Nielsen Reigns As Metrics Master
The judge's 23-page ruling last week suggests an avenue by which Nielsen's dominance could be threatened. It's just not going to happen.
The process would entail media companies -- NBC Universal, Time Warner, etc. -- banding together as a mega client. Together, they would then conduct the sort of review that advertisers do when searching for a new agency.
Evaluating the best measurement option, the Big Media giants would hear pitches from Nielsen and competitors with potentially a better mousetrap. They would already agreed that their decision would become the market currency -- even if it took substantial investment and sweat equity if a Nielsen alternative won out.
Would that qualify as collusion? Not necessarily.
It is true that Big Media would be making a decision collectively, but not before opening the process to all comers. Nielsen might have the advantage, but Kantar Media or Rentrak would have a monumental opportunity to make a case based on set-top-box data or another methodology. Nielsen might then have to take a backseat and get ready for the next review.
Yet, it's fantasy. Never mind that it's difficult to fathom Kantar, Rentrak or another would-be genius coming up with enough funding necessary to muscle out Nielsen.
What becomes apparent in the federal court decision is even a wealthy challenger wouldn't stand a chance based on how Nielsen -- smartly -- runs its business. Nielsen does indeed stagger contracts, meaning its deals with media companies expire at different times.
Those companies don't seem to object much or be eager to push for an overhaul. Nielsen may be the devil they know. But they don't want to gamble with the devil they don't.
In 2007, testimony given in a separate Nielsen anti-trust case, CBS research chief David Poltrack said if his company were to purchase a competing service, an analysis would need to show that could lead to a $50 million-plus bump in profit.
Last week's decision by Judge Paul C. Huck was actually on a matter with only a tangential relation to the national ratings market. Sunbeam Television, the owner of the Fox affiliate in South Florida, charges Nielsen uses various tactics to muscle out competitors in that market.
Judge Huck issued a preliminary decision that, while conceding there may be evidence of such, there is not enough to declare Nielsen a monopoly.
Yet his decision finds there is "some evidence that Nielsen has a policy or practice of staggering the terms of certain of its national market contracts." In the process, he cites a Nielsen internal business plan that lists "(s)taggered renewals" as a "(c)ontract strategy" for "(w)inning and retaining all potential clients."
Judge Huck writes that this "could give rise to a reasonable inference that the policy" has Nielsen seeking a type of "exclusionary" market control.
Nielsen responds that it is not trying to block competition with staggering contracts with NBC Universal, Time Warner and others. Instead, it signs the deals because negotiating them takes "enormous effort" and it would be "burdensome to negotiate numerous large contracts simultaneously."
That argument indicated media companies are OK with Nielsen's dominance. Nielsen knows the length of each contract it cuts and could go out of its way to ensure they expire at different times. Why can't a media company negotiate aggressively to demand Nielsen agree to a deal that expires at the same time of at least one other Big Media member? Is it a matter of legality or languor?
Nielsen contends its contracts do not preclude a programmer from inking deals with other measurement services. Many do, using systems such as TRA and others as a Nielsen supplement, not a replacement.
Any contender will always be a pretender.