Analyst: FTC Condition on Nielsen-Arbitron Hardly Matters

Commission’s quibble benefits ESPN but puts no restrictions on ratings giant

Commissioner Joshua Wright blasted the Federal Trade Commission in his dissent for over-reaching in the condition it imposed on Nielsen’s purchase of Arbitron, but the ultimate impact of the condition on the future market for cross-platform audience measurement may be inconsequential.

The Federal Trade Commission’s condition on Nielsen’s $1.3 billion purchase of Arbitron, to keep alive “Project Blueprint,” a one-year-old custom research project, was engineered by Arbitron and comScore to benefit only one client: ESPN. As part of the condition, Nielsen must license data gathered by Arbitron’s portable people meter and other software to the project.

No Nielsen assets are involved in the condition, and there are no restrictions on Nielsen in developing XCR, its own cross-platform product.

“We view this condition as almost equivalent to no condition at all,” wrote Bernstein Research senior analyst Todd Juenger Tuesday in a report issued to investors.

ESPN is a big client for any research firm, but it’s also unique compared to other media companies because of the importance of radio in its cross-platform strategy. The prospect of other companies being interested in a custom product created specifically for ESPN could be a long shot.

“ESPN is believed to be seeking other networks to join them to support this initiative. Without other customers, it is unlikely ESPN can support the product by itself much longer,” Juenger wrote.

Making Project Blueprint a syndicated service that would compete with research giant Nielsen is a high hurdle. TV coverage by the Arbitron PPM service is limited to the top 48 markets and only 70 percent of the TV footprint is encoded.

While Nielsen/Arbitron may assist with encoding (which is how the PPM is able to measure media behavior), it cannot compel nonparticipating broadcast and cable networks to encode their signals. In addition, the PPM lacks the robust reporting capabilities, like commercial ratings, that Nielsen uses in its syndicated TV service.

Nielsen certainly wasn’t worried that the condition would lead to any real competition to its own service and hasn’t expressed much interest in developing cross-platform as a currency measurement system.

“With respect to cross-platform, to be honest with you, rather than talk about that in the context of currency, I’d rather talk about that in the context of marketing mix decisions that are made by advertisers,” said Nielsen CEO Dave Calhoun, in Monday’s conference call with investors.

It also doesn’t make sense for a research company to develop a product relying on Arbitron’s PPM, which Nielsen may or may not deploy beyond the 48 markets where Arbitron has been using the technology to measure radio.

“We believe comScore will immediately begin work to migrate their product design to no longer rely on the Arbitron data,” Juenger said. “In fact, we believe comScore is already planning for life without the Arbitron data and will likely continue the Project Blueprint format only to keep a foot in the door while they work toward the next product iteration.”

So even though the FTC tried to create a competitor for Nielsen in the barely there syndicated cross-platform market, the agency’s conditions boil down to whether or not other customers will join ESPN in what is today a custom research project. Many might believe eight years (the length of the condition) is well enough time to do that, but given the typically glacial pace it takes research companies to roll out new services, eight years is nothing.