• by Wayne Friedman , November 11, 2009

Major TV media-buying agency GroupM is considering legal action against Nielsen Co. for eliminating local TV station live-only program ratings and adding in live-plus-same-day programs ratings with DVR playback.

"We are exploring our options with our legal council," says Rino Scanzoni, chief investment officer for GroupM North America, which, he says, might include antitrust concerns.

GroupM contends the move will bring harm to its clients. That is, it is not the basis of contracts they have with TV stations, which are on a live-only program rating basis. Scanzoni says these contracts with stations extend well into next year.

"I have never seen such blatant disregard," says Scanzoni. "If they want to add another stream, that's fine. But by eliminating the live-only stream, they are changing the currency."

On Monday, Nielsen said it was eliminating live-only program ratings starting in January. It was substituting live-plus same-day program ratings, which include DVR playback. In September, Nielsen announced its intent to make the change, but that it first would consider clients' feedback.

By eliminating live-only data, Lyle Schwartz, managing partner and director of implementation research and marketplace analysis for GroupM, says Nielsen is overstepping its bounds, getting involved in the negotiation process: "Nielsen's job is produce the data. Their job is not telling the agencies how to sell."

A Nielsen spokesman says: "We consulted extensively with all clients, who responded that creating a ratings stream that includes both live viewing and the DVR playback for that same day was an urgent priority and the best representation of individual day viewing."

By way of comparison, the five broadcast networks live-plus-same-day ratings are currently 13% higher than live-only. Scanzoni says if you assume a commercial-skipping rate of 60% (data that comes from Nielsen itself), and 33% DVR household penetration, marketers would be paying 8% more than what the commercial exposure actually is.

"If they move forward, you will see a decrease in spending," says Scanzoni. "Clients aren't stupid. They are de-valuating the currency." GroupM controls about one-third of all TV spending. Last year, according to the Television Bureau of Advertising, $16.5 billion in advertising revenues was spent on TV stations.

Nielsen will offer live-only data only for analytical use -- and on a delayed basis. Only live-plus-same-day ratings can be entered into media agencies' computer systems -- such as those from Donavan Data Systems or MediaBank -- for use in posting and reconciling media buys.

The elimination of live-only demographic data is only for the larger local people meter markets -- about 25 or so -- that account for 40% of U.S. TV local viewing. Many big TV advertisers target these top markets.

Smaller "set-meter" markets -- another 25 markets or so -- will drop live-only household ratings data, to be replaced by live-plus same-day ratings. In these markets, diaries are used to get demographics, the data advertisers use to contract their media buys. This process will not change.

Ideally, media agencies want local TV commercial ratings, something they get now with national TV networks with the C3 currency -- commercial ratings plus three days of DVR playback. But Nielsen currently cannnot produce a local commercial ratings currency.

GroupM's Schwartz says Nielsen should at least consider moving from average quarter-hour ratings for local TV to a more exacting average-minute rating that advertisers get from national TV ratings.

Media buying executives believe Nielsen was pushed for the change by TV stations -- where it gets around 75% of its revenues. Scanzoni agrees that the current local TV measuring system isn't accurate and needs to be changed. But eliminating live-only is not the way.

Nielsen said it did not want to add more streams of data because clients -- particular TV stations -- have told Nielsen they have reached capacity in terms of the amount of local ratings data they can handle.

Nielsen has been adding new streams of local TV data, first with live plus seven days of DVR playback a couple of years back. In January 2009, it offered live program plus three days of DVR playback.

But these metrics have been virtually rejected by TV advertisers.