Nielsen to delay ad rating system

Television ratings giant Nielsen Media Research on Friday delayed the launch of a controversial system to measure viewership for commercials after encountering stiff resistance from TV programmers who believed the ratings system wasn’t ready for prime time.

“We have $50 billion in advertising revenue riding on this,” said Alan Wurtzel, NBC Universal’s president of research. “There’s no value in rushing to do something before it’s ready. We are trying to develop a ratings system that we are going to be dealing with for years to come.”

The new system is designed to give advertisers and TV programmers a better picture of how many consumers use their digital video recorders to fast-forward through commercials. But cable programmers, which have the most to lose under the system in part because viewers tend to watch cable shows in spurts and channel-surf during breaks, have hammered Nielsen. They pointed out flaws in the preliminary data.

Nielsen had scheduled a Dec. 11 launch, but findings distributed this week revealed another shortcoming. The firm found that most DVR viewing occurred within two days of a program’s being recorded, but its system was designed to capture viewing live, within 24 hours of the original airing or within a week of it.

On Friday, Nielsen told clients it would “temporarily postpone” the rollout. “Greater accountability is coming,” said spokesman Gary Holmes. “Nielsen will work with our clients to provide more detail on who’s watching the commercials.”

Nielsen had been building the system since June at the request of advertisers and broadcasters.

The major networks, including CBS and NBC, were interested in proving to advertisers that millions of people who digitally record programs continue to watch the commercials. The networks want those eyeballs to count as part of the audience so they can charge higher ad rates.

But during negotiations last spring, ad buyers refused to pay for viewers who recorded and then watched a program later. As a result, networks left money on the table during their negotiations in the so-called upfront market, when the bulk of commercial time is sold.

That problem is only going to grow as more consumers install DVRs. Nielsen estimates that about 10% of the 111 million homes in the U.S. with TVs have digital video recorders. But by next year the DVR penetration is expected to be closer to 20%, said David Poltrack, top researcher for CBS Corp.

“Our goal and our mission is to see the commercial ratings measurement system in place before the next upfront,” Poltrack said. “The bottom line is that we are delivering more commercial impressions.”

Most industry observers believe the ratings for commercials will help broadcasters because they will add viewers to the audience that they sell. The outlook isn’t as clear for cable programmers and those that sell syndicated shows, given that most of the shows recorded are network programs, such as “Grey’s Anatomy” or “CSI: Crime Scene Investigation.”

In addition, cable programmers were upset because Nielsen’s system wasn’t sophisticated enough to differentiate between national advertisements that they sell and local ads sold by cable operators.

In its memo, Nielsen said it would work to fine-tune the system to address the concerns of cable channels and syndicators.

“This system is too important to just say, ‘Hey, the train has left the station,’ ” said Sean Cunningham, chief executive of the Cabletelevision Advertising Bureau. “Getting it right is way more important than getting it fast.”

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meg.james@latimes.com