Testimony of Patrick J. Mullen President
Tribune Broadcasting Company Before the Senate Commerce
Committee
July 27, 2005
Mr. Chairman and members of the Committee, thank you for
the opportunity to appear before you today to testify in
support of S. 1372, which will go a long way toward assuring
that there is a strong independent body to oversee the reliability
of television audience measurement.
My name is Pat Mullen. Our company, Tribune Broadcasting,
operates 26 major market television stations located in 15
states from coast to coast, including stations in 8 of the
10 largest markets.
All of these TV stations are what used
to be called "independent" stations -- local
stations that did not have the legacy of a network identification
to hold loyal viewers year after year. Through innovative
local, sports and syndicated programming, Tribune’s
stations have provided viewers with an alternative to the
"traditional"
networks,
attracting viewers to programs they could not find elsewhere.
Their success has depended in every case on an accurate count
of our audience. New stations, small stations, UHF stations,
as well as broadcast pioneer stations like WGN-TV in Chicago,
KTLA in Los Angeles and WPIX in New York, have found they
can compete and succeed if they provide new and better programming
options for viewers.
Our stations get a report card every morning from Nielsen.
Those ratings determine the viability of our business.
- They determine the value of our advertising.
- This
in turn determines how much money can be invested in new
and better programming, and in new digital technology.
- And
ratings also determine which programs remain on the air,
and which ones will be taken off for apparent lack of viewer
interest.
Today, all but one of Tribune’s television stations
have affiliated with the newer networks, The WB and Fox.
We are eager to compete with our fellow broadcasters, and
with the ever-increasing number of networks vying for viewers’ attention
over cable and satellite. But to do this we must have an
honest report card. A trustworthy measurement of the size
and composition of each competitor’s audience.
Mr. Chairman, I regret to say that the measurement system
we have today in the largest television markets is not worthy
of public trust. It does not have the trust of our company
or that of more than a dozen other responsible broadcasters.
Congress has repeatedly acknowledged
the importance of a free and robust broadcast service,
which is particularly important in times of crisis. We
believe the system of over-the-air television in America
demands statistically valid and reliable measurement of
its audience. It deserves a guaranteed minimum standard
of accuracy because of the importance of television news,
public affairs, sports and entertainment programming to
this country’s culture and to our democracy.
In times of crisis, from hurricanes in Florida to fires
in California, when the cable is out and satellite service
is interrupted, broadcasters serve as the first responder
on the scene, transmitting potentially life saving information
to our fellow citizens. We are proud of that record of service.
It may prove even more vital if, as in London and Madrid,
terrorist attacks continue to spread beyond the war zone
in the Middle East.
But we are not here today in an attempt to secure an advantage
over our multi-channel competitors or to slow the erosion
of our audiences caused by the growing choices available
to viewers. Our company welcomes competition.
The problem, Mr. Chairman, is that the
keys to our success -- our
ratings -- are held by a monopoly. When Nielsen had
a competitor, its service and its response to client concerns
were substantially better than they are today. In the absence
of competition, we are left to plead for fair treatment and
reliable results. Time and time again, Nielsen has turned
us away.
We have no choice but to do business with Nielsen. Ratings
are the currency on which the advertising business operates.
And despite recent challenges, our company has always had
a good relationship with Nielsen. So we are here today reluctantly,
but with a sense of urgency.
In 1964 the Media Rating Council was
established at the urging of Congress. It is a nonprofit
organization whose membership includes representatives
of broadcast TV and radio, cable television, print, advertisers,
ad agencies, and now Internet constituencies. The MRC’s mission is to maintain
confidence in audience research and secure measurement services
that are valid, reliable and effective. MRC does this through
audits to test the methodology and credibility of research
services, and accreditation to certify services that meet
the MRC’s minimum standards. Research services must
disclose their data to the MRC to enable it to validate their
measurements.
The Media Rating Council is a classic
example of industry self-regulation. It consumes no tax
dollars nor requires government oversight. It does its
job quietly, professionally and efficiently, with participation
by all segments of the industry. In our experience the
MRC has never been used for private gain by one member
over another, or to delay or stop innovation. The very
existence of the MRC’s auditing
and accreditation processes, and its diverse make-up, tend
to keep participants honest.
Historically, participation in the MRC’s processes
has been voluntary. The MRC cannot force anyone to comply
with its procedures, and it cannot require a ratings service
to submit to an audit or to offer only accredited measurement
services. Unfortunately, Nielsen has chosen to ignore the
MRC’s guidance in deploying Local People Meter (LPM)
service.
The LPM service that Nielsen has implemented in New York
and Chicago has yet to be accredited by the MRC. It is worth
noting here that in New York, on the average day for the
week ending July 10, the viewing choices for nearly one-third
of the black and Hispanic men ages 18-34 in the Nielsen LPM
sample were not reflected in the ratings. (Additional detail
is available in the attachments to this testimony.)
Despite these kinds of obvious flaws,
Nielsen has just launched its LPM service in Washington,
D.C. and Philadelphia — also
without MRC accreditation. It is clear to me that Nielsen
submits to MRC processes only when it suits its aggressive
business strategies.
Tribune has tried to work constructively
with Nielsen and to suggest ways to improve audience measurement.
In numerous meetings, emails and letters over the past
year, Tribune has pointed out defects in Nielsen’s LPM sample and
faulting rates. The problems being presented have led to
significant under-reporting of important audience segments.
