• by Joe Mandese  @mp_joemandese, June 17, 2005

In a development that has the potential to drag much of Nielsen Media Research's dirtiest laundry out for public scrutiny, a small rival has filed an antitrust suit against the TV Ratings giant and plans to take it to trial.

The suit, which was filed Thursday by erinMedia and ReacTV in the U.S. District Court for the Middle District of Florida, claims that Nielsen's practice of negotiating "staggered long-term contracts with TV networks and other customers" has created a monopolistic and anti-competitive environment that blocks entry by new players like erinMedia, which as been trying to create a TV audience measurement marketplace based on actual viewing data from digital set-top devices.

The suit specifically requests, among other things, that the court award injunctive relief to end Nielsen's monopoly, that "all of Nielsen's long-term, staggered contracts immediately become invalidated; and that Nielsen be denied the ability to continue anticompetitive practices such as purchasing its competitors.

In fact, Nielsen's market influence now extends well beyond simple TV audience measurement, and the company has been aggressively starting new businesses or acquiring rivals. Just this week, Nielsen announced the acquisition of Audio Audit, a major developer of TV and radio audience verification systems. Executives familiar with the companies said Nielsen has even made overtures to acquire erinMedia, which were rejected.

Using language similar to that invoked by anti-Nielsen pressure group Don't Count Us Out, Frank Maggio, chairman-CEO of erinMedia and founder-CEO of ReacTV, stated, "Nielsen has control over every aspect of the ratings process, from data sampling to data collection to data analysis. That allows too much influence and control by a single entity, and the potential for data manipulation by the highest bidder. What America needs instead is a system in which TV networks control access to their customers, a second company captures the data through set-top boxes, and a third company analyzes it."

Like DCUO, erinMedia has launched a website to keep interested parties abreast of the lawsuit.

The antitrust suit is not the first time an industry player has raised such allegations publicly. A little over a year ago, the American Association of Advertising Agencies filed an antitrust complaint with the Federal Trade Commission. The commission has not yet taken any action on that.