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Cumulus Sues Nielsen over Ratings Monopoly

I ran this past a couple of clients, and they both think that in order to settle this, Nielsen may have to back down from the strict rules on Total Line Reporting and delisting of non-subscribing stations.
 
K.M. Richards said:
I ran this past a couple of clients, and they both think that in order to settle this, Nielsen may have to back down from the strict rules on Total Line Reporting and delisting of non-subscribing stations.
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That is a very smart analysis. In contrast, we have to recognize that there have been quite a few competitors to Arbitron / Nielsen over the years. Advertisers and stations chose Arbitron over The Pulse and Hooper back in the 70, and then we had Birch and several others attempt to institute services.

The key lies with advertisers. If agencies and big accounts do not want a second service, none will prosper.
 
K.M. Richards said:
Lance's coverage of this on RadioInsight has a link to the full 56-page filing at the end:

radioinsight.com

Cumulus Media Sues Nielsen For Monopolizing Radio Ratings Data Market

Cumulus Media has filed a federal lawsuit in Manhattan accusing accusing Nielsen of illegally leveraging its dominance over national and
radioinsight.com radioinsight.com
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Again, as you mentioned, this gives cause to compel Nielsen from delisting unsubscribe stations and networks. It would not surprise me to see a considerable. relaxation back towards what we used to see: all stations, both commercial and nonprofit, and both subscriber and non-subscriber listed in at least the data that subscribers get.

Perhaps we would not see the unsubscribe scribers in the public release of data but it would allow us to see smaller stations that might, in fact, be chewing away at the audience of subscribers. While I understand that many stations that did not subscribe took advantage of the knowledge of ratings, that is a somewhat simplistic situation; non-subscribers. You can always see the results of stations that get at least a .1 rating just buy asking any agency buyer to see their ranker.

When I had the opportunity to be on a committee working on the people meter back around 2002 there were both Nielsen and Arbitron executives present. My observation was that the Arbitron people were both researchers and media “fans“. The Nielsen people were much more focused on the profit than on the medium they measured at the time
 
Nielsen has a monopoly, for sure. But they (and their predecessor Arbitron) have had one for several decades.

It's not clear to me that Cumulus has much of a case here. Companies are allowed to use pricing to give their customers certain incentives, and they are allowed to change those pricing structures from time to time.

The ratings industry is interesting from an economics perspective primarily because there are few sellers (one in most markets) and also few buyers. The national data that Cumulus/Westwood One is filing suit over probably has fewer than 5 buyers.
 
Cumulus has little chance of prevailing if this goes to trial. Broadcasters and agencies are free to purchase or not purchase Nielsen's products.

The big broadcasters could probably form a joint venture to develop their own ratings service if they had the willpower to do so.

Is Cumulus doing anything to prop up Eastlan while it whines to the court system about Nielsen?

Now, if this case were about an alleged breach of contract by Nielsen, then that would be an entirely different story. Disclaimer - I've not (yet) read the actual lawsuit.
 
MarkW said:
Cumulus has little chance of prevailing if this goes to trial. Broadcasters and agencies are free to purchase or not purchase Nielsen's products.
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It's an anti-trust suit. Your argument doesn't apply, because Cumulus is accusing Nielsen of exploiting a near-monopoly on ratings.

I strongly suggest that you read the filing.
 
I will, and I will offer additional thoughts upon doing so. :)

It am interested in seeing how they allege Nielsen is stifling would-be competition.
 
K.M. Richards said:
It's an anti-trust suit. Your argument doesn't apply, because Cumulus is accusing Nielsen of exploiting a near-monopoly on ratings.

I strongly suggest that you read the filing.
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I hope that Nielson's lawyers are smart enough to recognize that the public bluster of saying that "the Cumulus case has no merit," is not going to fly well with most Federal judges. While the onus will be on Cumulus to prove its charges of, basically, price fixing, the company appears to be halfway there, if not more, with what Nielson has offered it. I'm in agreement with both you and @davideduardo here--Nielson will most likely have to give up its practice of not listing the ratings of stations who don't subscribe to its service.
 
MarkW said:
It am interested in seeing how they allege Nielsen is stifling would-be competition.
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The filing is very specific and fact-based in doing so. Specifically, they say the way Nielsen has structured their ratings reports and made onerous preconditions for receiving national data not only puts them as Westwood One's owner (and iHeart, as Premiere's owner) at a disadvantage by also being station owners ... if they don't subscribe their locally-owned stations in a market, Nielsen excludes that market from the nationwide report. And that makes Eastlan essentially non-existent as a viable alternative in any market.
 
I've now read in detail the "meat" of the lawsuit filed by Cumulus. I more or less agree with K.M.'s assessment in terms of the Tying allegations.

As a result, I rescind the following comment I made earlier:
Cumulus has little chance of prevailing if this goes to trial.
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If Cumulus' depiction of the facts is indeed accurate, they likely have a strong case against Nielsen in terms of the Tying Policy. Nielsen prices national ratings data very differently (i.e. much more steeply) for network syndicators who also operate local radio stations than for network syndicators who do not operate local radio stations. The primary way to avoid the absurd differential in pricing for national ratings data is by purchasing local radio ratings data in a multitude of markets regardless of the actual desire for such data. Another option is to accept a "Swiss cheese" style national ratings report whereby Nielsen intentionally excludes data from the local markets where the standalone local market reports were not purchased.

Under U.S. Anti-Trust law, if the provider of a desired service has monopolistic power over said service, it is often illegal for that company to coerce a customer of the desired service to also purchase an undesired service. Based on Cumulus' version of the facts, it certainly appears Nielsen is engaging in such practices.

