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CBS Acknowledges ‘Contractual Impasse’ With Nielsen

CBS Corp. said it was locked in a “contractual impasse” with the media-measurement service provider Nielsen, and would turn to other gauges of audience until it could negotiate what executives believe is a fair price for access to Nielsen’s data.

“The entire media industry is aware of the need for complete and accurate measurement across platforms. While Nielsen has made some strides in this area, progress has not been what we and many clients would like, and local TV measurement is particularly challenged. Despite this backdrop, Nielsen continues to use their market power to bundle disparate services and raise prices for services that don’t sufficiently address ongoing changes in the industry,” CBS said Thursday. “As a result, we are currently at a contractual impasse, although we continue to be open to negotiating a fair deal that makes strategic and financial sense for CBS. If we cannot come to an agreement with Nielsen, we will continue to employ the many viable alternatives available to us, including Comscore.”

The statement is CBS’ first public word on the matter, which first came to light in late December.  One point of contention in the in talks, according to a person familiar with the matter, is the fact that CBS is using other services for local-audience measurement at its stations and wants a deal that reflects its desire to use fewer Nielsen products.

CBS is believed to pay more than $100 million a year to Nielsen for access to its data, which is used across the TV industry as the bedrock element in deals with advertisers.

At issue is a long-running complaint from TV networks that Nielsen isn’t measuring the many different audiences for their programming as well as it should. As smartphones, mobile tablets and broadband-connected TV’s gain more consumer acceptance, audiences are increasingly able to stream their TV favorites in on-demand fashion, making the task of counting them exponentially more difficult. TV networks have long based their advertising rates on Nielsen’s measure of linear TV audiences, which have slipped as consumers embrace Netflix, Hulu, Amazon Prime and other streaming and on-demand options. In such an environment, TV networks believe Nielsen’s overnight ratings are no longer the critical yardstick of viewership they once were.

And yet, Nielsen has long been the standard of measurement in the media industry. Media buyers and TV networks do deals for billions of dollars based on its measure of how many people are watching the commercial breaks in various TV programs. Nielsen has worked in recent years to start measuring viewers who watch TV in new ways, including video streaming, across multiple viewing windows and even in bars, hotels and other out-of-home venues.

Millions of dollars could potentially be at stake for both sides. CBS’ annual payment to Nielsen is a significant amount. On the other hand. Nielsen measures underpin so-called “scatter” ad deals for CBS commercial inventory bought close to air date;  the value of any “make-goods,” or ad inventory CBS would have to give clients whose previously-aired ads did not meet previous ratings guarantees; and local ads.

 

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