erinMedia Sets Deadline For Backers, Vows New Action Over Nielsen Move

TV ratings firm erinMedia has set a deadline of the end of this week for strategic partners to join a coalition that would help the start-up become a serious competitor to Nielsen. If those backers fail to commit, founder Frank Maggio says he will turn to another potential ally to combat Nielsen's monopolistic control of the U.S. TV ratings business: the United States government.

Maggio told MediaDailyNews the ultimatum follows an announcement by Nielsen on Monday that it had formed a new division to develop TV audience measurement services derived from cable and satellite TV digital set-top boxes. Nielsen's announcement, coming a week after venture capital firm Spark Capital went public with plans to back erinMedia with $25 million in funding, is timed to thwart support for erinMedia, Maggio said.

Maggio described the Nielsen move as a "pre-announcement," a legal term used to describe announcements by monopolies that are intended to block market support for similar products or services being offered by smaller competitors.

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"If you look at Nielsen's announcement, there is nothing new in there. They are not announcing any new intellectual property. There is no deal with Comcast or any other cable operator to do something new. They are forming a division with the sole purpose to thwart erinMedia. It is nothing but a blocking tactic," Maggio asserted.

On Monday, Nielsen announced that the new division, dubbed Nielsen DigitalPlus, would "work with set-top box data from cable system operators (MSOs) and satellite providers to create new insights and services for clients by integrating set top box data with other Nielsen information." The Nielsen announcement offered no details for how the company planned to do that, but said it would "build on Nielsen's long history of set-top box data projects going back to Warner Amex's QUBE system in the 1980s" and more recent deals with Comcast's video-on-demand data and TiVo's digital video recorder data.

Nielsen said it already is working on "research projects with several MSOs and satellite providers to study set-top box data for potential analytical and audience measurement purposes," but declined to disclose who those companies were or what the nature of those projects are.

The announcement also comes as others have stepped up efforts to begin providing television audience measurement services derived from digital set-top data. U.K.-based research company TNS has begun working with several U.S. cable operators to help them model and even "commercialize" TV ratings services based on their set-top data, and TiVo recently launched a commercialized TV ratings service based on a panel of its DVR subscribers.

Starcom MediaVest Group, recently became the first ad agency to sign up for the TiVo service, and its parent Publicis Groupe, was identified by Spark Capital as one of the potential strategic investors in erinMedia. The others include a major television network, and a major automotive advertiser. Publicis has a deep relationship with General Motors Corp.

Publicis executives say they have been exploring a strategic role with erinMedia, but that it would not likely involve a cash infusion in the venture round. That would be consistent with other strategic venture stakes Publicis has taken in the past year, which involved equity in exchange for Publicis' strategic support and intellectual capital.

While it is erinMedia's wealth of intellectual capital, including some formidable patents for producing TV ratings via digital set-top data, that attracted Spark Capital, Maggio says the timing of Nielsen's DigitalPlus announcement could scare off some of those backers, one of which has already expressed "fear of retribution" from Nielsen should it support erinMedia.

"I am drawing a line in the sand," Maggio said of this week's deadline. "I'm not going to be the stalking horse for this industry. If the industry cannot see [Nielsen] is a brazen monopoly and they're comfortable in the hands of a brazen monopoly, then I'm going to have to do the only other thing I can do to force the market open. And that's to redouble the litigation."

erinMedia currently has a federal antitrust suit pending against Nielsen based on allegations that it "staggers" long-term contracts with its biggest clients in a way that stifles competition. Maggio says Nielsen's latest moves, however, indicate even more aggressive tactics to block support for a potential competitor and that he also plans to call on federal regulators to "take another look" at Nielsen.

"It's a new company," Maggio said, referring to the restructuring of the Nielsen Company, formerly VNU, which was taken private late last year by a group of private equity firms, that have consolidated its operations under the Nielsen brand.

"I am telling you unequivocally, I am not going to stop until the government takes another look at the new Nielsen Company," he vowed.

Interestingly, Microsoft recently settled a long-term antitrust suit brought by Caldera, a software firm that claimed Microsoft blocked it as a competitor by "pre-announcing" similar software products.

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