I’m interrupting my regularly scheduled column due to the news on Friday that Cumulus sued Nielsen in U.S. District Court for the Southern District of New York.
I’ve read over the complaint, and while I’m (thankfully) not a lawyer, I’ll offer some context and thoughts.
Cumulus’ attorneys regularly used the phrase “upon information and understanding,” which apparently is part of federal fraud pleadings and requires further facts. Some of what you’ll read here is upon my personal “information and understanding.”
When I started in this business, Arbitron reported every commercial radio station that met minimum reporting standards regardless of subscriber status. It was assumed that clients, broadcasters, agencies, and advertisers paid for a complete view of the commercial radio marketplace. This was back when one entity could own no more than seven AM and seven FM stations nationally.
Occasionally, the system was abused. Everything was on paper, so someone might borrow a book from a friend at an agency or another station in town that had access. While they couldn’t use the numbers for sales purposes, when you know the numbers, you can negotiate rates. As a television example, when I worked at WPXI-TV in Pittsburgh in the early ‘90s, Arbitron introduced ScanAmerica there, and our owners, Cox Television, did not subscribe.
However, we received overnights via fax from a syndicator, had access to the book, and set rates accordingly. For avails with Arbitron shops, we had rates but no numbers — yet the rates somehow matched up to the ratings.
In this century, access became limited, beginning in 2014 when Nielsen stopped reporting non-subscribers in the topline data release. Apparently, some stations used data that appeared in the trade press or local media for sales purposes. That avenue was cut off.
Next, Nielsen adopted the “Subscriber First” policy in 2021. “Subscriber First” should be named “Subscriber Only,” as the policy removed any non-subscribing stations from the summary data set. That’s the data set that goes to agencies and advertisers, so non-subscribing stations were no longer visible to buyers and planners. The non-subscriber estimates continued to appear in the respondent data set that subscribing stations received so programmers could see a full view of the market.
Let’s move to the present and the motivation for Cumulus’ suit. Cumulus owns Westwood One, one of the two major radio networks (there are others, but none on the scale of Westwood and iHeart’s Premiere, and no other network owners also own local stations). Westwood uses Nielsen’s Nationwide service for sales and programming. Network radio is a numbers-driven business.
When negotiating for a new Nielsen contract, according to the filing, Cumulus decided they no longer wished to pay for local Nielsen ratings in a majority of their 80 local markets. An example is Los Angeles, where the only Cumulus-owned outlet is KABC-AM. KABC was a big deal in its heyday, which passed long ago. Cumulus sees no reason to pay L.A. Nielsen rates for one station with a small audience.
Nielsen cited a new “tying” policy stating that if a company owns a property in a market, it must subscribe to the local service to allow its network to have access as well. If KABC doesn’t subscribe locally, then Westwood One will not have access to L.A. estimates. Westwood does business with multiple stations in Los Angeles that are not owned by Cumulus.
Per the filing, Cumulus would prefer to use Eastlan in some markets or go without estimates in others. However, Westwood can’t operate without the full Nationwide data set. Cumulus in Memphis already subscribes to Eastlan instead of Nielsen. Under the tying policy, Nielsen will not include Memphis in Westwood’s Nationwide data set.
Cumulus asserts this violates U.S. antitrust law under the Sherman Anti-Trust Act. The Sherman Act was passed in 1890 when Marconi was 16 and having fun at his family’s Italian estate. David Sarnoff’s mother was pregnant with that broadcast pioneer when President Harrison signed the Act into law.
The Act has been updated over the years. Cumulus’ key accusation falls under Section 2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony and, on conviction thereof, shall be punished by a fine not exceeding $100,000,000 if a corporation or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, at the discretion of the court.
Cumulus argues that Nielsen has a monopoly on national radio ratings and is using that monopoly power to force Cumulus to buy Nielsen data in its 80 local markets. Its position is that if the company doesn’t give in to Nielsen, Westwood One will be greatly harmed, as its full U.S. audience will not appear in Nationwide.
The company sent a “cease and desist” letter to Nielsen in August explaining the tying policy was “anticompetitive and illegal.” Cumulus stated that Nielsen then offered to sell the Nationwide data set without the tying policy but at a price nearly ten times (italics theirs) what Cumulus currently pays. Cumulus says this price would be equivalent to what it would pay for Nationwide and local data in the 80 Cumulus markets. In other words, the company pays the same if it wants Nationwide for the whole country.
