Paramount Close to Dropping Nielsen TV Ratings in Contract Dispute

Paramount Global is getting ready to smack Nielsen with a ruler.

Paramount Global has told both its ad-sales staff as well as executives at prominent media-buying agencies that it is very close to ending its reliance on Nielsen ratings data, according to two people familiar with the matter, part of a move to embrace other forms of audience measurement at a time when traditional media companies are scrambling to count viewers who use digital and social media to watch their favorite programming.

The two companies have been enmeshed in discussions for months about renewing their current contract, these people said, but remain far apart on pricing. Their current deal expires on September 30, according to these people, and Paramount, which operates CBS, Comedy Central and Nickelodeon, among others, would be without Nielsen audience counts starting on October 1.

Paramount Global and Nielsen both declined to comment.

“Disengaging from Nielsen is not our first choice, and we remain hopeful for a resolution,” said John Halley, president of Paramount ad sales, in a recent letter to media agencies. “We are asking for your partnership as we navigate this situation.” Paramount would rely on VideoAmp, a rival provider of audience measurement services which has struck deals in recent years with several networks and buy-siders, during any period when Nielsen tabulations are not available.

Nielsen feels its services continue to have great value, according to a person familiar with the company’s thinking. It has added new kinds of data to its tabulations, including examinations of specific groups of audience as well as viewers who watch programs in so-called “out of home” venues like hotels and bars. This person says the overall industry will continue to have access to ratings for Paramount properties if a new deal is not reached.

Paramount may find itself hard-pressed to go without Nielsen for long. The company’s measurements continue to form the bedrock of the economics of the media industry. Advertisers use Nielsen counts to figure out how much they should pay for commercials. And Paramount will no doubt want Nielsen’s totals on such coming broadcasts as its Sunday football games on CBS and a vice-presidential debate that will be moderated by CBS News on October 1 — the very first day Paramount would be without the traditional measurement service.

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 embraced Netflix, Hulu, Amazon Prime and other streaming and on-demand options.

Executives at Paramount look at the hundreds of millions the company spends on Nielsen measurement each year, according to one of the people familiar with the situation, and feel that paying a higher fee seems ill-advised and not in the company’s best interest.

“Nielsen is insisting on substantial price increases across all their products, including linear measurement, despite the changing economic landscape of our industry.  Nielsen’s costs as a percentage of Paramount ad revenue have quintupled over significant parts of our business over the last years; in certain instances, Nielsen’s fees already exceed the total advertising revenue of the network being measured,” Halley said in the letter. “This has led us to conclude that the model, as proposed, is not workable, and that the cost structure requires re-engineering.”

Paramount is looking to cut its costs significantly. The company is about to be acquired by Skydance Media, and its current management team has already begun working to trim $500 million from its operating structure. Skydance Media has articulated a plan under which it would reduce costs by another $1.5 billion.

Nielsen and parts of Paramount have come to loggerheads in the past. In late 2018, CBS dropped Nielsen over a similar dispute tied to pricing. CBS was without Nielsen measures for about 20 days.

Nielsen has never been a favorite of the TV networks, which look at the measurement company as a sort of teacher that always grades papers with a desire to lower the grade. But in recent years, the relationships has grown increasingly contentious, with the networks questioning the efficacy of Nielsen’s technology, and making a host of efforts to use other forms of audience measurement.

Advertisers have been receptive to upstart measurment vendors like VideoAmp, ComScore and iSpot, among others. But they continue to rely on Nielsen, no matter how much the networks complain.