Vanishing Viewers Cause a Stir Over TV Ratings System : Entertainment: Networks blame flaws of the ‘people meter’; others cite boring programming. Is there a method better than A. C. Nielsen’s?

The television ratings system, which has been the impartial umpire governing the $9.5 billion spent on network advertising each year, is facing the worst crisis in its 35-year history.

For six months, national TV ratings as reported by A. C. Nielsen Co., once as predictable as the hype preceding new shows every fall, now uneasily resemble the gyrations of the stock market.

To the consternation of the networks, millions of viewers have suddenly vanished without a trace from the Nielsen radar screen. And the networks blame the ratings company. “I’m worried the present ratings system has begun to unravel,” says Alan Wurtzel, senior vice president at ABC.

Nielsen and the advertising agencies deny that there are bugs in the system, saying the networks are ignoring basic facts. Television viewing is in a slump, they say, because of the inevitable fragmentation resulting from new channels. Also, some believe, the audience is fed up with the same old shows that the networks broadcast every season.

“One factor is boring programming,” contended Richard Kostyra, executive vice president at the J. Walter Thompson advertising agency in New York.

No matter the cause of the problem, what has happened this year is likely to make even the most self-assured network executives digest antacid along with their morning ratings reports.

From January to March, one of the peak ratings periods of the year, young men’s and women’s viewing of soap operas, game shows and evening news programs fell 10% to 14% from year-ago levels.

Although viewing perked up in April and May, the networks’ newscasts and late-night talk shows continued to suffer declines of 13% and 6%, respectively, among young adults. Viewers 18 to 49 are a prized “target audience” for whom advertisers are willing to pay more. Thus, slippage in their numbers causes a disproportionate loss of revenue for the networks.

If the present decline continues through year-end, the networks’ advertising revenues could fall more than $400 million short of projections. So far, the shortfall is put at $150 million to $200 million.

The confusion is occurring as the networks have begun booking more than $4 billion in advertising time for the coming season. So disturbed are they over the impact of fluctuating ratings that they unilaterally changed their ad rate policies in an effort to reduce the projected revenue shortfall.

With hundreds of millions of dollars at stake, it’s not surprising that the networks are concerned about the reliability of the data provided by Nielsen, the only company in the United States that offers national ratings for TV programs.

Nielsen says it has inspected everything from the hardware to computer programs involved in collecting audience data and can find nothing in the system to explain the sharp drop in ratings. Advertising agencies, who also buy ratings data from Nielsen, concur.

But the heat is on Nielsen. A three-year contract with CBS and NBC expires in September--ABC continues to pay Nielsen, though it never signed the pact--and the networks are using the ratings flap to win concessions in the renewal negotiations.

At the center of the debate between the networks, Nielsen and the advertising community over the accuracy of the ratings is Nielsen’s “people meter.” This measurement device, introduced in 1987 to speed up delivery of ratings information, replaced diaries that were filled out by hand.

The people meter automatically records the channel watched, but a viewer must press a button on a remote-control device to tell the meter which members of the family are viewing at a given time.

This ratings system may befuddle anybody who is not a statistician steeped in the highly technical science of audience measurement. Only 4,000 meters are used to measure the programs watched in 92.1 million homes.

Nielsen actually operates two systems to measure programs. National ratings, collected from 4,000 meters, are called the National Television Index. They measure programs seen on networks, cable channels and in syndication. The other service, National Station Index, measures viewing of local TV programs.

The problem, from the networks’ point of view, is that the measurements of the two systems--which have always been used to validate each other--now show widening discrepancies. Daytime ratings, for example, were off 10% among women 18 to 49 in the first quarter in the national system but only 6% in the local system.

Network executives believe that the reason for the decline in viewing rests with “fatigue” in the homes outfitted with Nielsen’s people meter. Although the term conjures up physical exhaustion, fatigue in the case of people meters is nothing more than forgetting to push the button on the remote-control device.

“Younger viewers are not hitting the buttons,” ABC’s Wurtzel said. “Older viewers tend to be more consistent.” Once a button goes unpushed, there is no record a show has been watched.

John Dimling, executive vice president of Nielsen, acknowledges that there is a fatigue problem, “but not enough to make a difference.” He believes that the discrepancy in the ratings generated by the national and local systems reflects the fact that the data is collected from two different groups of homes, called “panels.”

Some researchers believe, however, that the sharp fluctuations now seen in ratings may be because of a measurement system that has not kept pace with the way Americans watch TV.

“The ratings system today is predicated on the 1950s,” ABC’s Wurtzel said. Back then, TV watching typically occurred around a set in the living room. There were only a handful of channels to watch, and in the evening parents controlled the dial.

In the past decade, thanks largely to cable, there has been an explosion in the number of channels and in homes with more than one TV set. And, aided by remote control switchers, people increasingly watch portions of programs rather than whole shows.

The result is that there’s no “normal” way to watch TV any longer.

“Now you get sets of all sizes and in all locations,” explained Robert J. Niles, vice president of research at NBC. “Whether it’s watching on vacation, in college dorms, bars or anywhere out of the home.”

Niles estimates that there are 1 million tiny TVs that people carry with them outside the house. They aren’t counted in the ratings.

“As the viewing of TV changes, the measurement system has to change with it,” he said.

Ready to step into the breach is Pergamon AGB, a London-based ratings company that measures TV audiences in Britain and Europe. Also watching the controversy is Arbitron Ratings Co., which hopes by December to be rolling out its own national people meter ratings service.

AGB is owned by British media mogul Robert Maxwell, who bought the ratings company after it pulled out of the U.S. market in August, 1988. During its first attempt to crack the U.S. market, AGB lost $67 million.

AGB said it was re-entering the United States because of the “inherent weakness and apparent unreliability of Nielsen’s TV audience measurement data that is causing so much financial damage to the networks.”

ABC and NBC said they did not extend an invitation to AGB to try again, although CBS has met with AGB officials and may help start up the U.S. operation. ABC and NBC executives are to hear AGB’s pitch this week.

But the idea that AGB would try to enter the U.S. market again sent titters through the advertising community. “The only reason AGB was not supported last time by the networks was because its audience estimates were lower than Nielsen’s,” J. Walter Thompson’s Kostyra said.

“Agencies would (like to) support two systems, but most cannot afford both,” he added. Nielsen charges agencies a rate based on their billings. A top agency can expect to pay $500,000 to $1 million annually.

The possibility that the networks might start their own ratings system, as they have hinted periodically, strikes advertising agencies as a bit odd, given the inherent conflict of interest in such a scheme.

“Do you want the fox in charge of the chicken coop?” asked Betsy Frank, senior vice president at Saatchi & Saatchi Advertising in New York. “Part and parcel of better research for the networks is they would like their numbers to go up again. If the networks can design their own system, they can ensure that fact.”

It is unlikely that Nielsen will lose its contract to supply national TV ratings to the networks and ad agencies, although the turmoil of the past six months has shaken the company’s de facto monopoly status.

“A lot of this is being done to pressure Nielsen” into changing its system, said Steven Sternberg, vice president of research at the Bozell Inc. ad agency. “Competition is always good, but it took three years to get AGB going last time, and it would take a very long time to get any service started again.”

MISSING PERSONS

Pecentage changes in numbers of viewres from the 1988-89 season to the ‘89-90 season among adults 18 to 49. Nielsen says it can find nothing in the system to explain the sharp drop in ratings, but network researchers argue that the falloffs are too dramatic and suggest some inherent flaws in the system.