Nielsen Sues ComScore Over Misuse of People Meter

Suit alleges measurement firm violated terms of licensing pact

Ratings measurement giant Nielsen said it has filed a suit in federal court that claims troubled ratings measurement rival comScore violated a licensing agreement for its Portable People Meter (PPM) technology.

Nielsen said it is asking the U.S. District Court for the Southern District of New York for a preliminary injunction to stop comScore from releasing its Extended TV measurement product, which Nielsen says violates an earlier licensing pact.

“[C]omScore’s introduction of Extended TV to the market would clearly violate Nielsen’s rights under the agreement, and, if comScore is not enjoined, Nielsen will suffer irreparable harm to its business through loss of important customers and decreased market share,” Nielsen wrote. “Nielsen is entitled to injunctive relief to prevent such harm.”

ComScore officials were not immediately available for comment.

Nielsen began licensing its PPM technology back in 2014, part of the concessions it made to win federal approval of its 2013 $1.5 billion merger with Arbitron. As part of the approval of that deal, the Federal Trade Commission required that Nielsen license the PPM to other parties for at least eight years. ComScore began licensing the People Meter in January 2014.

Nielsen and Arbitron had early partnered to develop the PPM, which measures outdoor, radio and other forms of cross-platform media not captured by Nielsen’s set-top ratings devices.

According to the suit, as part of the agreement, comScore agreed to use the PPM only “to provide services in the cross-platform market,” which Nielsen defined as requiring at minimum both television and online audience measurements. The PPM could not be used for “individual standalone services,” according to the suit, meaning it couldn’t be used to compete directly with Nielsen “in the provision of linear television audience measurement in the absence of material online audience measurement.”

But that, according to Nielsen, is just what comScore plans to do.

ComScore announced in February its plans to introduce Extended TV, which will measure TV content across a variety of viewing types – linear, time-shifted and digital – by the end of the year.

While that would appear to meet the guidelines of the licensing agreement, Nielsen said it had been hearing rumblings as early as 2016 that comScore was planning on releasing a TV-only measurement product. In a Feb. 24 earnings conference call with analysts, the company said those fears were realized.

According to the suit, during the earnings call comScore CEO and co-founder Gian Fulgoni referred to the Extended TV product as providing a “TV-centric view of the world,” adding that “along with Extended TV,” the company “is continuing to deliver our cross-media product, which combines and measures the audience for television programming content, along with all types of digital content, not just video.”

In the suit Nielsen argues that in almost every circumstance the Extended TV product will provide measurement of linear TV audiences minus any material online audience measurement.

“[C]omScore plans to produce demographic ratings of linear television where it attempts to measure online viewership of a program and cannot (either because viewership is so low that it is below minimal reporting standards or because no online viewing is observed),” Nielsen said in the suit. “[C]omScore also plans to do so where it has not even attempted to measure online viewing.”

Nielsen executives began expressing their concern with comScore in early 2017, and by April told senior comScore executives that the use of PPM data in the Extended TV product violated their agreement.

According to Nielsen, comScore executives admitted in these discussions that Extended TV in most cases, “will use PPM data to generate a linear television audience measurement even when there is no measurable online audience.”

ComScore has held that Extended TV does not violate the licensing deal and falls within the definition of cross platform services.

The two parties agreed to go to arbitration on Aug. 23, but according to the suit, “following the mediation and several additional weeks of negotiation, Nielsen and comScore have remained unable to resolve the dispute.”

The suit marks the latest trouble for comScore, which in March 2016 announced it was having “accounting issues,” and later said it would have to restate earnings for 2015, 2016 and 2017. Those woes, which emerged shortly after it merged with rival measurement company Rentrak, led to the resignation of founder and CEO Serge Matta in 2016, who was replaced by Fulgoni.

The company, which was delisted from the NASDAQ exchange on Feb. 8 after it missed a deadline to file financial statements with the Securities and Exchange Commission. The company has since said it would not be able to file those documents until at least March 2018.

Nielsen said it is asking the court to enjoin comScore and its executives from using PPM data for Extended TV or any similar product and from beta testing any such product, for court costs and attorneys’ fees and any further relief the court believes is justified.

(Photo via FamZoo Staff's Flickr. Image taken on May 25, 2016 and used per Creative Commons 2.0 license. The photo was cropped to fit 16x9 aspect ratio.)