• by Frank S. Foster , May 19, 2008

Despite industry expectations that Nielsen's C3 ratings would receive MRC accreditation in time for the 2007 upfront (then further assurances the process would be completed in January of 2008) it is now that time of year again -- and Nielsen's system has yet to gain MRC approval.

In the past, the MRC has blamed Nielsen for the delays -- and while many will point fingers, I suggest the reasons behind the hindrance are irrelevant. The current system has failed to fulfill its mission. The industry has proven beyond doubt that it cannot force Nielsen to accredit a service before it rolls it out. For the good of everyone involved, a new plan must be concocted. Make Nielsen show us how good or bad its service really is. Television ratings should be quantified.

The origins of the MRC (originally the Broadcast Rating Council) date back to the consent decree of 1963 and the Harris Committee hearings that followed. The consent decree itself was the culmination of an FTC investigation that began in April of 1960. The government, concerned that Nielsen had too much market power (over 90% market share in 1961) and as such had little incentive to improve shoddy practices, ordered Nielsen to cease its efforts to monopolize and restrain trade. The government cited several examples of Nielsen's practices including "restrictive agreements with competitors, acquiring competitors' customers and trade names, interfering in the development and use of competing electronic and mechanical measuring devices through threats of patent proceedings, harassment, coercion, and otherwise, sabotaging competitors' financing of such efforts." In the 1963 FTC consent decree the government saw fit to order Nielsen to cease and desist from three basic types of activities:

1. Putting together agreements that made it difficult for competitors to compete or forced them to withdraw from the market altogether. 2. Buying competitors for a period of ten years. 3. Hindering the efforts of competitors to get funding.

In the last 50 years, has the industry kept Nielsen at bay? I suggest the current environment is what Senator Oren D. Harris feared-an unchecked Nielsen running amuck. Nielsen's long-term, staggered contracts with networks -- some are ten years in length -- dramatically hinder competition. Nielsen's contractual relationship with Google does nothing to promote competitive offerings. In the midst of industry concern about consumer engagement and set-top-box analysis, Nielsen recently spent hundreds of millions of dollars to acquire mildly profitable IAG, and the rumor mill suggests an offer for TNS is likely. Nielsen's timely announcement of its digitalPlus initiative during a critical juncture in erinMedia's financial raise in February of 2007 did not help the cause and contributed to the latter's marketplace exit. The government was concerned that Nielsen had sewn up 90% of the ratings market in 1961. I would estimate Nielsen garnered more than 98% of the television ratings market in 2007 -- is the situation better or worse?

My suggestion -- the industry should ask the MRC to "quantify" ratings services --solves the problem indirectly. Let potential competitors and industry players see how high Nielsen has raised the bar. Each service should be examined on the basis of error and bias so that validity, reliability and effectiveness can be compared, just as the MRC's mission allows it to do. As the former head of a fledgling television ratings company, I was routinely lectured by industry insiders that MRC accreditation was imperative. Before any competitive ratings product could ever be considered credible, it must pass muster. Upon exploration of the endeavor, I emerged with the impression that the process was outrageously expensive, incredibly time-intensive - and, as we have now seen, apparently unnecessary for at least one party, as Nielsen is not required to play by such rules.

While the process may be helpful for a number of reasons, including the power it gives the industry to decide whether or not a service gains accreditation, it does little to promote competition in the space. And that, my dear friends, is the rub. Right or wrong, every aspect of the ratings business is geared to assist the incumbent. Without competition, there is no incentive for the incumbent to change. Without a change in the competitive landscape, there will be no legitimate competition.

Pundits, myself included, have argued for years that Nielsen's services are riddled with error and bias. If it were shown that Nielsen's local ratings for ESPN and USA were subject to an error equal to 50% of the rating, would it change your opinion of the service? What if it were 75%? In the end, we have no idea. Let the MRC evaluate bias and error and see if Nielsen is as accurate as they claim to be. Make them pay for it, too. They can afford it