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An Inside View

As the controversy over Nielsen's new local people meter (LPM) grows, testimony by a former Nielsen employee raises serious new questions about the accuracy of the research firm's ratings technique.

In a suit filed earlier this month in Los Angeles, broadcaster Univision included a declaration from a senior vice president who was a key executive at Nielsen for nearly three decades. In the little-noticed document, Ceril Shagrin details the flaws in Nielsen's new service in intricate detail.

The 24-page declaration is one of the latest headaches for Nielsen, which has been under pressure to address concerns that its new LPM ratings system, set to roll out in the top 10 TV markets, undercounts minorities. Last week, an audit leaked to the press revealed that Nielsen misidentified the ethnic and racial composition of homes in its New York household sample—the second market behind Boston where Nielsen has introduced the new ratings meter.

Moreover, the American Association of Advertising Agencies and The Cabletelevision Advertising Bureau made pleas to Nielsen to quickly fix errors in the LPM samples. News Corp.'s Fox Broadcasting has led a public campaign denouncing the new ratings system in conjunction with minority groups. And Tribune Co. and Viacom Inc., as well as the National Association of Broadcasters TV Board, are urging Nielsen to delay introduction of people meters until proper accreditation is received from the Media Rating Council.

Last week, Nielsen said it would fix the problems cited by the MRC by mid August and will request a new accreditation hearing. The ratings company has defended the LPM as more accurate than the outgoing diary method.

The company also says it will vigorously contest Univision's claims in court, although it has not officially responded. The lawsuit seeks to stop Nielsen from launching its Los Angeles LPM service until the inaccuracies are fixed. A hearing has been scheduled for July 1. Unless barred by the court, Nielsen will launch the Los Angeles LPM July 8.

The key charge in Shagrin's declaration is that Nielsen has failed to recruit enough families to adequately reflect the viewing habits of Hispanics in Los Angeles, where they account for 42% of the population.

Persuading families to participate in Nielsen household samples is critical to the company's effort to create accurate ratings. Typically, the ratings firm devises a sample based on census data. But Shagrin insists that Nielsen simply isn't devoting the resources needed to enlist enough families to fill an accurate sample.

Nielsen spokesman Jack Loftus denies the charge. "With all due respect to Ceril," he says, "there will never be enough Spanish-speaking homes in the sample to satisfy Univision. It's all about what's good for Univision."

Shagrin, who joined Univision's research department five years ago, was a valued Nielsen executive who spent more time there than current CEO Susan Whiting. She ushered Nielsen into the Hispanic-ratings business 15 years ago after complaints from Hispanic programmers that Nielsen was undercounting viewers.

In the late 1980s, she oversaw the team that created both the local and national ratings systems designed specifically to measure Hispanic viewers in the U.S. Both services, launched in 1992, cover audiences in Hispanic households only and are separate from the broader Nielsen systems that measure all viewing.

Shagrin declined to be interviewed for this story, citing the lawsuit filed on June 10. But her declaration says Nielsen under-represents Los Angeles homes where Spanish is the primary language by a whopping 37%; it under-represents homes headed by younger Hispanics (ages 18-34) by 22% and doesn't contain enough Hispanic homes with large families.

The upshot: lower ratings for Univision's core audience and potentially fewer ad dollars flowing into the company's coffers, especially now, during the upfront ad-sales market. In a related filing in the suit, Univision said upfront ad sales this year may reach $715 million, up from just $197 million six years ago. Faulty ratings would "significantly damage" sales efforts, the company said.

Whether the declaration influences the suit's outcome is unclear. For now, it reveals critical flaws in Nielsen's relations with the Hispanic community. Critics say Hispanic households have been one of the toughest segments of the population to recruit for Nielsen, in part because the ratings company has low recognition among members of that ethnic group. The term "Nielsen family" is widely recognized because the company has rated TV shows since the medium began more than 50 years ago. But to Hispanics, many of whom are recent immigrants, the term isn't meaningful.

"Nielsen lacks a profile among this particular group," says Alex Nogales, president of the National Hispanic Media Coalition. "They're not doing a good job of working with the Hispanic community."

In the document, Shagrin offers a solution: more time and money. Nielsen spent more than 18 months phasing in the local Hispanic-ratings service before its official launch in 1992, she told the court. If the company devotes the right amount of resources to a ratings system, "Nielsen is perfectly capable of installing and maintaining an adequately representative Hispanic sample."