CBS, Nielsen Fail to Strike New Deal as Contract Lapses

CBS, which distributes some of TV’s most-watched programs, may have to use a new way to count its viewers.

CBS and the media-measurement service Nielsen are without a contract after their current deal lapsed at 12:01 a.m. Tuesday, according to two people familiar with the matter. The situation — for now — remains fluid. Talks are likely to continue. But CBS is determined to secure a pact that it feels makes the best economic sense for the company while Nielsen believes the network will find negotiating with advertisers more difficult if it does not have access to its measures of audience viewing, these people said.

CBS has been weighing dropping Nielsen and instead using its own data as well as measurement information from Comscore, a Nielsen rival, to do deals with advertisers. CBS senior executives informed staffers at the company’s owned and operated stations and various other business units late last year to prepare in case a deal with Nielsen could not be reached. The network is the home of such popular programs as “NCIS,” “The Big Bang Theory,” “The CBS Evening News” and “The Late Show with Stephen Colbert.”

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 are not 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.

The move will not be without potential ramifications for CBS. While many of the nation’s big media companies have worked to expand the way they get credit from advertisers for audiences, Nielsen continues to support the one that brings in the most money –  people who watch TV via linear viewing.  If CBS were to move forward without Nielsen measures,  according to one person familiar with Nielsen’s side of the talks., it could be akin to walking into a bank that uses American dollars with big handfuls of Italian lira. CBS’ access to Nielsen data has been revoked with the lapsed contract, this person said, but the media agencies it does business with will continue to be able to use the information, and might try to strike new agreements that rely on smaller audience numbers.

Millions of dollars could potentially be at stake for both sides.

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. Under one estimate, provided by the person familiar with Nielsen’s side of talks, more than $500 million in CBS advertising could potentially be affected. At the same time, CBS’ contract with Nielsen has been said to be worth more than $100 million a year.

Nielsen executives are concerned, the person said, that CBS not having a Nielsen deal could destabilize the rest of the marketplace for TV advertising.

Nielsen has been enmeshed in negotiations on several fronts, recently renewing a deal with Raycom Media, owner of TV stations in cities like New Orleans and Richmond, and Hearst Television. But another company, Gray Television, said late last year it had decided to use Comscore instead of Nielsen starting in 2019.