by Dave Zornow
Published in Cable Avails magazine, December 1993

In October, Arbitron announced it was closing its television ratings division, ending four decades of competition with Nielsen. Arbitron's withdrawal from the TV audience measurement business leaves only one supplier of syndicated local television ratings for agencies, TV stations and cable. "The only competition Nielsen has now is no ratings," says Jim Dennsion, Arbitron Television's product manager. TV station, agency and cable clients all agree that a one supplier business is a bad omen of things to come.

"When two competitors fight for your business, it always results in a better end product," says Alisa Joseph, research director for ChicagoLand TV, a regional cable news channel and an Arbitron subscriber. "Customers benefit when there is a choice of vendor because each company is always looking to innovate and gain an advantage."

Arbitron insider Jim Dennison believes less competition could also lower the quality of research. "It's easier to take research shortcuts when there is one supplier," says Dennison. "If a TV station gets a 5 in one service and a 7 in the other, you can compare the results. If the only number you get is the 5, what basis do you have to question the research?"

Cable clients have reservations about a Nielsen cable monopoly, and higher costs are only one of their fears. "Nielsen's pattern has been to follow another company once the market has been set," says Kevin Smith, vice president/general manager of Mega Advertising in McLean, Virginia. "Now they are alone, will they become complacent and get fat and happy with their current products?" Smith wonders. Cable has reason to be concerned, because Nielsen followed AGB's lead in introducing a people meter service and Arbitron's footsteps in creating TV Conquest and STAR as competitive products to Product Target Aid and Custom Target Aid. Will Nielsen seize the initiative and become a new product innovator for the emerging spot cable business?  "History says they won't," says Smith.

ChicagoLand's Joseph says that competition the value of competition goes beyond price and product. ChicagoLand chose Arbitron's local TV service over Nielsen's because Arbitron had a cable client service rep in their local Chicago office. Cost and product were considerations, but service was the deciding factor. Nielsen has now added a cable sales rep in their Chicago office.

The rating service forecast for cable isn't all bad. "I suspect that Nielsen may increase their sample sizes," predicts Norman Hecht, president of Norman Hecht Research and former vice president and general manager of Arbitron Television. Hecht reasons that Nielsen, now relieved of competitive pressures, will be in a better position to increase spot TV samples, which in turn will benefit spot cable. Hecht says that Nielsen will probably hold the line on rates because most of the big TV station groups have long-term contracts. Mega's Smith agrees. "The nature of a one company market is to create a monopolistic feeling, but I don't think Nielsen is likely to behave this way."

History sometimes repeating itself with an ironic twist. The last time a ratings company shut down to create a defacto monopoly, Arbitron was on the winning end. Radio stations lost their only Arbitron alternative in December 1991 when Birch Ratings closed its doors. Radio station owner and Arbitron client Paul Meecham says its more difficult to do business when there's only one ratings service. "When Birch was in business, you could negotiate with both companies. As soon as Birch was gone, Arbitron became non-negotiable." Meecham says that innovation has also suffered. "In the last two years, Arbitron has talked about adding more sample and qualitative measurement but so far we haven't seen anything yet."

Where did Arbitron TV go wrong? Clients say that the company made a series of bad business decisions such as ignoring the spot cable business until late and pushing an unpopular local people meter service called ScanAmerica. Arbitron's problems began in the early 1980's when TV stations became hot-ticket items for investors. New cost-conscious owners decided that two budget expenditures for look-a-like ratings services were excessive and they began to slash audience research spending.

Dave Zornow is President/TNG Research, a media research consultancy and applications development company that works with media sellers and research providers.

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