NRG Chief Fights Back : Movies: Market researcher Joe Farrell counters news report that questions his company’s accuracy, ethics.

Attempting to curb the fallout from a Wall Street Journal story questioning the accuracy and ethics of his National Research Group, Hollywood market-research powerhouse Joe Farrell has faxed a rebuttal to film studios, terming the allegations “totally false . . . unrealistic and ignorant.”

“We guess everyone who has achieved some measure of success takes their turn to be attacked by jealous, vindictive people,” said the statement, which was distributed Friday, the same day the story appeared. “It seems as though a dozen or so former employees, all of whom in one way or another were either dismissed for cause by NRG and/or have something to gain competitively, defamed us with some outlandish stories.”

Farrell’s company, which gathers and analyzes data about the box-office potential of feature film releases and the effectiveness of the ad campaigns promoting them, was accused of doctoring figures to please--or substantiate arguments made by--his clients, packing post-screening “focus group” sessions with people upbeat about the film, altering demographic information obtained from phone interviews and occasionally completing the questionnaires in-house.

Farrell argued that time constraints--plus the fact that his data must ultimately be judged against the actual outcome--make such tampering virtually impossible and counterproductive. The NRG chief, who is the sole provider of research to six studios and provides services to two others, declined to speak with The Times.

The studios, for their part, are adopting a “wait and see” attitude, postponing any reassessment of their relationship with the NRG until all the facts are in.

“Joe is often a voice of reason in a sea of optimism,” said Sidney Ganis, president of marketing and distribution for Columbia Pictures. “He gives us a sense of reality, the bad news as well as the good. We sit in the focus groups ourselves. We get the screening results instantaneously. I’d be surprised if these irregularities occurred.”

Mike Medavoy, chairman of TriStar Pictures, said he was “troubled” by the charges, but added that studios should be putting the statistics in perspective, in any case. “If you make decisions based solely on the raw data, you’re really in trouble,” he said. “Still, research is helpful at times. The NRG has the largest data bank, which increases the chance of accuracy and their ability to read things. And I don’t believe that Joe Farrell plays with the numbers.”

Many industry sources believe that Farrell has been dealt a severe blow, nevertheless. “Being tainted in public has to hurt him,” said one. “It gives the filmmakers, already skeptical of what he contributes to the process, even more reason not to trust him. And the studios will be putting him under a microscope. Any inaccuracies, no matter how innocent, will raise the specter of impropriety. He’ll probably become more conservative in his projections in order to protect himself.”

Another top studio executive was more sanguine about the controversy. “My guess is that Joe can weather this,” he said. “No one is set up to be an effective competitor. This may open the door for others to move in, however, and more competition is certainly in our best interest.”

One marketing executive said Farrell’s close ties with the powers-that-be will be tested by the accusations. “There’s been low-level buzz about Farrell for years,” he observed. “Now that people have put their names on the charges, the big question is: ‘Will Hollywood re-examine the way it does business or is the old-boy network so strong he can continue?’ ”

Arnie Fishman, chairman of Lieberman Research West, a competing firm, is betting on the latter. “If Colgate-Palmolive or Procter & Gamble had questions about the integrity of the information they were given, they’d, no doubt, embark on an inquiry,” he said. “But the studios--many of them public companies--don’t seem interested in checking things out. If Farrell really wanted to clear his name, he’d open up his books to independent audit. Until then, this places a black mark on the entire market research industry.”