Analyst: Hearing is wakeup call for Nielsen

Nielsen Media Research may have dodged any direct government intervention in the Local People Meter (LPM) dispute (7/16/04 RBR Daily Epaper #138), at least for now, but analyst Lee Westerfield at Harris Nesbitt, says last week's Senate hearing was a wake-up call for Nielsen to take more seriously how it counts minorities. At the same time, Fox and Univision failed to get lawmakers to move toward government regulation of TV ratings.

"Nielsen was put on notice to no longer handle the issue of minority viewership so cavalierly, most especially in an important presidential [election] year. Audience ratings are not a dry issue when politics and minority interests come into play. Nielsen, to my ears, was served notice to correct its mishandling of sampling issues in an orderly and rapid way - - or else risk big brother, government, revisiting with a firmer hand in the future," Westerfield said after sitting through the session on Capitol Hill. "Essentially the Commerce Committee indicated that private enterprise should find a way to self-regulate, but again with the hot potato of minority issues brought into play here, a remedy must be found or Nielsen will run the risk of government intercession at a later date."

Would Media Ratings Council (MRC) accreditation settle everything?

"MRC accreditation would de-fang the arguments of Fox and Univision, but would not by itself ameliorate the concerns of Fox, Univision and Tribune. The debate is clearly not about whether the local people meter functions, but rather whether the panels in New York and LA are representative and panelists are sufficiently well trained," he said.

"Cutting through the rhetoric, such as the claim [by Nielsen] that the LA court validated Nielsen's case - - it did not - - that the MRC withholding accreditation validated the concerns of Fox and others - - it did not - - the practical issue is whether Nielsen will apply resources beforehand to assure correct sample and diminish the default risks, not afterward," the analyst concluded.

Westerfield said the Media Ratings Council succeeded in its main objective in the Senate hearing, with CEO George Ivie as one of the witnesses. It established itself as an independent auditor "worthy of trust," he said, and avoided being removed from that role by government intervention. But he also noted that MRC didn't make any perceivable headway in expanding its enforcement authority. Ivie also called for Nielsen to keep LPM in a test mode for a lengthy period of time in each market, pending MRC accreditation, but Nielsen didn't bite on that idea.

"There were no victories here," Westerfield said of the hearing. The analysts said it was clear that Nielsen and its opponents have all hardened their positions, "making any solution between the interest parties pretty difficult."

Coming from a Wall Street perspective, Westerfield finds it surprising that Nielsen is able to go ahead with LPM after its auditor, the MRC, has refused to accredit the service. "If this was a CFO offering information to equity investors and the auditors didn't sign off, the statements don't go out - - period - - but Nielsen seems to be of the opinion that not getting the accreditation of an auditor is more like not getting a Good Housekeeping Seal of Approval - - the product is still pretty much a better thing, therefore commercially acceptable in the marketplace," he said.