,075	)		(2,150	)		—		(2,150	)
Proceeds from sale of investment		—			(1,466	)		(1,466	)		—			—		—
Receivable from sale of investment		—			(214	)		(214	)		—			—		—
Loss on sale of investment		—			(23	)		(23	)		—			—		—
Ending balance	$	7,506		$	—		$	7,506		$	7,636		$	5,180	$	12,816

	Nine-Month Period									Nine-Month Period
	September 30, 2012									September 30, 2011
	Scarborough			TRA			Total			Scarborough			TRA		Total
Beginning balance	$	13,210		$	1,703		$	14,913		$	13,205		$	5,180	$	18,385
Investment in affiliate income		671			—			671			631			—		631
Distributions from investee		(6,375	)		—			(6,375	)		(6,200	)		—		(6,200	)
Proceeds from sale of investment		—			(1,466	)		(1,466	)		—			—		—
Receivable from sale of investment		—			(214	)		(214	)		—			—		—
Loss on sale of investment		—			(23	)		(23	)		—			—		—
Ending balance	$	7,506		$	—		$	7,506		$	7,636		$	5,180	$	12,816

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2012

Accumulated Other Comprehensive Loss

6. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss as of September 30, 2012 and December 31, 2011, were as follows (in thousands):

	September 30,			December 31,
	2012			2011
Foreign currency translation adjustment	$	(2,172	)	$	(2,148	)
Retirement plan liabilities, net of tax		(12,490	)		(13,453	)
Accumulated other comprehensive loss	$	(14,662	)	$	(15,601	)

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Prepaid Expenses and Other Current Assets

9 Months Ended

Sep. 30, 2012

Prepaid Expenses and Other Current Assets

7. Prepaid Expenses and Other Current Assets

Prepaids and other current assets as of September 30, 2012, and December 31, 2011, consisted of the following (in thousands):

	September 30, 2012		December 31, 2011
Survey participant incentives and prepaid postage	$	3,298	$	1,770
Prepaid Scarborough royalties		972		—
Prepaid income taxes		1,497		1,984
Insurance recovery receivables		137		993
Other		2,455		2,394
Prepaids and other current assets	$	8,359	$	7,141

Insurance recovery receivables. During 2008, the Company became involved in two securities-law civil actions and a governmental interaction primarily related to the commercialization of the Company’s PPM service. The management of the Company believes a portion of the legal fees and costs associated with this litigation are covered by the Company’s Directors and Officers insurance policy and therefore has recognized an insurance recovery receivable. On February 3, 2012, as a result of a mediation process overseen by an independent mediator, the Company and its insurers agreed to settle the class action for $7.0 million, which was funded by insurance. From 2008 until September 30, 2012, the Company had incurred approximately $12.7 million in legal fees and costs in defense of its positions related thereto, and as of September 30, 2012, the Company had received $9.7 million in insurance reimbursements related to these legal actions.

For the nine-month periods ended September 30, 2012, and 2011, the Company incurred approximately $0.6 million, and $1.3 million, respectively, in related legal fees, which were recognized as increases to selling, general, and administrative expense. These legal fees were offset by $0.9 million, and $1.4 million in estimated insurance recoveries, respectively, which were recognized as reductions to selling, general and administrative expense during 2012 and 2011, respectively.

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Retirement Plans

9 Months Ended

Sep. 30, 2012

Retirement Plans

9. 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 has a nonqualified, unfunded supplemental retirement plan, as well as a postretirement healthcare plan for eligible retired employees who participate in the pension plan and were hired before January 1, 1992. The components of periodic benefit costs for the defined-benefit pension, postretirement healthcare and supplemental retirement plans were as follows for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Defined-Benefit Pension Plan Three-Month Period Ended September 30,						Postretirement Healthcare Plan Three-Month Period Ended September 30,				Supplemental Retirement Plan Three-Month Period Ended September 30,
	2012			2011			2012		2011		2012		2011
Service cost	$	216		$	193		$	10	$	9	$	7	$	5
Interest cost		477			454			18		20		40		40
Expected return on plan assets		(509	)		(512	)		—		—		—		—
Amortization of net loss		471			343			5		7		48		38
Net periodic benefit cost	$	655		$	478		$	33	$	36	$	95	$	83

