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Nielsen, Cable to Team?

The nation's largest cable operators are talking to Nielsen Media Research company about creating a new audience measuring system based on the sophisticated new technology in today's digital-cable set-tops.

Such a partnership could deliver a far more comprehensive profile of who is watching which cable channels and when—particularly smaller niche networks that aren't now measured by the ratings giant.

Cable operators involved in the discussions, including Comcast, Cox Communications and Time Warner, declined to give details. Cox Communications acknowledged conversations but says "we haven't made any decision."

Some ad agencies envisioned cable operators to use the gusher of viewer data from digital set-tops to establish a competitor to Nielsen, which dominates the TV ratings business. But industry executives say cable operators are likely to bolster Nielsen's dominance, partnering with the ratings giant rather than competing with it.

For years, cable operators have discussed pooling their set-top data, generated by every click of the remote. But now they're negotiating with Nielsen to process, sell and, most importantly, certify the data.

A stamp of approval from Nielsen may help cable operators in their primary quest—convincing advertisers to buy more commercials on local cable systems. "There really is no conflict whatsoever," contends Scott Brown, Nielsen's senior vice president of strategic relationships. "We are sitting down with the MSOs on a case-by-case basis. We're all exploring it in more depth."

No. 1 cable operator Comcast sees Nielsen as the best way to speed Madison Avenue's acceptance of the data as a reliable tool. "The only thing Comcast wants is to support Nielsen's local people meter," says an executive of one ad research firm. "They don't want to fight any battle other than shifting market share away from TV stations."

The prospect of tracking the viewership of millions of homes tantalizes many in the TV advertising business. Cable operators can see what channel subscribers are watching, how long they tune into a particular show and how quickly they surf out of a commercial.

Cable systems can readily collect data from far more homes than Nielsen can. By year-end, cable operators are expected to install two-way digital boxes in 24 million homes, 39% of cable's subscriber base. Some cable operators are considering offering not a statistical sample of their subscriber, but a census: data from every
digital home.

Nielsen's key shortcoming is the small number of homes it monitors to then project TV viewership of the entire nation. Nielsen's national sample is currently 6,000 homes, increasing to just 10,000 homes over the next few years. In local markets, Nielsen installs meters in 300 to 900 homes. Such a small sample can create a lot of volatility in the ratings, particularly among the smallest cable networks.

Cable operators also want to convince advertisers to buy spots in video-on-demand programming, including short spots and longer infomercials cable systems would deliver to subscribers clicking for more information.

The plan for a new cable ratings service has a crucial weakness: Operators don't know who is actually watching at any given moment. Even a digital-cable box is only measuring what channel is on. But the crucial currency of advertising is who
is actually watching: demos. Nielsen's people meters require members of a sample household to check in and check out as they watch TV—that's how they gauge how many 18- to 49-years-old are viewing.

There are plenty of other shortcomings. Federal privacy statutes complicate sharing subscriber data with outsiders. Also, since digital boxes cost subscribers a few dollars a month, they do not typically put set-tops on every TV set in a house. Since digital-cable subscribers have a couple hundred more channels, their viewing patterns would be dramatically skewed toward cable. It's difficult to project those numbers to all TV homes.

"With set-top data, it would be a remarkable assistance to see how people use, respond to and engage with television," says Russ Booth, director of buying firm MediaCom's futures group. "But we're really struggling with: What does that mean, and how do we make that promise a reality?"

Some TV executives say a Nielsen/cable alliance would produce a product measuring only digital-cable subscribers. "It's great for showing viewership of the small, digital channels. It's relatively useless for the mainstay channels, the CNNs."

Some ad researchers don't care. They see ways to adjust for those shortcomings, estimating demos by modeling the digital-cable pool against the conventional Nielsen results.

"We take this very, very seriously," says Richard Fielding, vice president of U.S. media research at Starcom North America. "This is not a replacement of Nielsen. It's definitely an augmentation of the Nielsen panel."