Print

Email story

Comment

Email editor

Suit: Ratings game outdated

A St. Petersburg man wants to compete in measuring TV audiences, but says he's aced out by Nielsen.

By CHASE SQUIRES
Published June 17, 2005

A St. Petersburg entrepreneur Thursday assailed television ratings giant Nielsen Media Research, filing a federal lawsuit accusing the company of using predatory practices to hold a monopoly in measuring television viewership.

Frank Maggio, founder of would-be ratings provider erinMedia and fledgling, would-be TV network ReacTV, sued in Tampa, demanding unspecified cash damages and asking the court to void contracts Nielsen maintains with television networks.

According to the suit, erinMedia has developed a way to mine information from digital set-top cable boxes for precise viewership data.

The suit claims Nielsen's statistical model of judging the national viewership trends in 109-million television homes by monitoring the habits of just thousands of families is unfair to advertisers and small networks. The suit alleges the system cheats viewers by inaccurately reporting audience preferences.

Nielsen vice president of communications Karen Gyimesi e-mailed the company's response to the suit:

"This frivolous complaint is completely unfounded. There is absolutely nothing about our contracts that prevents erinMedia or any other company from offering a ratings service, or that precludes our clients from using another service. We are very confident that this meritless lawsuit will fail."

Owned by the Dutch company VNU Media Measurement & Information, Nielsen divides the country into 210 markets. The Tampa/St. Petersburg market is the 13th largest, and Nielsen provides nearly 2,000 jobs in Pinellas County, most of them at an $80-million campus that opened in Oldsmar in 2003.

At stake in Maggio's suit is the way advertisers judge how to spend $60-billion annually, with rates based on what Nielsen says people are watching.

Maggio, 42, said Thursday he's ready for an expensive and protracted fight. He hired attorneys from Tampa and Atlanta, and with resumes boasting clients such as Coca-Cola and Home Depot.

"There's no good time to take on a giant. The best you can do is to hit them with the one thing they can't combat, and that is hit them with the truth," he said. "They can't bleed me, and the other thing they can't do, they can't touch me. I'm not a customer, they can't shut me off."

He bubbled with data, assailing Nielsen's system for using comparatively tiny samples to gauge viewership and adhering to hand-written diaries in which reporting viewers are supposed to record what they watch, then mail them in.

Maggio said erinMedia proposes collecting data from digital cable boxes - more than 25-million of them are in use now, with millions more anticipated. Stripped of personal information, identified only by zones, Maggio said a much larger sample could be fed into demographic formulas to generate a more accurate picture.

Stacey Lynn Koerner, executive vice president and analyst at New York's Initiative Media Worldwide, said the Nielsen system has its detractors, but there has to be some agreed-upon way to set advertising rates.

Television trade magazine Broadcasting & Cable last week reported that some smaller market stations are ditching Nielsen. According to the weekly magazine, more than 30 stations have dropped the service amid complaints about the quality of data.

But there has to be something, Koerner said. And overcoming the inertia against changing a nearly universally accepted measurement system, even if its flawed, will be difficult.

"Television is not just about entertaining people, it's actually a business, and businesses have to use currencies," she said. "Introducing a new measurement system is not just about who the competition is, but whether or not the industry is willing to address a new currency and accept a new currency."

Maggio said he's not against TV advertising, but he wants advertisers to pay rates based on real information. And viewers could be better served if programmers have a better idea of what consumers want to see, he said. Too many channels, the use of digital on demand, digital video recorders and viewers' itchy remote control finger make the Nielsen sampling model to small to get an accurate count, Maggio says.

"I really believe erinMedia is superior to Nielsen, and our product can change the face of television and the American culture," he said. "There's a fight going on about who should or shouldn't be in Nielsen samples. Our argument is while you guys are out there arguing about samples, there's a 109-million households out there that aren't being counted at all."

[Last modified June 17, 2005, 00:34:18]