Friday, January 14, 2011

SFL Friday -- Judge Huck Rules Against WSVN Over Nielson Methodology Change.



It's Friday and a three day weekend honoring that warmonger Martin Luther King, so perhaps it's fitting that Judge Huck has ruled today on a very interesting antitrust case involving whether Nielson properly captures minority and/or poor viewership (don't tell anyone, but I hear there's a lot of overlap).

Judge Huck in his Order granting partial summary judgment gives a nice summary of the claims brought by WSVN's parent company Sunbeam, which deal with a change in how viewership is measured:
This case arises out of controversy surrounding Nielsen’s October 2008 implementation of its Local People Meter methodology, a People Meter method replacing the Meter-Diary method in the Miami-Fort Lauderdale television market. Id. ¶ 3.  Sunbeam alleges that Nielsen implemented Local People Meters despite its knowledge that certain demographic groups—in particular, minorities—do not use the technology properly, leading to inaccurate ratings. Id. ¶ 57. Sunbeam alleges that this practice has drawn the criticism of customers, minority groups, advertisers, and congressional leaders, and contravenes an industry association’s recommendations. Id. Sunbeam further alleges that this flaw can be corrected by modifying survey methodology and statistics. Id. ¶ 82. The consequences of the change to the Local People Meter methodology have been profound: a dramatic reduction in WSVN’s ratings—in some cases by as much as fifty percent—resulting in lost advertising revenue of $1 million per month and a $100 million decrease in WSVN’s going-concern value. Id. ¶ 10.

Sunbeam contends that its injury is the result not merely of a defective ratings product, but of antitrust violations. Sunbeam alleges that Nielsen engaged in the following exclusionary and monopolistic conduct: (1) mandating contract provisions that prevent competitors from entering the market; (2) undertaking transactions and business strategies intended to neutralize actual or potential competitors; (3) imposing punitive pricing on customers who resist its practices; (4) utilizing defective ratings data to attract and retain new cable customers, thereby foreclosing a potential avenue of competitor entry; (5) imposing on its customers onerous contract provisions that, inter alia, leave them with no effective contractual recourse in the event of breach; and (6) charging noncompetitive prices for its rating services. Id. ¶ 13.
Hmm, this strikes me as a very difficult antitrust claim to establish..

Who are Nielson's competitors, for example?

The Judge finds all sorts of problems, including the aforesaid lack of competition as well as causation, and focuses on the zero-sum nature of TV viewership ratings:
For years, Sunbeam was pleased with the status quo of the Meter-Diary method, which even Sunbeam admits has flaws, but other stations, including cable stations, were not. Now some of those other stations may be satisfied, and Sunbeam is not. Were Nielsen to be compelled to revert to the Meter-Diary method or institute a new method entirely, it would likely face new complaints and possibly new antitrust actions from other stations, cable or broadcast, dissatisfied with their decreased allocation. This precarious position does not mean that Nielsen should be immune from some suit. The law does require, however, that Sunbeam present a triable issue of damages and, as to lost ad revenue and going-concern value, it cannot do so without undue speculation.
The Court did defer on the state court counts and permitted additional briefing, so all is not lost yet (actually, it probably is).

Boy, reading that thing was exhausting -- I'm cutting out for some well-deserved windsurfing but will try to check in tomorrow.

Have a great weekend!

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