SMART Show Is Canceled

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Maybe it wasn't such a smart idea after all.

Statistical Research Inc. said last week that it would shut
down its Systems for Measuring and Reporting Television (SMART) project, signaling that
there won't be a national ratings alternative to Nielsen Media Research any time
soon.

SRI president Gale Metzger said last Thursday that the
problem wasn't the data. "Nothing went wrong with the research. On the business
side, people haven't said yes. No one said no, but not to decide is to decide, as the
saying goes."

More than 30 TV and cable networks, ad agencies and major
advertisers like Procter & Gamble Co. and Kraft Foods had supported the SMART
laboratory in Philadelphia over the past year, Metzger said.

"It is obviously disappointing that the necessary
funding for a national rollout has not been forthcoming," he added.

The "Big Four" television networks -- ABC, CBS,
NBC and Fox -- put up the bulk of the $40 million that was invested in the 300-household
Philadelphia lab (other funds came from SRI and the ad community).

But industry sources said they balked at paying another $50
million in seven-year contracts even before the national SMART rollout launched.

SRI apparently couldn't convince investors to join in
without the networks' support.

The networks had told SRI to seek out third-party funding
last fall in order to lessen their own financial burdens, so the researcher landed
Andersen Worldwide early this year. But Metzger has since refused to discuss
Andersen's role.

Nielsen and other industry sources have estimated that it
would cost $100 million to $120 million to launch a 5,000-home national SMART service,
plus another $80 million per year to keep it running.

Metzger said SRI would lay off 20 people in this shutdown.
Other staffers had been let go or reassigned in January, when the firm replaced its
Philadelphia lab ("Phase II") with "Phase III," a 50-home New Jersey
sample to be used for training purposes.

Although several cable networks had participated in the
lab, only USA Networks Inc. and Discovery Communications Inc. had signed letters of intent
like the Big Four.

SRI was never able to convince the networks to make the
transition from those letters to formally committing to buying the service.

USA Networks vice president of research Tim Brooks, calling
SMART's demise unfortunate, said, "The broadcasters obviously have had a change
of heart in where they want to put their money."

He pointed out that broadcasters signed long-term contracts
with Nielsen last fall -- renewals that other industry sources estimated at $40 million
across four years.

That hefty research commitment, other industry sources
said, led the broadcasters to press SRI to bring in investors.

As for USA, Brooks said, "We asked hard questions like
they did. It's like people standing on a dock and nobody's going to be the first
to jump in. We wouldn't have gone alone."

Brooks said there would be some residual benefits from
SMART's work. "Because of SMART, Nielsen has improved its customer service and
invested in its infrastructure over the past couple of years," he added.

Nielsen's plan to offer subscribers direct access to
raw ratings data for the first time, for example, was directly due to SMART, "which
built that into its system from the start," Brooks said.

That direct access has been delayed for months, but the
research giant now promises to deliver it starting sometime in June, he said.

Ad-agency executives were hard to track down last week, but
many have cited the importance of competition in the past year or so.

BBDO Worldwide executive vice president Steve Grubbs, for
one, said last year, "History has shown that Nielsen tends to react to our concerns
with much greater interest, rapidity and diligence when competition is in the
marketplace."

What's next? "We're not closing the door on
this," Metzger said. "There may be an awakening with this reality. But
that's a question for the marketplace. The longer they wait, the harder [it will be]
to reconstitute what they have [now in SMART]."

But Brooks said the chance of a SMART revival was remote,
although he was optimistic that a challenge to Nielsen could yet happen. "It may take
a different form" than SMART and several other failed attempts, he added.

For instance, he said, the ad community might accelerate a
dormant plan to form an industry commission to oversee TV ratings, as is done in the
United Kingdom.

The American Association of Advertising Agencies floated
such a ratings-consortium plan in 1997, but it never got beyond the talk stages.

That may be because, as various cable sources said, it
could run into antitrust snags, or Nielsen could end up ultimately being chosen in the
consortium's proposed bidding process.

Meanwhile, Metzger promised to keep the SMART name alive on
a series of existing and proposed media studies, such as its "Home Technology,"
"TV Ownership" and "How People Use Television" reports.

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