ErinMedia’s attempt to actively challenge Nielsen Media Research’s dominance in the TV-ratings business has apparently come to an end, at least for now.
The Florida-based startup, after failing to secure a $25 million cash infusion, last week said it was pulling back and had laid off “a majority of its employees” to reduce costs.
ErinMedia, which plans to continue waging a legal battle against Nielsen, said it will primarily focus on licensing its six recently secured patents to research companies interested in analyzing digital set-top box data. Using set-top data to track TV viewership had been Erin Media’s bailiwick.
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The hardware and software that ErinMedia had developed to generate second-by-second demographic overnight ratings, using set-top data, will remain operational.
If a company approached Erin Media and wanted to use its system and gear to produce ratings, and was willing to pay a market price for that data, the company would become operational and provide that service, according to ErinMedia founder and owner Frank Maggio.
“ErinMedia is not going to be generating ratings products for the foreseeable future,” Maggio said. “But the equipment is being put into a data center … If anyone wants to license us and use our hardware, they can be generating ratings next week. So it’s not like it’s been shut down.
“It’s just that we don’t have a lot of need for staff right now. … We have very valuable intellectual property and hardware that can be turned on. With 24 hours notice, it’s up and running.”
After March 1, ErinMedia will operate out of St. Petersburg, Fla., moving from Bradenton, Fla.
Maggio, a Florida real-estate developer, blamed Nielsen for effectively derailing ErinMedia’s efforts to find financing and strategic partners. He also said that his fledgling interactive-gaming channel, ReacTV, will continue to operate.
Nielsen on Feb. 21 said it was starting a separate unit, DigitalPlus, to process viewing data from set-tops.
According to Maggio, that news “chilled” ErinMedia’s efforts to get backing from Boston-based Spark Capital. That venture-capital fund was trying to build a consortium that would have provided strategic support and up to $25 million in capital to ErinMedia.
But after Nielsen’s announcement, Spark Capital notified Erin Media the $25 million funding effort, “as proposed, would not be favorably concluded,” according to ErinMedia.
Nielsen spokesman Anne Elliot last week said her company couldn’t comment on ErinMedia’s announcement because of the startup’s pending lawsuit against Nielsen.
But earlier this month, Nielsen officials denied they timed their DigitalPlus news to affect ErinMedia’s efforts to find capital.
Nielsen also stressed that while their Digital Plus unit was new, it is merely combining several of the ratings giant’s longstanding initiatives for gathering and using data from set-tops.
Spark Capital general partner Todd Dagres said that he’d been in the process of due diligence, and just talking to some media companies, about ErinMedia.
“There is still an opportunity out there for a company like ErinMedia to augment what Nielsen does,” Dagres said. “The opportunity is still there, I believe.”
Some media companies “don’t like having a single vendor,” like Nielsen, according to Dagres, because “they have no pricing power, they have no alternatives.”
ErinMedia will also keep pursuing its antitrust suit against Nielsen Media, filed in June 2005. An early 2008 trial date has been set in federal court.
Among numerous claims, the suit alleges that Nielsen uses long-term, staggered contracts as a means to insure that no competitor can secure a foothold in the TV-ratings industry.
The case marked the first antitrust action against Nielsen since a 1963 Consent Order by the Federal Trade Commission, which cited A.C. Nielsen for various antitrust violations dating back to the 1950s and early 1960s.
Bright House Networks in Tampa, Fla., rolled out Maggio’s ReacTV channel to 500,000 homes in an ongoing beta test last year. “Bright House Networks has no plans for any programming changes, including ReacTV, at this time,” Bright House spokesman Kena Lewis said.
ReacTV has actually been paying ErinMedia $1.5 million a year to produce TV ratings for the gaming network, which is essentially simulcast on TV and the Internet, letting viewers play and interact online.
“ReacTV was effectively subsidizing ErinMedia,” said Maggio, who ran them as separate companies.
Short-term, ReacTV will use transactional data from the Internet to calculate the channel’s TV ratings. But Maggio also plans to approach Nielsen and TNS Media Intelligence to try to buy TV ratings for ReacTV from them.
Nielsen has previously refused to sell rating data to ReacTV, Maggio said.
ReacTV will be undergoing a “refreshing” and updating in the next 30 days, new features and a new look, according to Maggio.
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