	Defined-Benefit Pension Plan Nine-Month Period Ended September 30,						Postretirement Healthcare Plan Nine-Month Period Ended September 30,				Supplemental Retirement Plan Nine-Month Period Ended September 30,
	2012			2011			2012		2011		2012		2011
Service cost	$	647		$	580		$	28	$	28	$	22	$	15
Interest cost		1,430			1,364			54		61		120		120
Expected return on plan assets		(1,527	)		(1,538	)		—		—		—		—
Amortization of net loss		1,414			1,028			16		21		144		114
Net periodic benefit cost	$	1,964		$	1,434		$	98	$	110	$	286	$	249

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Net Income per Weighted-Average Common Share - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Earnings Per Share Disclosure [Line Items]
Stock options to purchase common stock	2,089,125	2,094,214
Shares excluded from the computation of the diluted net income per weighted-average common share	1,399,252	1,102,228

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Stock Repurchases

9 Months Ended

Sep. 30, 2012

Stock Repurchases

14. Stock Repurchases

On February 9, 2012, the Company’s Board of Directors authorized a program to repurchase up to $100.0 million in shares of the Company’s outstanding common stock through either periodic open-market or private transactions, in accordance with applicable insider trading and other securities laws and regulations, at then-prevailing market prices over a period of up to two years ending February 9, 2014. As of September 30, 2012, the Company had repurchased 1,372,853 shares of its outstanding common stock under this program for approximately $50.0 million. No shares of the Company’s common stock were repurchased during the three-month period ended September 30, 2012.

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Retirement Plans (Tables)

9 Months Ended

Sep. 30, 2012

Components of Periodic Benefit Costs for Defined-Benefit Pension, Postretirement Healthcare and Supplemental Retirement Plan

The components of periodic benefit costs for the defined-benefit pension, postretirement healthcare and supplemental retirement plans were as follows for the three and nine-month periods ended September 30, 2012, and 2011 (in thousands):

	Defined-Benefit Pension Plan Three-Month Period Ended September 30,						Postretirement Healthcare Plan Three-Month Period Ended September 30,				Supplemental Retirement Plan Three-Month Period Ended September 30,
	2012			2011			2012		2011		2012		2011
Service cost	$	216		$	193		$	10	$	9	$	7	$	5
Interest cost		477			454			18		20		40		40
Expected return on plan assets		(509	)		(512	)		—		—		—		—
Amortization of net loss		471			343			5		7		48		38
Net periodic benefit cost	$	655		$	478		$	33	$	36	$	95	$	83

	Defined-Benefit Pension Plan Nine-Month Period Ended September 30,						Postretirement Healthcare Plan Nine-Month Period Ended September 30,				Supplemental Retirement Plan Nine-Month Period Ended September 30,
	2012			2011			2012		2011		2012		2011
Service cost	$	647		$	580		$	28	$	28	$	22	$	15
Interest cost		1,430			1,364			54		61		120		120
Expected return on plan assets		(1,527	)		(1,538	)		—		—		—		—
Amortization of net loss		1,414			1,028			16		21		144		114
Net periodic benefit cost	$	1,964		$	1,434		$	98	$	110	$	286	$	249

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Concentration Risk - Additional Information (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Concentration Risk [Line Items]
Number of customer accounting for more than ten percent of accounts receivable	2	2
Customer One
Concentration Risk [Line Items]
Percentage of accounts receivable from one customer out of total accounts receivable	19.00%	23.00%
Customer Two
Concentration Risk [Line Items]
Percentage of accounts receivable from one customer out of total accounts receivable	10.00%	11.00%
Customer Concentration Risk
Concentration Risk [Line Items]
Percentage of revenue from one customer out of total revenue		19.00%
Number of customer accounting for more than ten percent of revenue		1

