Facing 'Staggered' Contract Suit, Nielsen Extends 'Landmark' Contract With Time Warner
Nielsen said it has negotiated a three-year extension to its existing agreement with Time Warner for both national and local TV ratings, including its controversial local people meter (LPM) services in New York, Los Angeles, and Atlanta.
Like its original contract--which was negotiated in 1998 by former Time Warner research czar Scott McDonald, who is now head of research at Conde Nast--it covers Time Warner's broadcast, cable, and syndication business units, including Time Warner Cable, Turner Broadcasting, The WB Television Network, HBO, Court TV, and Warner Bros. Domestic Television Distribution.
The agreement provides the Time Warner businesses with national and local television audience estimates, including LPM service for Time Warner Cable in New York and Los Angeles and for WTBS in Atlanta. In addition, the agreement enables both companies to share information and to work together to develop and test new television measurement systems. When the original agreement was struck, it was hailed as a blueprint for the kind of long-term deals Nielsen hoped to lock up with other major television clients. Although they vary in tenure, Nielsen has secured multi-year agreements with most of its major clients, largely on the basis that there is no viable alternative in the marketplace.
Nielsen rival erinMedia, and its sister company ReacTV, last week filed an antitrust suit seeking an injunctive relief to break Nielsen's long-term agreements on the basis that they prevent new competitors from entering the market.
"These contracts are for terms of approximately four to seven years, and generally terminate at significantly different times," alleged the suit, which added: "Upon information and belief, [Nielsen Media Research] imposes steep financial penalties on customers who refuse to enter into long-term agreements. By strategically staggering the termination dates of these contracts, [Nielsen] has acted to entrench its monopoly by making it essentially impossible for erinMedia, or any other competitor, to challenge [Nielsen] as the currency for national television ratings in the industry generally or in any segment of the industry."