Paramount Global considers breaking away from Nielsen ratings

Paramount’s shift towards alternative audience measurement

Paramount Global is on the verge of a significant shift in how it measures its audience, potentially moving away from the long-standing Nielsen ratings. This change comes as traditional media companies strive to adapt to the evolving landscape of digital and social media viewership.

The ongoing negotiations

For months, Paramount and Nielsen have been in discussions about renewing their contract, which is set to expire on September 30. However, the two parties remain far apart on pricing. If no agreement is reached, Paramount, which operates networks like CBS, Comedy Central, and Nickelodeon, will be without Nielsen’s audience counts starting October 1.

Paramount’s contingency plan

In a recent letter to media agencies, John Halley, president of Paramount ad sales, expressed hope for a resolution but also indicated that the company is prepared to rely on VideoAmp, a rival audience measurement service, if necessary. VideoAmp has secured deals with several networks and media buyers in recent years, positioning itself as a viable alternative to Nielsen.

Nielsen’s stance

Nielsen maintains that its services continue to offer significant value. The company has incorporated new types of data into its measurements, including analyses of specific audience groups and viewers in “out of home” venues like hotels and bars. Despite the potential contract lapse, Nielsen believes the industry will still have access to ratings for Paramount properties.

The importance of Nielsen ratings

Nielsen’s measurements are crucial to the media industry’s economics. Advertisers rely on these counts to determine how much to pay for commercials. Paramount, in particular, will need accurate audience data for upcoming broadcasts, such as Sunday football games on CBS and a vice-presidential debate moderated by CBS News on October 1.

The challenge of modern audience measurement

TV networks have long criticized Nielsen for not adequately measuring the diverse audiences for their programming. As more consumers use smartphones, tablets, and broadband-connected TVs to stream content on-demand, counting these viewers has become increasingly complex. Traditional linear TV audiences have declined as streaming services like Netflix, Hulu, and Amazon Prime gain popularity.

Financial considerations

Paramount spends hundreds of millions annually on Nielsen measurement. Given the changing economic landscape, the company feels that paying a higher fee is not in its best interest. Halley highlighted in his letter that Nielsen’s costs as a percentage of Paramount’s ad revenue have significantly increased, sometimes exceeding the total advertising revenue of the network being measured. This has led Paramount to conclude that the current model is unsustainable and requires re-engineering.

Cost-cutting measures

Paramount is actively seeking to reduce costs. The company is about to be acquired by Skydance Media, and its current management team has already started trimming $500 million from its operating structure. Skydance Media plans to cut an additional $1.5 billion in costs.

Historical context

This isn’t the first time Paramount and Nielsen have clashed. In late 2018, CBS dropped Nielsen over a similar pricing dispute and was without Nielsen measures for about 20 days. TV networks have historically viewed Nielsen as a stringent grader, and the relationship has grown more contentious in recent years. Networks have questioned the efficacy of Nielsen’s technology and explored other forms of audience measurement.

The rise of alternative measurement vendors

Advertisers have shown interest in upstart measurement vendors like VideoAmp, ComScore, and iSpot. However, despite the networks’ complaints, Nielsen remains a cornerstone of audience measurement.

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