Paramount’s threat to drop Nielsen ratings on Oct. 1, as part of a contract standoff with the measurement giant, raises questions about whether the ad industry is ready to trade on a new currency. Paramount has said it would name VideoAmp as its preferred currency should it not reach a new agreement with Nielsen, according to a letter to agency investment leaders written by John Halley, Paramount’s president of advertising.

That move could face contractual roadblocks in executing upfront deals already written.

The companies are locked in a disagreement over the price of Nielsen’s service, wrote Halley in the letter reviewed by Ad Age. The contract is set to expire today (Sept. 30). Should the companies not come to terms in time, advertisers would be required to convert guarantees for existing deals made with Nielsen data for Paramount inventory, including CBS, Nickelodeon and Paramount+, to new currencies.

Paramount declined to comment. Nielsen declined to comment on contract terms with Paramount or other clients.

The dispute revolves around Nielsen “insisting on substantial price increases” to renew its contract with Paramount, according to Halley’s letter sent late Wednesday. “Nielsen’s costs as a percentage of Paramount ad revenue have quintupled over significant parts of our business over the last years,” wrote Halley. “In certain instances, Nielsen’s fees already exceed the total advertising revenue of the network being measured.”

Halley said that should Nielsen data go dark on Paramount, the company “will solely utilize VideoAmp for planning, reporting and stewardship,” and that the company has been providing clients with VideoAmp data on active campaigns for the past four months regardless of deal terms for comparison.

In an email sent to clients Thursday and obtained by Ad Age, Nielsen Chief Revenue Officer Amilcar Perez responded that “our other customers [meaning, non-Paramount] will continue to have full access to our data.”

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CBS and Nielsen previously disagreed over contract terms in 2019, leading to a lapse in coverage. At the time, media buyers told Ad Age that the lack of data was a major impediment in buying ad space from CBS, although agencies retained Nielsen coverage of CBS and were able to steward existing buys using Comscore data.

In the years since, dealmaking on Nielsen alternative currencies, such as with data from VideoAmp, Comscore and iSpot, has become a prominent industry focus, and Paramount is much better off this time to continue dealmaking. 

The immediate impact on advertisers will be minimal, according to two media buyers. One buyer said that existing deals, including those just struck during upfront negotiations, will be a matter of switching audience guarantees from Nielsen to VideoAmp. The buyer said their agency, as well as others, have been utilizing VideoAmp data for several years, and are able to easily convert one to the other.

A second buyer, though, said it may be more complicated given the depth to which some deals, particularly multi-year commitments, are ingrained with Nielsen data. And the difference between audiences that Nielsen measures versus those that VideoAmp measures for the same media can vary greatly, said the second buyer, adding that sometimes the audiences track with one another while other times they’re vastly different.

Although Paramount will no longer have access to Nielsen data, the second buyer said the agencies will retain access to Nielsen’s measurement of Paramount channels and be able to maintain Nielsen guarantees with Paramount based on their data.

“This happens in local—there’s a lot of local station groups that just won’t spend the money with Nielsen to subscribe, but we as agencies do, and technically we’re not supposed to share them, and we don’t share them, but there’s ways to figure that out,” said the buyer. “We need some standardization [in measurement across media sellers] so we have a workaround. I feel like this is the same. We’re going to have the opportunity to see the numbers, even if Paramount doesn’t, And at least in the beginning for deals that are done, if they were guaranteed on Nielsen, we’re still going to get those guarantees.”

The first buyer said that the majority of their upfront deals with Paramount were done using Nielsen as currency, while roughly 25% were done on VideoAmp for advanced audiences. The second buyer said they had already transitioned their upfront deals with Paramount to VideoAmp with the exception of sports, which were done on Nielsen. Previously, numerous media buyers told Ad Age that the majority of upfront deals were transacted on Nielsen.

Prior to Nielsen’s recent correspondence, the first buyer said “initially Nielsen expressed to Paramount that any and all Paramount data would go dark.” 

This would have had much more complex implications as the buyer said the missing data would have upended the process of translating Nielsen data to VideoAmp for planning and analysis, and would require agencies to develop additional processes for doing so. But the buyer said a hypothetical Paramount blackout would also not be in Nielsen’s best interest.

