News

Big Four Get SMART; Cables Skeptical

8/09/1998 8:00 PM Eastern

The Big Four networks and six major ad agencies have thrown
brawn and bucks behind a competitor to Nielsen Media Research, but last week, cable
networks remained skeptical of the new system.

Cable programmers said backers of the new audience research
venture will have to answer more questions before they will sign on the dotted line.

ABC, CBS, NBC and Fox have signed letters of intent to
support a technology, Systems for Measuring and Reporting Television (SMART), developed by
Statistical Research Inc. of Westfield, N.J. The agencies involved include BBDO; Grey
Media/MediaCom; Optimum Media: A Division of DDB Needham Worldwide; STARCOM Media
Services: The Media Division of the Leo Burnett Co. Inc.; TeleVest Inc. and TN Media: A
True North Communications Co.

Some observers suggested the networks are blaming some of
their erosion in viewership on the measurement method.

Cable executives said they remain very interested in the
potential Nielsen competitor but are loath to "buy a car based on a sketch," as
one executive, who declined to be identified, put it.

SMART is undergoing market tests but has generated only a
few reports since its April 29 inception in a Philadelphia lab. There, networks
participating in the trial are encoded with SMART technology for viewer measurement. SMART
has tested for the four investing broadcasters, Discovery Networks, ESPN, Lifetime
Television and USA Networks.

Through a spokesman, Steve McGowan, vice president of
research for the Discovery Networks, said his company is still participating in the lab
and reviewing SRI's business plan. Specific cable issues still need to be worked out
before Discovery Networks will sign a letter of intent, he said.

Cable network officials said SMART has already been
improved because of cable companies' participation in the lab. Without them, cable
would have been "blindsided by a broadcast-centered new technology," said Tim
Brooks, senior vice president of research for USA Networks.

Still, "USA isn't going to buy into any system
that sees the world through broadcast binoculars," he said.

So far the test has presented "pretty reasonable data
-- Seinfeld [was] still No. 1," he said.

Cable executives said major issues remain. They include:
designing a system that takes into account network distribution; expanding the definition
of primetime beyond the broadcast model and increasing the report output so investors can
get frequent reports if they want them; and ultimate control of the technology.


Researchers said that if SMART survives, they don't
want it to become another Nielsen. That is, a firm that measures an industry but is only
advised, not controlled, by that industry.

Cost is a factor, too. Sources have said the laboratory
backers have spent $40 million. A fully functioning system could cost $120 million with
annual operating costs of $80 million a year, according to observers within Nielsen.

The industry's dominant ratings service also
criticized the SMART technology because it allows nonviewers in a room to log onto the
meters. That could inflate reporting by 12 percent, Nielsen has asserted.

But investors continue to laud SMART, noting that if the
technology does nothing else, it has made Nielsen more diligent and responsive.

Programmers have carped for years about Nielsen,
challenging the accuracy of its data and turgid speed of change.

In announcing his network's support for SMART, Neil
Braun, president of NBC Television, said in a prepared statement, "SRI has shown that
better is possible. They've demonstrated a commitment to doing what's best for
the industry. NBC knows this is an important investment for the long term."

Michael Drexler, chairman of TN Media, added that audience
measurement technology only improves with competition.

SRI boasts its system is digital-safe, reliably identifying
commercials from shows and offering programming clients unlimited access to
respondent-level data. Home-based equipment is noninvasive and easy for both adults and
children to manipulate, the company said.

Even with the broadcast networks' support, SMART may
not be fully deployed until the millennium, backers say.

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