IBM, GE eye funding of SRI's Smart

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IBM Corp. and GE Electric Capital Services are having discussions with Statistical Research Inc. about helping fund a national rollout of Smart, its system for measuring and reporting TV audiences.

SRI has been making the rounds of networks and ad agencies outlining the business plan for its competitor to Nielsen Media Research.

Under the plan, the big drivers would be the broadcast networks. SRI is seeking $100 million--asking $90 million from the networks, $10 million from agencies and $5 million from advertisers, according to executives familiar with the plan.

SRI is looking for initial investments of about $15 million each from the Big 4: ABC, CBS, NBC and Fox. The first payment would be 25%, or $3.75 million, followed five or six months later by another 25%.

The total investment wouldn't be paid until the end of 2000, if funding were to start in a few months.

Cable networks, agencies and advertisers would be on a similar payment schedule, though the amount they'd invest would be substantially less, the executives said.

All investors would get stock in the venture.

IBM, GE TO BUY OUT BACKERS?

The discussions with IBM and GE would see one or both of them buying out the initial backers before total payments are due.

On an annual-fee basis, the Big 4 broadcasters would be charged $1 million each as a base rate, and then about $1,000 per each half-hour show measured.

"The idea is that an IBM or a GE would need to see that the industry--the networks, the agencies and the marketers--is really supportive before they'd come in in a substantial way," said one of the executives with knowledge of the plans.

Gale Metzger, president of SRI, said "no comment" when asked if he's having discussions with IBM. SRI is said to have first spoken with IBM about Smart about a year ago.

The rollout includes equipment approval by Smart five months after funding is committed. Eleven months later, equipment would be installed in 2,000 homes; 2,000 more six months after that; and 1,000 more five months later, for a total 5,000 homes.

The service would be governed by a board of advisers from eight broadcast and cable networks, six ad agencies and two marketers.

SUPPORT DEBATED

The SRI discussions come as a number of marketers are debating the support, if any, they want to give a national launch of Smart, and how Nielsen's recent announcement it will go public factors in.

"The industry needs to decide what leverage it can get when Nielsen becomes public to get it more responsive," said one of the executives, and, also, "if it wants to support Smart or how the two can somehow be connected some way."

Last week, Smart announced its first ratings from 142 homes in Philadelphia.

Copyright May 1998, Crain Communications Inc.

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