Nielsen has acknowledged difficulties and has promised to
fix the problems. But despite Nielsen’s efforts, it
has failed to fix these problems.
For these reasons, in a letter dated May 25, 2005, Tribune
and 17 other broadcast companies embraced the new technology
but urged Nielsen to postpone the scheduled deployment of
LPM service in Philadelphia and Washington until the MRC
deemed the system reliable in markets where it was already
being used.
Nielsen responded the following day.
It said "the
broadcast group request for some sort of mandatory, prior
MRC accreditation raises considerable antitrust concerns."
Nielsen rejected the industry’s proposal and the legitimate
concerns detailed in our letter.
In response, the MRC, under the guidance
of Executive Director/CEO George Ivie, recommended a meeting
between Nielsen and either the MRC’s Television Committee
or the full MRC board, or that Nielsen participate in the
MRC mediation process. Broadcasters said we would accept
either approach, with a preference for mediation. Nielsen
refused both, saying mediation would be "unnecessarily
cumbersome and time consuming."
Finally, on June 28, the MRC’s board
of directors approved a resolution recommending that Nielsen
offer LPM service in additional markets only after completing
an MRC audit. Tribune then asked Nielsen to accept the MRC
Board’s
resolution, delaying the scheduled LPM launch in Philadelphia
and Washington. Nielsen's response was an immediate, "No."
So the company continues to ignore the
legitimate concerns of its customers and the MRC. Its actions
are those of the classic unregulated monopoly, accountable
to no one. Had Nielsen been more responsive to broadcasters’ or the
MRC’s concerns, I doubt we would be here today.
A promising new measurement service,
Arbitron’s portable
people meter (PPM), is being tested in the Houston market.
This new technology measures both television and radio signals,
and I believe Arbitron plans to use this system for radio
ratings starting in 2006. Arbitron has licensed this technology
in Singapore, Norway and Canada. Although Arbitron is managing
this test, Nielsen has the contractual option to form a joint
venture with Arbitron to market PPM television service commercially
in the United States. Thus, it is our understanding that
Nielsen could effectively control how and when PPM technology
will be deployed for television measurement. Because PPMs
are an alternative to Nielsen’s proprietary LPM service,
it appears highly unlikely Nielsen will allow the PPM technology
to compete with its LPM service.
We hope this testimony makes clear the need for government
intervention in this critical segment of the U.S. economy.
Throughout Tribune's long history in both print and broadcast
journalism, we very rarely have petitioned for federal intervention
in the marketplace. Like many of my fellow broadcasters,
I personally have spent many days trying to reach a private
solution to this problem with Nielsen. We simply do not have
the ability to persuade Nielsen to submit to MRC processes
and roll out its new measurement systems only after they
have proved reliable to an independent and expert body, the
Media Rating Council.
And because Nielsen is a monopoly, we have nowhere else
to turn to get accurate and reliable ratings.
S. 1372, the FAIR Ratings Act, would correct this market
failure by requiring MRC accreditation before the commercial
introduction of any commercial ratings measurement system.
The dispute resolution system established by the bill would
provide ready means to test the reliability of new measurement
systems, and would encourage companies that design them to
vet them thoroughly, ensuring their credibility and integrity
before they are launched commercially. The bill would not
impose any undue burden on parties to the process, and would
enable the Media Ratings Council to fulfill its mission of
encouraging the development of reliable and improved ratings
measurement systems, which we fully support.
The examples included in this report demonstrate that we
are not dealing with a trivial dispute or sour grapes because
our ratings are down. After more than a year’s experience
in New York and Chicago, the LPM system continues to be
embarrassingly defective.
Sampling issues abound, including problems with response
rates, in-tab representation and fault rates. For example:
- New York's LPM response rate averaged 25.3 percent
for the week ending July 3, 2005. This means that three
out of every four households initially designated as sample
households refused installation of a people meter in their
home or accepted a meter but did not contribute any viewing
data.
- Young men ages 18-34 have been persistently under-represented
in Boston, Chicago, Los Angeles, New York, Philadelphia
and San Francisco. Fault rates for men 18-34 generally
are twice as high as those for men ages 55+ in LPM samples.
- Fault rates remain unacceptably
high for important audience segments such as African Americans
and Hispanics despite new coaching initiatives. On the
average day in New York for the week ending July 10, the
viewing choices of nearly one-third of the black and Hispanic
men ages 18-34 in the LPM sample were not reflected in
the ratings.
- Chicago sample data for the week
ending July 10th show that almost one-third of the 443
African Americans installed in the sample were not in
tab — meaning
their television viewing was not counted in the ratings.
- Households of five persons or more
have been persistently under-represented in the total samples
in New York, Los Angeles, Chicago and Boston. In New York,
for the week ending July 10, the viewing choices of more
than one in four of the black and Hispanic households of
5 or more persons in the LPM sample were not reflected
in the ratings.
- Fault rates for households of five or
more are generally two to three times as high as in one-person
households.
Clearly, the free market cannot solve this problem, which
is a serious one. Free over-the-air broadcasters, unlike
our cable and satellite competitors, depend on a single revenue
stream, which is derived from advertising. We do not charge
a subscriber fee, and we make our service available free
to all. Accurate and reliable ratings are key to the health
of our business. Mr. Chairman, we appreciate your allowing
us the time to make our views known, and urge the Committee
to favorably report S. 1372.
Thank you.
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