The Weather Channel’s owner claims Nielsen cannot reliably rate smaller networks and concealed the flaw in its system it to maintain its dominance on ratings services.
CF Entertainment on Wednesday sued The Nielsen Company for fraud, arguing the ratings giant provides a fundamentally defective service that has caused networks to lose billions of dollars in ad revenue. CF, which is owned by Byron Allen’s media group, alleges ratings on its network and other similarly situated companies were undercounted by hundreds of millions of viewers.
“Nielsen is the most well-known television ratings service providers in the country, but it relies on an antiquated panel system to estimate television viewership,” reads the complaint. “This is a crude tool that does not reliably measure television viewership in the Twenty-First Century.”
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According to the complaint, which was filed in Illinois federal court, Nielsen’s ratings system no longer works in an environment where viewers can watch content by subscribing with distributors, such as satellite or cable providers, or stream over the internet through services and apps that can be viewed on various devices.
“This fragmentation of viewership has eroded the reliability of Nielsen’s panel system,” writes attorney Chris Gair. “Nielsen has known about the problems for years but has not invested to make its ratings system reliable and up-to-date.” Nielsen did not immediately respond to a request for comment.
The Media Rights council, an independent organization charged with regulating Nielsen, in August suspended Nielsen’s accreditation for local and national TV measurement after it found that the company significantly underreported viewership. After an internal audit, Nielsen acknowledged that it didn’t account for some out-of-home viewers during a 16 month period from September 2020 to December 2021, which the lawsuit says caused over $700 million in lost ad revenue for the industry. It then reported that it failed to capture more than 41 million viewers who watched the Super Bowl.
CF claims its internal metrics also gave reason for the company to suspect Nielsen’s ratings were off. It alleges that it knew that it had viewership on its networks, especially during the prime advertising slots, but that Nielsen’s ratings report told a different story.
“Nielsen did not capture these viewers for much of the reporting period and for many of the primetime slots,” the complaint reads. “Because advertisers condition payments for commercials on the number of viewers who watch commercials, Nielsen’s failure to capture viewership on the ESN Networks damaged Entertainment Studios.”
According to the lawsuit, the issue was that sample errors in Nielsen’s reports dramatically increase when the distribution for a network has limited subscribership. CF argues, “The greater the sample error, the more likely it is that the viewership reported by Nielsen will differ significantly from the actual viewership, and the difference increases as the sample error increases.”
“In other words, Nielsen knew that the errors in its data would be more frequent and larger for smaller companies like Entertainment Studios,” the complaint continues.
CF says that Nielsen knew about its inability to reliable rate Entertainment Studios’ networks and didn’t disclose it to continue securing lucrative contracts.
CF has taken issue with Nielsen in the past. In April 2020, it sued the ratings giant for engaging in predatory pricing, alleging that it was being overcharged by more than $400,000 per month.
The lawsuit comes as networks and marketers are increasingly looking for better ways to track viewership and ad engagement. Nielsen has recently sued competitors for alleged patent infringement to preserve its influence. It sued TVSquared on March 4, alleging the ad measurement platform infringed on a patent used to track exposure to media across numerous platforms (computers, TVs, apps). The suit was filed one day after online advertising firm Innovid closed a $160 million deal to buy TVSquared.
Nielsen, which has announced new efforts to measure out-of-home viewing, has also filed similar lawsuit against ratings upstarts HyphaMetrics and TVision. Some of its customers have already started using other services. NBCUniversal has stated that it will use iSpot.tv to track viewership for the Olympics.
