Nielsen Meters Will Alter Local TV Ratings

Nielsen Media Research said Monday that it would begin providing overnight ratings in the nation’s top 10 TV markets, a move that could give new clout, and more advertising dollars, to local cable companies.

Beginning next year, Nielsen will install electronic boxes called “people meters” into thousands of additional homes in Los Angeles, New York and Chicago to glean detailed demographic information about viewers and their TV habits. By the end of 2006, the boxes will be phased into the remaining top 10 markets, which together represent 30% of the nation.

At present, the detailed data that advertisers care most about -- the age and gender of viewers -- are available in local markets only after “sweeps” periods, which occur in February, May and November. With the people meter system, such information will be produced every night.

“This is going to change the whole way television time is bought and sold and the way programming decisions are made,” said Jack Loftus, a Nielsen spokesman.

The change represents a victory for cable providers over resistant broadcast networks.

Cable companies have long complained that the viewership information for local markets is inaccurate because it is compiled from an infrequent and antiquated 1950s-era measurement system -- using pencils and paper diaries.

TV viewers, cable executives say, typically get around to scribbling their selections into a Nielsen diary only at the end of a sweeps month. And when they do, they are more inclined to remember a show such as “Everybody Loves Raymond” on CBS and forget about a lower-profile program they watched on Bravo.

“I don’t know anyone who believes that electronic devices aren’t a better way to capture information rather than someone’s memory,” said Jane K. Collins, vice president of research for Adlink, which places ads on cable systems in the Los Angeles region. “The diary system was invented when there were basically three networks and the entire family watched TV on one set,” Collins added, “and so it was very easy to mark down what shows were watched.”

People meters are nothing new. First introduced in 1987, the gadgets are about the size of a cable box and attach to television sets. Viewers activate the box with a remote control when they watch a program, and the information is then tabulated.

Nielsen currently uses the devices to compile national overnight ratings based on results from 5,000 homes. Those ratings steer expenditure of $30 billion a year in national advertising.

In addition to the changes that will affect local TV markets, Nielsen said on Monday that it plans to double the national sample audience to 10,000 homes by 2006 to improve the accuracy of those ratings.

National ratings are important to the networks, but they are meaningless to local cable companies and broadcast stations trying to sell their commercial time. Local TV advertising in the top 10 markets amounts to more than $8 billion annually.

“We’re hoping that this expansion will generate a fairer share of ad dollars for cable,” said Phyllis Leibert, director of research ad sales for Time Warner Cable.

For example, in Boston, where people meter boxes were introduced last year as part of a pilot program, some cable providers already have seen their audience climb by as much as 20%, according to Adlink’s Collins. At the same time, Boston’s broadcast stations have watched some of their numbers fall.

Nielsen’s Loftus noted that the conversion from diaries to people meters is expected to cost tens of millions of dollars. “It’s going to be hugely expensive,” he said. “First we have to design the system, recruit the homes, install the equipment and teach viewers how to use it.”

Ultimately, the cost is expected to be passed on to Nielsen’s customers. AOL Time Warner Inc.’s cable unit, Comcast Corp. and Adlink agreed to help Nielsen pay for part of the expansion. Though General Electric Co.-owned NBC and Walt Disney Co.’s ABC station group have agreed to pick up their share, Viacom Inc.-owned CBS and News Corp.-owned Fox Broadcasting have not, according to Nielsen. CBS and Fox declined to comment.

Industry experts said network resistance to people meters has diminished in recent years because most networks are owned by huge media conglomerates, such as Viacom and Disney, which generate more profit from their cable operations than from their broadcast networks.

Once the new system is in place, overnight numbers generated by the meters probably will diminish the importance of sweeps. Networks that own stations in the larger markets, experts say, won’t be as motivated to grab at ratings with Michael Jackson specials and guest appearances, such as Demi Moore on NBC’s “Will & Grace.”

Nielsen’s planned overhaul also probably will increase the representation of younger viewers, viewers in more upscale homes, as well as Latinos and blacks, experts believe.

NBC’s research president, Alan Wurtzel, said the network signed off on expanding the people meters because “it’s a better mouse trap than the antiquated diary system.... This is going to reward those stations that have a very consistent performance.”

But NBC agreed only after pressing Nielsen to develop a next-generation technology, “personal people meters,” which are triggered automatically and don’t rely on pushing buttons. After all, Wurtzel said, the meters’ results still skew toward older viewers and female viewers who tend to be more responsible.

“Young men and teens tend not to do this stuff,” he said. “If teens don’t clean up their rooms when they’re asked, what makes you think they’re going to punch a button for Nielsen?”