When I started at the National Association of Broadcasters in 1987, on my first day, the report of economists working for NAB and an ad hoc group called the Radio Audience Measurement Task Force (RAMTF) was being reviewed. The issue at the time was the high price for Arbitron data and whether Birch, the competitor, was being unfairly held back due to monopolistic behavior by Arbitron.
My memory of the RAMTF was that the economists said Arbitron was a monopoly — but a legal one — in the sense that the company had become a monopoly not by harming other companies, but by offering better products. They also found that Arbitron was much more expensive in markets that did not have Birch than in those that did. Amazing how competition affects prices!
A current analogy might be Google. There are search competitors to Google, and in the distant past, I used Yahoo and even AltaVista at times. Today, Microsoft offers Bing. ChatGPT may soon be a real competitor, yet when someone looks up something online, they often say “Google it.” Google holds a huge share of search but grew organically.
In my experience, “tying” has happened before. When I worked at Birch/Scarborough, I heard we lost out with some agencies because they wanted the BAR service (national ad spend data), which was part-owned by Arbitron. Arbitron would either throw it in or tie radio data to BAR. We had no equivalent to BAR, so some agencies went with Arbitron Radio for just that reason.
More recently, Nielsen has tied co-owned Scarborough to the local ratings service to thwart The Media Audit. I’ve heard that Scarborough is thrown in at little or no cost, thus keeping The Media Audit out. No broadcaster will complain that they may be paying below-market prices for Scarborough.
Cumulus also cites Eastlan in the complaint. Eastlan has been around since 1999, generally measuring small markets that can’t afford Nielsen service, although the service is available in Raleigh-Durham, Greensboro, and Memphis — all three Nielsen PPM markets.
As Cumulus’ counsel notes, Eastlan is far less expensive than Nielsen. However, it does not appear in one of the major agency platforms, MediaOcean. An agency using MediaOcean does not see Eastlan data as an alternative to Nielsen. However, Eastlan data is in Strata and Advantage, per the Eastlan website. Eastlan is an alternative for local ratings. Although considering my issues with Nielsen methodology, it is not at Nielsen’s quality level.
What’s different here is not only that a broadcaster filed suit against Nielsen — shining a public light on negotiations with Nielsen — but that the dispute was not settled before Cumulus resorted to this step. If you trust Google Gemini, the vast majority of cases like this one are settled out of court. Cumulus has requested a jury trial.
This is a game of “chicken.” Considering the issues with network radio, Westwood One without full data is hard to imagine. In their Q2 financial release, Cumulus said their network business was down 14.7% in the first six months year over year. In Q2, the decline was 20.5%. Imagine the state of Cumulus’ network business without Nationwide!
However, Nielsen also needs revenue, especially with private equity ownership. As one of the Big Three ownership groups, Cumulus makes up a solid chunk of Nielsen Audio’s topline. It’s not enough to cause any serious financial issues for Nielsen, but it will sting if Cumulus walks. That infers that Cumulus may go without Nielsen data even in the 32 markets where the company wants it. If Cumulus does leave and holds up financially, it would be a seismic event that one of the big groups made a go of it without Nielsen data.
Is this Eastlan’s opportunity to finally become a true competitor to Nielsen? Assuming the company could bulk up quickly enough to cover many more markets, especially larger ones? Would MediaOcean agree to include Eastlan data so that Cumulus and potentially other companies would have a lower-priced alternative?
Antitrust litigation is expensive. Nielsen will not want to discuss its pricing and negotiation strategies in open court. Cumulus on the other hand is not profitable. Taking a further hit to revenue in the absence of Nielsen data, even after removing the Nielsen expense, will be hard.
All it takes is one desperate or foolish Cumulus AE to use Nielsen data obtained under the table, and Cumulus will be talking with a different set of Nielsen lawyers. If you don’t think this can happen, just ask Saga. In 2014, Nielsen sued for piracy (copyright infringement). Saga, which under Ed Christian had traditionally demurred from buying Nielsen data, eventually licensed five markets.
I expect some sort of deal between the parties later this year. Nielsen will drop the tying language. Cumulus will keep Nielsen in more than 32 markets while adding Eastlan in smaller markets that are barely profitable for Nielsen. I have no inside information to support this, but it only makes sense. What do you think?
Let’s meet again next week.
Barrett Media produces daily content on the music, news, and sports media industries. To stay updated, sign up for our newsletters and get the latest information delivered straight to your inbox.
