Rentrak issues a flurry of press releases. Its PR machine is prolific. And yet, the company seems to hold its most game-changing announcements for earnings calls it holds with investors. Money talks, so forget the go-between?
Three months ago, the measurement company told Wall Streeters that Dish Network had taken a stake in the company and agreed to give it exclusive access to set-top-box (STB) data through 2016. Then on Wednesday, it made the watershed announcement it had signed its first deal with an O&O group.
ABC has inked an agreement to use the Rentrak local TV service for three of its eight owned stations – ones in Houston, San Francisco and Fresno. The Houston station had quietly been using the data for about six months under a short-term agreement.
Rentrak has achieved a lot of breakthroughs in just a short period as CEO Bill Livek has sought to make TV measurement its propeller. A year ago, it had 100 local stations using its service that offers second-by-second tracking. Now, it has 200. (The company also measures national networks.)
A top Nielsen executive recently pretty much validated what Livek has said for years – that the market could support two ratings streams: the Nielsen panel-based one and what Rentrak calls a census-like gauge.
The signing of an O&O (owned and operated) group is another validation. ABC-owned stations aren’t dropping Nielsen as their primary currency base anytime soon, but Rentrak can provide a research trove, while offering an opportunity to make some modest deals.
The agreement sets the stage for Rentrak to attract other Big Four-owned station groups, perhaps with the San Francisco market as the linchpin. There, CBS and NBCUniversal own stations and Rentrak’s strategy has been to sign a client in a market, prove its worth and hope others follow.
In Cleveland, it has all the major-network affiliates, one of four markets where it has that profile, and it has at least three statons in 26 markets.
O&Os are sort of the last foot in the door Rentrak needs. It has deals with most of the major station groups, where it has looked to expand the relationships by signing up more and more of their stations (there are hundreds more to go). Perhaps because the Big Four networks are tethered to Nielsen, they’ve been holdouts.
Rentrak offers significantly lower costs than Nielsen, so that may have helped it gain traction, but the company said on average its long-term contracts (with station owners, networks and agencies) have an annual increase of 30%.
Rentrak’s growth and ABC deal comes as Nielsen has begun the early stages of rolling out its version of a new local-market ratings stream using return-path information – commonly called set-top-box data – and a new code reader device.
Talk to Nielsen and the company will say it had begun moving towards incorporating STB data before Rentrak blossomed. Listen to investors’ questions and how Rentrak's Livek responds and one might think Nielsen gained at least some motivation from it.
“I’ll draw an analogy to the auto business in the 1970s,” CEO Livek said Wednesday. “The U.S. manufacturers were producing products that the consumer didn’t want and all of a sudden we had an oil crisis and the consumer discovered that there were high-quality Japanese cars that didn’t rust on the showroom floor and got phenomenal mileage.
“It’s similar in local TV. There was an antiquated product that Rentrak saw, we built a superior product, continue to improve on it, continue to build critical masses of customers and, of course, the competitive marketplace does what the competitive marketplace does. Everyone starts improving. Do we believe that it is going to hurt the momentum we’ve built? No. We believe that it’s too late.”
Those investors, who get the big news first, seem to agree. On a day when the stock market was dropping precipitously, Rentrak’s share price was up nicely.