TV Ratings Testimony Proves Divided: Will Regulation Stifle Or Enhance Innovation

In the latest round of political debate surrounding the TV ratings business, representatives from Madison Avenue, the TV industry and the research business testified on Capitol Hill Wednesday, stripping away much of their partisan rhetoric and reducing their positions to a few simple themes, mainly whether the so-called FAIR TV Ratings bill would stifle or nurture competition and innovation in an industry that now has one self-regulated monopoly. The chief executive of Nielsen Media Research, and a top agency media buyer, said regulation would stifle the process, while a representative from the broadcast industry, an acknowledged ratings authority, and the head of the industry's ratings watchdog group said it would nurture it. A representative from large Spanish-language broadcaster Univision was "neutral" on the subject.

The hearings, which took place in the U.S. Senate touched on all sorts of methodological minutiae that seemed to confuse and confound the Sen. Conrad Burns (R-MT) who presided over the testimony, delving into such details as the fault rates, sampling and cooperation rates that affect TV ratings samples, and the accreditation process that validates it. But the essence of the debate, concurred Tribune Broadcasting CEO Pat Mullen, MRC executive director and CEO George Ivie, and renowned research authority Gale Metzger, is that the TV and advertising industries are dependant on a sole supplier of TV ratings that has been ignoring the self-regulatory process, and undermining the organization created to manage it. "Nielsen has in fact rolled these markets out before audits have taken place," said the MRC's Ivie, referring to local people meter markets Nielsen introduced in defiance of the MRC's Television Committee. "That is a problem. That is problem, sitting in my place, that I don't want to see happen again."

advertisement

advertisement

In what appeared to be a startling admission, Nielsen CEO Susan Whiting asserted, "We have to use the MRC process and not make it mandatory," revealing what Metzger, a one-time Nielsen rival who created the SMART TV ratings initiative, referred to as "Nielsen's new, more aggressive posture with the MRC."

Metzger said this has typically happened during periods when Nielsen faced no competition, and was immune to market pressures, as it appears to be now. He also asserted that regulating the TV ratings process, and making it mandatory to receive MRC accreditation before a service could be introduced or changed, would not stifle competition.

"The opposite would be true. It would be difficult to have less innovation or less competition than we have now," he said.

Metzger also noted that the "balance of power" in the TV industry has fundamentally changed since the 1960s when the MRC was formed by the industry to regulate ratings following a Congressional review then. Back then, he said, the Big 3 broadcast networks wielded a significant amount of power that could check and counterbalance Nielsen. But he said the fragmentation of the television marketplace has diffused the TV industry's power, increasing Nielsen's marketplace leverage.

Tribune Broadcasting CEO Pat Mullen testified that Nielsen submits to the MRC process, "only when it supports its aggressive business strategy." He implied Nielsen does not operate in the best interests of its clients, but in its own business plans. Citing its option to develop a portable people meter system based on Arbitron's technology, Mullen said, "It appears highly unlikely that Nielsen will allow the PPM technology to compete with its LPM service" in the top ten markets where Nielsen's national and local TV business plan is based on using people meters.

"Clearly the free market cannot solve this problem, which is a serious one," said Mullen.

Nielsen's Whiting maintained that voluntary self-regulation is the way to go, and that making accreditation mandatory would both slow down ratings research innovation and would inhibit new players from entering the market. She said a new code of conduct that Nielsen has been negotiating with the MRC would suffice, and that Nielsen would commit to it assuming other media ratings providers also agreed.

"We are working on that with some urgency. We expect to have sign off on that by Oct. 15," added the MRC's Ivie.

But the positions of Nielsen's Whiting and the sole representative of Madison Avenue, MindShare President of Local Broadcast Kathy Crawford appeared to be driven more by a sense of urgency for marketplace reasons than by the methodological processes involved.

Crawford maintained that the Senate bill would make advertisers "far less willing" to advertise on local TV stations, noting that Madison Avenue has been "waiting 15 years" since people meters were introduced nationally to bring them to local TV markets.

"We have the advertiser paying the ultimate price here," she said.

Burns adjourned the hearing, offering the representatives to add additional comments to the record if they'd like and by telling them that other members of Congress would likely have additional questions for them.

Next story loading loading..