Better Than Sex: Sue the Ratings Company
That’s exactly what WSVN-Fox 7 in Miami did. They accused Nielsen of “recklessly, arbitrarily, capriciously” understating the audience of their local and national programming. To be more precise, The Fox 7 10pm Newscast lost 50 percent of their viewers, and the all so popular American Idol took a 29 percent drop! Ed Ansin, owner of WSVN said: “It’s a very bad situation…it’s a very bad situation.”
Fox 7 places the blame on Nielsen for introducing the metered home methodology last October. In the past, Miami had been a diary based ratings system. The new in-home meters automatically detect what a household is viewing, and then data is shuffled back to Nielsen headquarters via phone lines. TV stations contend that the metered homes produce higher ratings for the cable channels and much lower ratings for the locally broadcast stations. Sure seemed to be the case for WSVN-TV who reported a loss in the neighborhood of $1 million per month, and a reduced station value of $100m in the past six months. That’s according to Sunbeam, the parent company of WSVN.
Oh but wait….there is more! The Sunbeam lawsuit filed in the U.S. District Court of Miami also claims that Nielsen is in violation of both federal and state antitrust laws. They claim this antitrust activity allows Nielsen to “charge supra-competitive prices for poor quality service.” They state further that “Nielsen’s monopoly in the market for television ratings gives it the power to control price, output and quality.”
But you know what? WE created this mess. By establishing a system whereby broadcasters share in ONE universally accepted ratings system, we have cast our lot in stone. The fact of the matter is, ALL the ratings services have a ton of error in them. The question is, what kind of error do you want to tolerate? These ratings companies have return rates that are in the range of 25 to 35 percent. That means approximately 7 out of 10 viewers/listeners will NEVER agree to participate with Nielsen or Arbitron. That means never ever. 
Next time you are cocktailing with your friends ask them if they ever pick up the phone at night and agree to participate in a survey. Now you understand the truth about the ratings.
So when the ratings game changes…which in this case means going from diaries to meters, the error changes. Minorities error may increase, local TV audiences may decrease, time spent viewing/listening may increase, etc etc. We go from one system of error to another. But at least it is universal. Isn’t that a relief!
The really interesting thing about this lawsuit is the antitrust aspect of the claim suggesting that Nielsen is a monopoly. You’re damn right this is a monopoly. It’s a monopoly that is propagated not only by Nielsen and Arbitron, but further supported by broadcasters and advertisers alike. Like I said….we the people choose to have one and only one ratings service to make it easier for agencies to buy our product.
But recently the antitrust waters have become choppier with the arrival of the Obama administration. According to the New York Times, Obama’s top antitrust official, Christine Varney announced that this administration intends to “restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share.” That could spell trouble for the giant single corps like Nielsen and Arbitron that have a headlock on media rating services. So stay tuned. And do remember that once you make your bed, you have to lie in it (no pun intended).
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Metered homes do produce higher ratings for cable stations because the rating service does feel it has to measure both over the air and cable stations.
It could make an effort to measure the cable and non-cable homes on a percentage basis, and put only 75 to 80 percent of the measurement service into both over-the-air and cable station homes and 20 to 25 percent of the over-the-air only homes
If a company would like to start up another television rating service, the cost would be prohibitive, but there is nothing to stop them from trying to do so
Stations I used to own in Western Massachusetts saw one part of the DMA getting two survey periods a year - with 54 diaries representing 56,000 adults 12+. We would routinely go from a 20+ share to a 2.0 and back again - and the agencies would buy us only when the book was high. The industry has held a gun to its own head and threatened to shoot for decades.