An International Nielsen Scandal?

This week, New Delhi Television Limited, India’s oldest and largest news network, filed a multi-billion dollar lawsuit in the New York State Supreme Court, alleging that the Nielsen Company and its partner in India, Kantar Media Research, have been receiving bribes in exchange for rampant manipulation of television viewership data.  The lawsuit also contends that similar activities are taking place in places such as Turkey, the Phillipines, and here in the U.S. (specifically, Florida).  The full 196-page complaint can be found here.

The lawsuit contains a number of damning claims, including accusations that executives were accepting bribes from television networks; and that elaborate systems were in place to manipulate the data gathering process in Nielsen households so that normal viewing could take place on unmeasured televisions, while the measured televisions were tuned to specific channels for extended time periods in order to artificially inflate their ratings.

The lawsuit alleges that such manipulations were facilitated by Nielsen’s refusal to increase the size of its household sample (only eight thousand homes).  That is, when the household sample is so small, it is possible for relatively few corrupted households to significantly affect ratings results.

The lawsuit also alleges that such activities have been taking place for eight years; and that, when presented earlier this year with evidence, Nielsen executives promised to address the problems.  Essentially, the lawsuit contends that Nielsen executives have conducted their own investigation and admitted to the corruption, but have done nothing to rectify the situation.

Audience measurement firms are no strangers to lawsuits.  Radio audience measurement firm Arbitron came under legal attack from a variety of stakeholders (include a number of state attorneys general) as a result of its efforts to to launch its Portable People Meter technology.  Similarly, Nielsen’s efforts in the U.S. to launch its Local People Meter led to a legal attack from Spanish-language broadcaster Univision. And then there was the three-year antitrust lawsuit filed against Nielsen by upstart measurement firm erinMedia.  Generally, these lawsuits either failed, or ended in settlements of one form or another.

It will be interesting to see whether this lawsuit follows a similar path, or whether it becomes a full blown international scandal.  In many ways, the lawsuit reflects one of the key dangers that arises from the overwhelming tendency toward monopoly in the realm of audience measurement.  If only one firm provides the relevant data, there really isn’t any kind of potentially effective system of checks and balances in place.  And thus the potential for corruption and manipulation increases.

And, in the case of Nielsen, the scope of its position of prominence in the provision of television audience data around the globe is remarkable.  Back in 2008, the company announced to its clients that it controlled three quarters of the world’s TV currency data.

As I talk about in Audience Evolution, every once in a while the question of whether more comprehensive government oversight or regulation of the audience measurement industry is required briefly finds its way onto the policy agenda, only to fade back into the background.  One can’t help but wonder whether — if the claims contained within this lawsuit are substantiated — this could be a turning point that finally provokes a more aggressive government response.

 

 

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5 Responses to An International Nielsen Scandal?

  1. I suppose the check/balance on a monopoly info provider is credibility, which is what Nielsen is actually selling. I wonder if rigged ratings in India (a far away place, assumed to be corrupt) will affect Nielsen’s credibility in the US at all. If it does, I imagine it would be a market response–a speeding up of the use of alternate providers–rather than governmental. Self-regulation via trade organizations is the usual response to such corruption (like the Audit Bureau of Circulation for print circulation). In any event, I think it’s likely that Nielsen has already begun to lose its monopoly grip on ratings. Or am I being too optimistic?
    BTW, I attended Time Warner’s College Professor Thought Leadership seminar recently, which was a series of presentations by VP of Research from their various divisions. My comments on the seminar can be found here: http://blog.commarts.wisc.edu/2012/07/30/time-warners-thought-leadership-seminar/ and here: http://awordfromoursponsor.wordpress.com/

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