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Nielsen Alternative Gets Shelved

Television: Firms endorsed SMART ratings system, but its developer couldn't persuade them to pay for the service.

May 28, 1999|ELIZABETH JENSEN | TIMES STAFF WRITER

NEW YORK — With no industry funding on the horizon, Statistical Research Inc. said it is pulling the plug on its planned television ratings system, dubbed SMART (for Systems for Measuring and Reporting Television). The system would have been an alternative to Nielsen Media Research, the monopoly provider of television ratings that has come under intense criticism in recent years.

Although advances in television technology may eventually make collection of viewing data much easier, SRI's announcement leaves Nielsen's critics without a viable alternative at a time when television watching is rapidly fragmenting. Nearly $50 billion in annual television advertising expenditures is based on the Nielsen figures.

SMART joins a growing list of companies, including Arbitron and Britain's AGB, that have tried to take on Nielsen and failed. A Nielsen spokeswoman said the SRI announcement "doesn't really change much about what we're doing, which is to focus on our job of putting out the best ratings possible." Nielsen shares closed at $26.13 a share, up $1.25 a share, in composite New York Stock Exchange trading.

SRI, which spent more than $40 million on SMART, had been seeking television and advertising industry funding for a national roll-out of its system, which has been operating at a Philadelphia test laboratory since 1996. The test, which focused in part on finding better ways to get TV viewers to cooperate with the intrusive process of figuring out what they are watching, was largely funded by NBC, CBS, ABC and Fox.

The broadcasters have complained for several years of what they perceived to be slipping standards at Nielsen, from not enough young adult men in the Nielsen sample to too many problems measuring viewing in homes with multiple television sets. SRI developed the SMART system to be easier to install and more user-friendly; among other advances, it was able to get more young children to log in when watching TV, so the researchers would know who was sitting in front of the sets.

Although SRI had recently found a partner in Andersen Consulting, the Westfield, N.J.-based research company still needed significant industry investments for a national roll-out, which would have cost $100 million.

SRI President Gale Metzger said he pulled the plug "because no one has said yes, not because no one has said no." SMART had racked up more than 30 endorsements from broadcasting and cable companies, as well as advertisers, but, in a tough economic climate, couldn't persuade them to pay for the additional service. Metzger said the SMART project could still be revived if financing is found.

NBC, ABC and CBS were being asked to pay $12 million each to launch the service, on top of annual fees, and the millions that each already pays for Nielsen service. "In this economic environment, it was very, very difficult" to come up with that kind of money, said Alan Wurtzel, NBC's president of research and media development.

Metzger, however, said he was surprised the industry was unable to find that relatively small sum, in light of the billions of dollars in ad revenue that ride on the ratings. "If you look at the economics, it is kind of puzzling. We hear all this wonderful praise and it doesn't quite go together."

Wurtzel said he was "disappointed that after spending so many years working on a terrific initiative it seems to be pretty much over. I thought the research that came out of it was spectacular."

David Poltrack, executive vice president of research and planning for CBS, called the SRI decision "personally very disappointing. Bringing competition to the national television marketplace has become my quixotic quest. The only saving thing is we know that SMART failed as a business proposal and not as a ratings proposal."

Several industry executives said they firmly believe that improvements in Nielsen's system in recent years have been largely due to the competitive pressures provided by SMART.

"Competition always results in better results," said NBC's Wurtzel. He said he believes Nielsen "really wants to improve, and they have made some improvements. But I think they would agree they are not where they and we would like them to be."

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