Top Indian network sues Nielsen for manipulating ratings

Posted at 07/31/2012 4:33 PM | Updated as of 07/31/2012 7:59 PM

MANILA, Philippines -- India's oldest and largest news network has accused The Nielsen Co. of manipulating viewership data in favor of broadcasters that are willing to provide bribes to its officials, several media outfits reported on Monday.

New Delhi Television Ltd. (NDTV) filed the 194-page lawsuit in New York County Supreme Court on July 26, accusing Nielsen of violating the Foreign Corrupt Practices Act, as well as the Dutch Corporate Governance Code.

"Viewership data is deliberately changed and/or manipulated with corrupt/dishonest intentions/motives," NDTV said in its lawsuit.

"The acts of viewership data manipulation are clearly malicious and undertaken with the active collusion, awareness, gross and willful negligence and reckless disregard of the top management of the defendants."

NDTV, which produced India’s first 24-hour news channel “Star News,” said it is being hurt by the manipulated ratings.

'Irreparable damage'

"The malafide and corrupt practices of the defendants have caused and continue to cause losses to NDTV not only of revenue, but also irreparable damage to NDTV’s hard earned goodwill, brand and reputation," it said in the lawsuit.

The company claimed that over the past eight years, it had revenue losses of not less than $810 million due the "false, fabricated and manipulated data."

“This is a case of a once noble company, Nielsen, now owned by ‘sponsors,’ exhibiting unabashed short term greed and reckless disregard of its duties and of its noble origin,” NDTV said in the lawsuit.

These “sponsors,” NDTV said, consist of private-equity firms that include KKR, The Blackstone Group, The Carlyle Group, Thomas H. Lee Partners, Alpinvest Partners, Hellman & Friedman and Centerview Partners.

NDTV claimed that the private-equity firms have ordered “cost cutting and cost avoidance measures to maintain share prices in the short term, so they can ‘cash out,’ as part of the typical leveraged buyout 'exit strategy,’ making billions of dollars in profits.”

Such measures, NDTV said, have resulted in “disregarding their explicit obligations to thousands of customers such as NDTV."

The Indian broadcaster also alleged that these cost-cutting measures are among the main reasons behind the supposedly manipulated TV viewership data.

Philippines case cited

NDTV also said Nielsen’s “wrongdoings” have hurt not only the New Delhi-based network but “countless others in Florida, Turkey, the Philippines and across the planet.”

In the Philippines, leading broadcast network ABS-CBN Corp. filed a case against AGB Nielsen Media Research for “failing to comply with its request to investigate alleged cheating and data tampering in TV ratings.” The case is still pending in court.

NDTV’s lawsuit specifically targets targets Television Audience Measurement or TAM, which it described as a “joint venture monopoly” created in 1998 by Nielsen and Kantar Media Research, which are former rivals in India.

However, in its complaint, NDTV also noted that TAM "acts merely as a distributor of the products generated by the Nielsen Process, which is controlled by Nielsen from the US."

"The corruption, manipulation and release of tampered and fabricated viewership figures for Nielsen’s Kantar’s and TAM’s Indian operations has been going on for at least eight years, despite the same having been brought to the knowledge of Nielsen, Kantar and TAM on numerous occasions between 2004 and 2012," it said.

On January 4, 2012, NDTV wrote to David Calhoun, the worldwide CEO of Nielsen, repeating complaints about the company’s losses resulting from “ongoing rampant corruption in television viewership data” published by TAM.

“All of NDTV’s losses and complaints as noted in this complaint were presented to those senior officials of Nielsen and Kantar at that meeting, along with evidence supporting such losses and complaints, the parties involved in rampant corruption, which, by the very nature of television and cable operations in India included politicians,” NDTV said in the lawsuit.

No remedial measures

NDTV said they were promised “immediate solutions” at the meeting but that no remedial measures were taken.

“The primary remedial measure required was (1) the discontinuation of publication of data until there was an increase of sample size from 8,000 to 30,000 and (2) immediately increased security measures. To date, however, no such remedial measures have been taken. Corrupt data continues to be published, with the knowledge and/or conscious disregard of the fact that the benefits of such continuing publication inure to the benefit of politicians,” NDTV said in the lawsuit, noting that due to the “monopoly power” of TAM, Indian broadcasters an advertisers have had no choice but to rely on “corrupted” data.

“Those promises have been broken, and NDTV has suffered losses as direct result of those broken promises,” NDTV said.

“That data has been, and continues to be, corrupted by lack of security and lack of adequate sample size. Yet Nielsen and Kantar, through TAM, continued and still continue, to publish such corrupted data, despite direct and specific knowledge and admission by each of them of the corruption of such data, and direct and specific knowledge of the losses caused, and that continue to be caused, to NDTV by the publication of such corrupted data,” NDTV said in its lawsuit.

Nielsen won't comment

According to The Hollywood Reporter, tampering with data has been a known problem in India since 2004 and has been discussed in public meetings.

“For example, during a November meeting in Mumbai of the board of directors of News Broadcasters Association, NDTV's executive vice chairperson Narayan Rao presented a report about the fiddling of PeopleMeters, the company's audience-measurement tool. Rao said some were ‘subverting the ratings system by 'discovering' the panel homes that have PeopleMeters installed in them, doctoring data emerging from 'parallel homes,' providing a separate TV in select panel homes for viewing while the TV linked to the meter was tuned to specified channels [and] misusing the guest button where up to 10 guests can be shown watching even when there is no one there,’” The Hollywood Reporter said in a report published on Monday.

“These acts are allegedly happening as TV channels in the country are covertly providing monetary inducements for the manipulation of data,” it added.

The Hollywood Reporter also quoted a Nielsen spokesperson as saying the company "has a longstanding policy of not commenting on pending legal matters."