CBS's $120 million fight with Nielsen tests Moonves' interim replacement

The contract between the companies expired Dec. 31, leaving CBS without Nielsen viewer data

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Les Moonves and Joe Ianniello in Sun Valley, Idaho on July 8, 2015.
Les Moonves and Joe Ianniello in Sun Valley, Idaho on July 8, 2015. Credit: David Paul Morris/Bloomberg

CBS Corp.'s contract fight with Nielsen Holdings Plc has created a scenario that would have been unimaginable until recently: The TV network with the highest viewership last season no longer has access to the most-widely used metric for measuring audiences.

The contract between the companies expired Dec. 31, leaving CBS without Nielsen viewer data that's used to set advertising rates. The New York-based broadcaster's acting chief executive officer is trying to get a better deal from the research firm, which collects more than $120 million annually from CBS.

The high-profile showdown is a test for Joe Ianniello, the longtime finance czar who's auditioning for permanent appointment to the CEO post. The fight comes at a critical time for Nielsen, too. Its new CEO, David Kenny, joined the company last month as a number of private equity firms were mulling a takeover.

While CBS would prefer a new contract with Nielsen covering all of its operations, including Showtime and the Smithsonian Channel, the company has suggested it could most easily do without local viewership data for its 27 TV stations.

"If we cannot come to an agreement with Nielsen, we will continue to employ the many viable alternatives available to us, including Comscore," CBS said in a statement last week.

A Contender

Ianniello is a contender to become permanent CEO -- depending on the course CBS takes in the coming months -- and is trying to show that the company has turned a page after the sexual misconduct scandal that drove out his predecessor Les Moonves. That's included appointing more women to top roles. He named Laurie Rosenfield chief people officer in October and put Susan Zirinsky in charge of CBS News this week.

In the past, dumping the company that invented broadcast TV ratings back in the 1950s -- with its diaries and people meters -- would be a nonstarter. But in recent years, Comscore Inc. has emerged as a stronger competitor.

While Nielsen has stuck to its method of using family-viewing samples to project overall audience habits, Comscore has tapped into TV set-top boxes for data, often gaining access to more homes in a market. Nielsen says it also uses cable TV gear as an information source and that its data gives customers more details about who is actually watching shows, rather than just which households.

Mobile Push

Nielsen said on Monday it's enhancing its ability to measure audiences on mobile phones and other devices.

In a memo to employees obtained by Bloomberg, Kenny said CBS was trying to obtain steep price cuts.

"Nielsen is more relevant than ever," he said. "The Nielsen of today -- after five years of hard, thoughtful work -- is not the slow, plodding company that CBS would like to portray us to be."

The accuracy of Nielsen rankings has been a source of complaint from networks such as CBS and NBC for years, particularly as more viewers record shows and watch them days after the original air date.

NBC, a unit of Comcast Corp., created its own measurement system to track viewing across multiple devices. Linda Yaccarino, NBCUniversal's chairman of advertising and partnerships, has promised to double the company's investment in such technology this year.

"We need to liberate ourselves from legacy processes and move towards a system that accurately reflects consumer behavior," she said in a note to staff late last year.

Other TV station owners have opted to forgo Nielsen rankings in local markets, where advertisers are likely to be smaller companies less focused on national ratings. Comscore said last week it reached an expanded agreement with Gray Television Inc. to provide ratings in 80 of the company's 91 markets.

CBS's local advertisers have so far been fine with Comscore-only data, according to a person familiar with the network's business, while national advertisers are skeptical the company can go without Nielsen. To further add intrigue to the fight, Radha Subramanyam, CBS's new head of research, is a former Nielsen employee.

Brian Wieser, an analyst and former advertising executive who follows both companies for Pivotal Research Group LLC, expects a deal to be reached soon. Nielsen has become too much of a standard for the industry to shift gears.

"The bigger the market, the more heavily skewed they are to large national advertisers," Wieser said. "Those advertisers need Nielsen."

—Bloomberg News

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