“Our contract with Nielsen is based on their ability to measure and report on the full TV universe,” said the first buyer. “If Paramount, or any other network group, is missing from that, we would expect a reduction in our costs to Nielsen.”

Additionally, the second buyer said that they don’t want to strike deals with every media company based on different currency providers, so a large seller like Paramount dropping Nielsen may sway their other deals toward VideoAmp or the currencies that can be utilized across all partners.

Beyond agency access to continued Nielsen data for Paramount, other contractual factors could make it hard to translate deals written on Nielsen data into VideoAmp data, according to people familiar with the matter.

Nielsen contracts prohibit media companies or other clients from reporting Nielsen data side by side with that from other measurement companies, such as VideoAmp, Comscore and iSpot.tv, according to media executives. That raises the possibility that Paramount’s efforts to provide comparable data streams to agencies for the months leading up to the current contract’s end could be a violation that Nielsen might seek to address through litigation.

But a person familiar with Paramount’s practices said the company is not presenting Nielsen and VideoAmp data side by side, but rather already has processed data to express advertiser dollar commitments from the upfront into VideoAmp data sets. That is not prohibited by the Nielsen contract, according to this person, and Paramount set up its ad tech stack so that this could be done easily.

Beyond that, breaking up with Nielsen is difficult because of data retention clauses in its contracts, which require media companies to eradicate all traces of historical Nielsen data from their systems once their contracts end, according to people familiar with the contracts. That includes not just prior reports from Nielsen, but also emails, ads, financial reports or any communication internally or externally that cited those ratings, according to executives who’ve terminated Nielsen contracts or contemplated doing so. They said complying with that directive can take months of work.

Behind Nielsen contract issues

In recent years, Nielsen has reduced its rates in renewals with companies such as Comcast NBCUniversal and TelevisaUnivision, according to people familiar with the matter, by agreeing to longer or extended terms and using leverage of assets they own, such as Comcast’s set-top box data.

Paramount has broadly been in financial straits as it aims to cut $500 million in costs to offset its debt and declining value as media companies struggle in the transition from traditional to digital media. Last week the company announced plans to cut approximately 15% of its U.S. workforce, including two recent rounds of mass layoffs affecting approximately 2,000 employees. 

These cuts come as the company has agreed to merge with Skydance Media next year as part of a larger acquisition by the media company’s founder David Ellison and investment firm RedBird Capital.

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Executives of Skydance, which has agreed to acquire Paramount, identified the Nielsen contract as one focus area for cost savings, according to a June report by CNBC. Industry executives have estimated the contracts of Paramount and others among the five biggest network players at around $200 million annually, though Nielsen and Paramount declined to comment on the size of the current contract.

While Paramount’s Nielsen contract is big, so is the company’s ad revenue, estimated at $10.1 billion globally and $8.8 billion in the U.S. last year by consultancy Madison and Wall.

Relations between Paramount and Nielsen have been fraught for some time, with Halley having accused Nielsen of “weaponizing” its MRC accreditation last year and later making a veiled threat to drop Nielsen, at least for access to streaming data.

While Nielsen declined to comment on contract terms, a spokesman pointed to the company’s efforts over the past six months to bring its big data plus panel measurement to market, launch an enhanced Nielsen One Ads system with advanced audience and outcomes capabilities and expand out-of-home TV audience measurement, all of which cost money to do.

Beyond Paramount, Nielsen continues to have contracts in place with all the other major TV-centric media companies. One exception is Allen Media Group, which last year dropped Nielsen and signed a 10-year deal with VideoAmp to provide currency measurement. The Weather Channel, part of Allen Media, last year used VideoAmp as currency with every major agency holding company, indicating it can be done.

For its part, VideoAmp already has been providing advanced audience and data-driven linear measurement for Paramount and elsewhere, boasting $1.5 billion in upfront commitments written on its currency so far this year, albeit in a TV market of around $80 billion in annual revenue.

“Paramount was one of the first media companies to transact on VideoAmp and has been an incredibly valued partner over the past three years,” said Chief Commercial Officer Peter Bradbury in a statement. “We are excited to continue to grow our partnership.”