Ratings Brawl

For as long as most U.S. homes have had television sets, the A.C. Nielsen company has provided the official figures on who was watching what. But now Nielsen's ratings supremacy is in doubt for the first time in more than 30 years. Last week CBS became the second network to say it will not renew its long-standing contract to receive Nielsen data. The CBS agreement expires at the end of August. ABC allowed its annual contract to lapse in March, and is now buying Nielsen's services month by month while the network tries to negotiate new terms. Losing ABC and CBS as customers could cost Nielsen up to $8 million annually, or an estimated 25% of its ratings revenues.

Network confidence in the venerable firm has been shaken by recent changes in the way Nielsen gathers its information. Traditionally, the Northbrook, Ill.-based company has used two sampling methods. In one survey, electronic meters wired to television sets in 1,700 homes record which channels are tuned in and when the set is on. Meanwhile, viewers in 2,600 other homes fill out diaries on who watches various programs. Advertisers and broadcasters have long recognized failings in this system. The meters, for example, could not tell when a program played to an empty room, and diaries were difficult to keep.

Last fall CBS signed a contract with AGB Television Research, a British ratings service, as a secondary statistical source. Starting this September, AGB will offer national ratings in the U.S. based on a new technology called people meters. Because AGB's sample viewers are asked to identify themselves when they watch TV by punching digits on a specially programmed, remote channel control, some experts predict the new system will give more reliable readings than the usual methods. The threat of this new technology from AGB hastened Nielsen's decision to convert to a system of people-meter ratings by September. Nielsen has already put the new machines in 2,000 homes, and now publishes people-meter ratings as well as its usual figures.

The results have apparently disturbed the networks. People-meter ratings have turned out to be as much as 10% lower than the traditional readings. Some - broadcast executives believe younger viewers record their habits more faithfully on the new meters, while older people who are not comfortable with high-tech gadgets ignore them. CBS complains that Nielsen's people-meter sample is skewed disproportionately to families with cable, who watch less network TV.

Most industry experts believe ABC and CBS could wind up renewing their Nielsen contracts if they can force the firm to improve its people-metering techniques. For the exciting climax of this story, tune in next September.