The two parties’ current agreement is set to expire on Monday, September 30
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| Paramount (Credit: Getty Images) |
Update (10/2): Just hours before its CBS television network televised what is certain to be a heavily watched debate between two candidates for Vice President of the United States, Paramount Global said late Monday night that its contract with Nielsen for audience measurement has expired — part of a broader dispute between the company and the data giant.
“Nielsen has severed our long-standing measurement partnership with its unacceptable demands, including substantial price increases that are inconsistent with the realities of a changing industry,” Paramount said in a statement, per Variety. “We have spent the last few years preparing for a multi-currency future and creating the operational infrastructure to move beyond Nielsen. We are confident in the quality of our alternative currency offering for clients as we continue efforts to reach a new Nielsen agreement with reasonable economic terms.”
“We look forward to working with Paramount on a new agreement,” Nielsen said in a statement.
Paramount had signaled to advertisers and their representatives last week that the company might be without Nielsen services. Paramount intends to rely on VideoAmp, one of a growing number of rivals to Nielsen, to help advertisers track the number of people who watch programming on Paramount’s portfolio of media assets.
At issue is a long-running complaint from TV networks that Nielsen isn’t measuring the many different audiences for their programming as well as it should.
As smartphones, mobile tablets and broadband-connected TVs gain more consumer acceptance, audiences are increasingly able to stream their TV favorites in on-demand fashion, making the task of counting them exponentially more difficult. TV networks have long based their advertising rates on Nielsen’s measure of linear TV audiences, which have slipped as consumers embraced Netflix, Hulu, Amazon Prime Video and other streaming and on-demand options.
At the same time, Paramount is under extreme pressure to cut costs. The company is about to be acquired by Skydance Media, and its current management team has already begun working to trim $500 million from its operating structure. Skydance Media has articulated a plan under which it would reduce costs by another $1.5 billion.
Executives at Paramount look at the hundreds of millions the company spends on Nielsen measurement each year, according to one of the people familiar with the situation, and feel that paying a higher fee seems ill-advised and not in the company’s best interest. They feel that Nielsen’s fees would in some cases exceed the total ad revenue of the network being measured — a sign of how some of the company’s cable networks have deteriorated in the streaming era.
Nielsen feels its services continue to have great value, according to a person familiar with the company’s thinking. It has added new kinds of data to its tabulations, including examinations of specific groups of audience as well as viewers who watch programs in so-called “out of home” venues like hotels and bars. This person says the overall industry will continue to have access to ratings for Paramount properties during any dark period between the two sides.
Paramount may find itself hard-pressed to go without Nielsen for long. The company’s measurements continue to form the bedrock of the economics of the media industry. Advertisers use Nielsen counts to figure out how much they should pay for commercials. The company expects to continue its negotiations with Nielsen and hopes to reach an agreement.
Nielsen and parts of Paramount have come to loggerheads in the past. In 2019, CBS dropped Nielsen over a similar dispute tied to pricing. CBS was without Nielsen measures for about 11 days before they inked a new deal.
Original post:
Paramount Global is considering potentially dropping its partnership with Nielsen as the two parties continue talks about renewing their current contract ahead of a deadline this coming Monday.
“Disengaging from Nielsen is not our first choice, and we remain hopeful for a resolution,” Paramount advertising president John Halley wrote in a letter to media agencies, according to Variety. “We are asking for your partnership as we navigate this situation.”
Halley argued that Nielsen is “insisting on substantial price increases across all their products, including linear measurement, despite the changing economic landscape of our industry” and that the costs as a percentage of Paramount’s ad revenue have “quintupled.”
“In certain instances, Nielsen’s fees already exceed the total advertising revenue of the network being measured,” Halley added. “This has led us to conclude that the model, as proposed, is not workable, and that the cost structure requires re-engineering.”
The outlet noted that Paramount would rely on rival audience measurement firm VideoAmp in the event a deal is not reached. Representatives for Paramount declined to comment.
The move would come as CBS is gearing up to launch its first Sunday football game this weekend, as well as the vice presidential debate moderated by CBS News on Oct. 1 — the first day that Paramount would be without Nielsen in the event a deal isn’t reached.
A Nielsen spokesperson told TheWrap that it hopes to reach a new deal and continue to partner with Paramount, but emphasized that all of its other customers and the industry at large would continue to have full access to its data, even if a new deal is not reached by the deadline. Nielsen has a deal in place with every other legacy media company.
Advertisers largely depend on the firm’s data, including the Streaming Top 10 and The Gauge, in order to help determine their spending on commercials as audiences shift from linear TV to streaming — though the scope of that data currently remains limited as that transition is ongoing. Over the past six months, the firm has launched new capabilities in order to expand its measurement data around audience and out-of-home viewing.
The negotiations with Nielsen coincide with belt-tightening at Paramount, as the media giant has said it will cut 15% of its U.S. workforce in order to help generate $500 million in annual run-rate cost savings. Areas impacted thus far have included Paramount+’s communications and content strategy teams, Paramount Television Studios and Paramount Advertising. Additional impacted areas include marketing, finance, legal, technology and other support functions.
David Ellison’s Skydance Media is set to merge with the studio in the first half of 2025 after acquiring controlling shareholder Shari Redstone’s National Amusements. Following the $8 billion deal’s close, Oracle co-founder and David’s father Larry Ellison will own 77.5% of National Amusements through a trust and series of corporations. The remainder of NAI will be owned by RedBird Capital Partners founder Gerry Cardinale’s RB Tentpole LP, which will control 22.5% if the deal goes through. David Ellison would then serve as Paramount’s chairman and CEO.
In connection with the $500 million in cuts, Paramount expects to incur a restructuring charge of $300-$400 million in the third quarter, with a cash impact that will occur over the next several quarters.
In addition to the cuts, Paramount has hired bankers to help the company with possible asset sales. TheWrap exclusively reported that Paramount sold the ComicBook and PopCulture websites to Nashville-based Savage Ventures for an undisclosed amount. Four individuals familiar with the plans of the company’s co-CEOs previously told TheWrap that other possible assets that could be put up for sale include Pluto TV, BET, VH1 and the Paramount lot itself, which would be leased back for the studio’s use. The company is also in “active discussions” about potential strategic partnerships and joint ventures with other streamers.
Paramount shares have fallen 14% in the past year and 26% year-to-date.
Stream a Mountain of Entertainment, including your Nickelodeon favorites on Paramount+! Try it FREE at ParamountPlus.com!
Originally published: September 27, 2024.
H/T: Special thanks to @916786wc for the news!
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