Court Chucks Sunbeam's Antitrust Case Against Nielsen

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A Florida federal judge has found that Nielsen did not violate antitrust laws while operating its local ratings system in the Miami market. The ruling, which defeats Sunbeam TV's charges, saves Nielsen from a trial on the matter and maybe a huge financial penalty -- at least for now.

Sunbeam Television, which has charged Nielsen with operating a monopoly by blocking competitors from entering the South Florida DMA, says it will appeal the ruling.

The decision came down Thursday in Miami federal district court. Sunbeam will also continue to litigate two other claims in its 2009 suit -- which Judge Paul C. Huck declined to rule on. The two allegations are that Nielsen has engaged in breach of contract and deceptive and unfair trade practices under Florida law.

Nielsen is moving toward an IPO, and any setback in court in the Sunbeam matter may deter initial investors.

Sunbeam, which runs the Fox affiliate in South Florida, has alleged that Nielsen's local people meters undercount viewers, which has hurt its station's ratings and cost it $1 million a month in ad revenue. Sunbeam has also said in court papers that the value of its station, WSVN, has fallen by $100 million.

The media company's claims that Nielsen runs a monopoly in South Florida involve charges that Nielsen took multiple actions to prevent other ratings services from moving in. Those include "imposing punitive pricing on customers who resist its practices." The monopoly allegedly has also led to the defective LPMs.

Sunbeam charges that Nielsen launched the devices in 2008 in Miami even with "knowledge that certain demographic groups -- in particular, minorities -- do not use the technology properly, leading to inaccurate ratings," according to court papers.

Nielsen responds that ratings collection has inherent issues, but LPMs were an improvement on the previous method used in South Florida. LPMs allowed for a "lack of reliance on paper diaries" and ability to provide "data reporting for individual viewers on a daily basis."

Judge Huck ruled there is a lack of evidence to back Sunbeam's claims that LPMs are inferior to the previous system. In addition, he wrote that Sunbeam "cannot meet the initial burden of establishing that WSVN's current ratings are less accurate than they would be under a prospective competitor's methodology."

Another reason the judge ruled in favor of Nielsen on the antitrust matter involved Arbitron having the potential to launch a local ratings service in Miami in 2006. It opted not to do so.

Arbitron had developed passive people meter technology with potential use in TV and radio ratings. Sunbeam alleges that Nielsen prevented deployment of the technology by signing an agreement with Arbitron giving it an option to gain "exclusive" control of the technology.

Nielsen, in turn, asserts that its deal with Arbitron was "non-exclusive" and Arbitron could have made similar deals with others.

In the end, Nielsen declined to exercise the option in 2006.

On another issue, Judge Huck determined that Nielsen was concerned about competition from a ratings service using the set-top-box data that cable operators own. Sunbeam charged that Nielsen sought to block a rival STB service by promising cable operators that its LPMs would inflate their ratings -- which they could use to garner more ad dollars.

Judge Huck wrote: "The record reflects that Nielsen viewed the cable operators as a potential competitive threat. There is some ambiguous evidence suggesting that Nielsen implemented (LPMs) to stave off that threat."

Sunbeam, owned by Ed Ansin, also has an NBC-CW duopoly in Boston.

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