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Components of Periodic Benefit Costs for Defined-Benefit Pension, Postretirement Healthcare and Supplemental Retirement Plan (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Defined-Benefit Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 216	$ 193	$ 647	$ 580
Interest cost	477	454	1,430	1,364
Expected return on plan assets	(509)	(512)	(1,527)	(1,538)
Amortization of net loss	471	343	1,414	1,028
Net periodic benefit cost	655	478	1,964	1,434
Postretirement Healthcare Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	10	9	28	28
Interest cost	18	20	54	61
Amortization of net loss	5	7	16	21
Net periodic benefit cost	33	36	98	110
Supplemental Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	7	5	22	15
Interest cost	40	40	120	120
Amortization of net loss	48	38	144	114
Net periodic benefit cost	$ 95	$ 83	$ 286	$ 249

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income	$ 15,787	$ 15,351	$ 43,557	$ 39,182
Other comprehensive income (loss):
Foreign currency translation adjustment	247	(248)	(24)	(257)
Amortization of actuarial loss, net of tax expense of $201, and $151 for the three-month periods ended September 30, 2012, and 2011, respectively; and net of tax expense of $611 and $454 for the nine-month periods ended September 30, 2012, and 2011, respectively.	323	237	963	709
Other comprehensive income (loss):	570	(11)	939	452
Comprehensive income	$ 16,357	$ 15,340	$ 44,496	$ 39,634

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Debt

9 Months Ended

Sep. 30, 2012

Debt

3. Debt

On November 21, 2011, 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”) expiring on November 21, 2016. The agreement contains an expansion feature to increase the total financing available under the Credit Facility by up to $75.0 million to an aggregate of $225.0 million. Such increased financing would 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, 2012 and December 31, 2011, there were no outstanding borrowings under the Credit Facility. Interest paid during the nine-month periods ended September 30, 2012, and 2011, was $0.2 million and $0.3 million, respectively.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2012

Changes in Goodwill

The following table shows the changes in goodwill for the nine-month periods ended September 30, 2012, and 2011, (in thousands):

	Nine-Month			Nine-Month
	Period Ended			Period Ended
	September 30,			September 30,
	2012			2011
Beginning balance	$	45,430		$	38,895
Zokem Oy addition		—			5,623
Translation effect		(71	)		—
Ending balance	$	45,359		$	44,518

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Equity and Other Investments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Schedule of Equity and Cost Investments [Line Items]
Equity investment	$ 7,506		$ 13,210
Cost investment			1,703
Equity and other investments	$ 7,506	$ 13,648	$ 14,913	$ 12,816	$ 17,256	$ 18,385

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Concentration Risk

9 Months Ended

Sep. 30, 2012

Concentration Risk

13. Concentration Risk

Arbitron is a leading media and marketing information services firm primarily serving radio, advertisers, advertising agencies, cable and broadcast television, retailers, out-of-home media, online media, mobile media, telecommunications providers, and print media.

The Company’s quantitative radio audience ratings service and related software licensing revenue accounted for the following percentages, in the aggregate, of total Company revenue:

	Three-Month			Three-Month			Nine-Month			Nine-Month
	Period Ended			Period Ended			Period Ended			Period Ended
	September 30,			September 30,			September 30,			September 30,
	2012			2011			2012			2011
Quantitative radio audience ratings service and related software licensing revenue		94	%		95	%		91	%		91	%

The Company had one customer that individually represented approximately 19% of its annual revenue for the year ended December 31, 2011. The Company had two customers that individually represented approximately 19% and 10% of its total accounts receivable balance as of September 30, 2012, and two customers that individually represented approximately 23% and 11% of its total accounts receivable balance as of December 31, 2011. The Company has historically experienced a high level of contract renewals.