On the separate topic of the Subscriber First Policy, I think the case presented by Cumulus is much weaker. They are essentially arguing it should be mandatory for Nielsen to publish the ratings data of all local stations in the ratings report for that particular survey area irrespective of each station's subscription status, since failure to publish such data could result in ad agencies not doing business with the unlisted station(s). It is unclear to me why Cumulus believes it has a right under the law to dictate the level of information Nielsen chooses to present or not present to its paying customers if Cumulus is not paying for the service in question.

Let's not lose sight of the fact Nielsen is choking on $11 billion of debt from its 2022 take private transaction. If Cumulus were to prevail on its lawsuit, the result might not be much of a price reduction for national ratings data for Cumulus (Westwood One) and iHM (Premiere), but instead, a big price increase for other companies that might use that data to bring everyone to parity.
 
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MarkW said:
If Cumulus' depiction of the facts is indeed accurate, they likely have a strong case against Nielsen in terms of the Tying Policy. Nielsen prices national ratings data very differently (i.e. much more steeply) for network syndicators who also operate local radio stations than for network syndicators who do not operate local radio stations.
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The reasoning is that the national data can be used for local sales by owned net affiliates.
MarkW said:
The primary way to avoid the absurd differential in pricing for national ratings data is by purchasing local radio ratings data in a multitude of markets regardless of the actual desire for such data.
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That would be much more expensive, and not easily consolidate-able.
MarkW said:
Another option is to accept a "Swiss cheese" style national ratings report whereby Nielsen intentionally excludes data from the local markets where the standalone local market reports were not purchased.

Under U.S. Anti-Trust law, if the provider of a desired service has monopolistic power over said service, it is often illegal for that company to coerce a customer of the desired service to also purchase an undesired service. Based on Cumulus' version of the facts, it certainly appears Nielsen is engaging in such practices.
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Not really. They are saying that they will not give for free easily ex-tractable local data as part of a network ratings service.
MarkW said:
On the separate topic of the Subscriber First Policy, I think the case presented by Cumulus is much weaker. They are essentially arguing it should be mandatory for Nielsen to publish the ratings data of all local stations in the ratings report for that particular survey area irrespective of each station's subscription status, since failure to publish such data could result in ad agencies not doing business with the unlisted station(s).
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The fact is that the vast majority of unlisted stations are ones with low ratings or which don't use ratings (Good Karma, for example) and agencies, the main source of ratings based revenue, do not buy that deep anyway.
MarkW said:
It is unclear to me why Cumulus believes it has a right under the law to dictate the level of information Nielsen chooses to present or not present to its paying customers if Cumulus is not paying for the service in question.
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And the reason for that is to prevent unsubscribed stations from getting data from subscribed friends at ad agencies.
 
So, is it safe to say you believe Cumulus' legal arguments for this matter lack merit?

As to the following:

MarkW said:
The primary way to avoid the absurd differential in pricing for national ratings data is by purchasing local radio ratings data in a multitude of markets regardless of the actual desire for such data.
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That would be much more expensive, and not easily consolidate-able.
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I think you may have misunderstood the point I was attempting to make. Nielsen requires Cumulus to buy the local ratings reports in the markets where it operates local broadcast stations in order to receive the national ratings data at what I'll call the "regular" price. For national broadcasters who do not own local stations, they can get the same national data at the "regular" price without the added burden of having to purchase individual local market data.

For each individual market where Cumulus owns 1 or more broadcasts stations where Cumulus refuses to purchase the local ratings report, Nielsen allegedly penalizes Westwood One programming by excluding listening from that market area in the national ratings report.

Cumulus is essentially characterizing this practice as strong-arm tactics by Nielsen to force it buy local market ratings reports it would not otherwise wish to purchase as a pre-condition to receiving national ratings data that is useful.
 
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MarkW said:
Cumulus is essentially characterizing this practice as strong-arm tactics by Nielsen to force it buy local market ratings reports it would not otherwise wish to purchase as a pre-condition to receiving national ratings data that is useful.
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What Cumulus would get under their claim is "free local station data" for network affiliates that could be extracted and used for local sales.

If you have a station that is your own network affiliate, you need local ratings for sales for that station alone and the network data for the coverage of the whole net. Neither is given for free.
 
I see now what you're saying. You are suggesting that they would effectively be able to extrapolate local market data from the national report that could then be used for sales purposes at the local level without having to pay for the local ratings report. Interesting.

If what you say is indeed correct, then perhaps my initial intuition was correct after all.
 
davideduardo said:
What Cumulus would get under their claim is "free local station data" for network affiliates that could be extracted and used for local sales.

If you have a station that is your own network affiliate, you need local ratings for sales for that station alone and the network data for the coverage of the whole net. Neither is given for free.
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While I agree with that argument in part, the conditions placed by Nielsen and the consequences of not "going along with the playbook" is that Westwood One is penalized on both counts. To use Los Angeles as an example -- because they are using it as one -- they are excluded from seeing the ratings data for network programming carried on any station in the market, just because they do not subscribe KABC to the local ratings.

On that basis, I think they have a good argument and one which is difficult to refute the way you have, David, to the satisfaction of a judge and jury.

And -- purely my opinion -- that should be something Nielsen should expect, instead of creating a less than complete ratings picture as the result of this policy which Cumulus is challenging.
 
Ohhhhhh, boy.

Looks like Nielsen thought that would all be forgotten in a dozen years.
 


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