Time Warner, Nielsen Sign Wide-Ranging Deal

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New York – Time Warner Inc. and Nielsen Media Research
last week announced a multifaceted seven-year audience-ratings agreement worth more than
$21 million per year – one that will enable the entertainment giant to get a handle
on viewership in the multichannel world of digital and the Internet.

Sources familiar with the deal estimated that the largest
single contract ever signed by Nielsen was worth "in excess of $150 million,"
spread over seven years.

The culmination of several years of secret talks, the
agreement marked the first time that cable networks, syndication and other entities under
Time Warner and its Turner Broadcasting System Inc. unit had signed a blanket deal, rather
than cutting separate deals, they said. (ABC and CBS recently signed four-year, $40
million contract renewals with Nielsen.)

The individual Time Warner entities, which were reluctant
to flesh out the terms beyond the announcement, deferred comment to their parent company.
Scott McDonald, Time Warner's executive vice president of research and technology,
was credited with being "the deal's architect," along with Susan Whiting,
general manager of national services at Nielsen.

Time Warner officials referred to a prepared statement from
president Richard Parsons.

"It simplifies and streamlines our ability to access
and use the ratings data across all of our business units in a cost-efficient way,"
Parsons said of the deal.

Nielsen spokesman Jack Loftus said the contract cuts across
a whole range of areas, including its test of the Active/Passive Meter in the Northeast
(to prepare for the multichannel digital environment of the future), as well as
measurement services for local-broadcast TV and cable; TV/personal computer convergence;
and the Internet.

"We want to be sure that we're counting those Web
users when they tune into [our] TV programming" in a corner of their screen, as well
as even the smallest station's audience among those affiliated with The WB Television
Network, McDonald explained.

In addition, the two parties will explore ways to use Time
Warner Cable's digital set-top boxes for compiling national, local and regional
ratings data.

Engineers who develop these advanced set-tops
"don't think in Nielsen terms," but Time Warner can now use its clout to
remind vendors of the importance of tracking viewers, a Time Warner official said.

A related issue, said Robert Sieber, vice president of
audience development at Turner, is whether Nielsen's A/P Meter program encoding will
successfully pass through the digital set-tops.

Well over one year ago, Turner Broadcasting Sales Inc.
passed on Statistical Research Inc.'s Systems for Measuring and Reporting Television
(SMART), because it feared that the Nielsen challenger would downplay broadcast erosion,
given the fact that the "Big Four" TV networks were its primary backers. SRI
disputed that allegation, noting that the TV networks also have significant cable
interests.

Still, a TBSI official said, "No one has closed the
door definitively on SMART." McDonald, echoing that position, said talks are
continuing with SRI.

"We continue to look into SMART," he said.
"We did a detailed examination of both [researchers'] meters last summer, and
that didn't dissuade us that Nielsen will remain a major research provider."

Surprisingly, the TV networks haven't yet done similar
evaluations of the two services, Sieber said.

Last week's mega-deal is a far cry from TBS'
– and cable's -- first Nielsen contract 18 years ago, Sieber recalled. He said
he had to beg Nielsen to provide cable ratings, and that Ted Turner (now vice chairman of
Time Warner) wound up shaking a Nielsen official by the shoulders as part of his effort to
convince the company to sign that first deal with cable.

Linda Moss contributed to this story.

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