Nets Hope LOIs Will Give SMART Life

Author:
Publish date:
Updated on

Several cable- and broadcast-television networks have
expressed a renewed interest in supporting the proposed national rollout of SMART, a
Statistical Research Inc. executive said last week.

Their hope is to boost the potential competitor to Nielsen
Media Research in the eye of potential investors.

Tim Brooks, senior vice president of research at USA
Networks Inc., said last week that his company was the first to have actually signed a new
letter of intent.

"The importance of the letter," he said, "is
to show [potential investors or strategic partners] that there's a real business
here, and that networks are lined up at the gate and willing to pay real cash money."

Discovery Communications Inc. is the other cable company
now leaning toward signing this second round of letters for SMART (Systems for Measuring
and Reporting Television) -- along with ABC, NBC and Fox on the broadcast side -- said
George Hooper, SRI's director of administration and senior associate.

The latest LOIs are based on a new start-up funding plan --
one that would call for the networks to spend less than what was previously expected --
Hooper added.

"SRI needs to line up third-party funding from venture
capital," Brooks said. "They're doing that now. Previously, they wanted all
of the funding from the [TV] industry itself, but it's hard to get the industry to
agree on anything."

Just how much the networks will be expected to chip in
"will depend on how much the third-party funder brings in," Brooks said. But a
smaller percentage from the TV industry would, of course, translate into "a loss of
control," he added.

However, Hooper -- disputing the notion that the networks
have dropped plans to have an ownership stake in SMART -- maintained that the networks had
never intended an ownership role.

"They don't want to be in the ratings
business," he said.

SRI president Gale Metzger hired investment banker Veronis,
Suhler & Associates late last year to seek investors to bankroll SMART's national
rollout.

But none of the broadcast and cable networks that had
formerly signed LOIs for SMART had converted those into firm contractual commitments as of
early this year.

In another move designed to keep interest alive, SRI
announced recently that initial work had begun on the sample selection process, which is
the first step in creating a national meter panel for the proposed SMART rollout.

The 300-household Philadelphia laboratory (which SRI calls
"Phase II") is now being replaced by "Phase III," a panel of up to 50
homes in New Jersey -- SRI is based in Westfield, N.J. -- that will be used to finalize
training and installation procedures.

As indicated previously, SRI wants to start issuing SMART
ratings reports at some point in 2001. By most accounts, more than $100 million would be
needed to launch SMART, followed by an estimated $80 million per year thereafter.

Related