UPDATE 1-US judge moves Arbitron-NY case to state court

(Adds Arbitron statement, paragraphs 7-8)

NEW YORK, Oct 27 (Reuters) - A federal judge dismissed on Monday a lawsuit by Arbitron Inc ARB.N against New York Attorney General Andrew Cuomo over his attempt to stop the company's new radio ratings system, moving the case to state court.

The prosecutor said in early September he was investigating the leading publisher of U.S. radio audience estimates over whether it had used deceptive business practices in its release of the company’s system in New York, called the Portable People Meter.

On Oct. 6, Arbitron sued the attorney general’s office in U.S. District Court in Manhattan, seeking to prevent the New York official from stopping the publication of Arbitron’s audience estimates based on the PPM.

The attorney general filed to dismiss that action and sued in New York State Supreme Court on Oct. 10. Cuomo’s lawsuit said the system may cut advertising revenue for black and Hispanic broadcasters.

The PPM system was put to commercial use for the first time on Oct. 6.

U.S. District Court Judge Denise Cote ruled in favor of the case being heard in state court.

“Today’s ruling does not impact Arbitron’s right to publish our Portable People Meter audience estimates in New York,” Arbitron said in a statement.

“Now that Arbitron has commercialized the PPM service in New York and other key markets, we look forward to defending our interests.”

A spokesman for Cuomo could not be reached for comment.

“The Attorney General has shown that important state interests are implicated by its state court lawsuit against Arbitron,” the judge wrote in her opinion.

The electronic system is different from the paper and pencil diaries that Arbitron has distributed for 40 years so that listeners can keep a written record of radio broadcasts they hear over a one-week period. Listeners mail the diaries back to the company for analysis. (Reporting by Grant McCool, editing by Matthew Lewis)