TV EXECS ANGERED BY NIELSEN DEBT: SEC FILING SAYS $300 MILLION DEBT TO RESULT FROM IMS HEALTH SPINOFF

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Executives at CBS and NBC reacted with anger and concern last week about the news that Nielsen Media Research will be saddled with $300 million of debt once parent Cognizant Corp. spins off sister IMS Health as a separate company.

The information was disclosed in a filing with the Securities & Exchange Commission.

"While management believes [Nielsen's] cash flow will be sufficient to service its debt and to reinvest in its business," read the filing, "a substantial portion of [Nielsen's] cash flow will be dedicated to payments of interest on debt, thereby reducing funds available for other purposes such as investment in new technologies necessary to perform in the emerging television market."

WORRIES ABOUT RATES

"It's an astonishing admission and one that concerns us greatly," said David Poltrack, exec VP-research and planning for CBS-TV. "Here you have a monopoly service saying that a large part of its cash flow will be going to debt service at the expense of developing new ways to measure digital TV and the like. Does that mean they are going to have to raise their already substantial rates even more? It's a major warning."

Major broadcast networks pay Nielsen about $10 million annually for its audience rating services.

Nicholas Schiavone, senior VP-research at NBC, said the revelation "suggests that any company negotiating with Nielsen would wonder about Nielsen's ability to perform satisfactory service across the board."

NBC is said to be negotiating a new contract with Nielsen; CBS and ABC have deals with Nielsen that last to 2000.

PROTECTING THE COMPANY

Jack Loftus, Nielsen's senior VP-communications, said Cognizant last week amended its statement after he was told of the wording by The Myers Report newsletter, which was doing a story on Nielsen.

The amended statement, submitted to the SEC, reads: "While management believes Nielsen Media Research's cash flow will be sufficient to service its debt and to invest in new technologies necessary to perform in the emerging television environment, a substantial portion of Nielsen Media Research's cash flow (an after tax amount equal to approximately 22% of its 1997 cash flow before financing activities) will be dedicated to payments of interest on debt, thereby reducing funds available for other purposes."

"We felt the original statement was misleading," said Mr. Loftus. The filing "is a legal document, and it's designed to protect the company" from future claims by investors.

"Nielsen ought to learn from Richard Nixon that it's hard to rewrite history, and probably even unwise," said Mr. Schiavone about the amended statement.

Nielsen will invest more money this year than ever before in business development-more than $60 million-Mr. Loftus said, adding that, when independent, it hopes to invest more than that amount.

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