David Calhoun left a job he loved as a star executive at General Electric to step into a mess as CEO of the A. C. Nielsen Corporation. His immediate challenge: The media research unit, which is under heavy fire from television clients such as NBC and CBS for chronic delays in reporting television ratings. Nielsen held a conference call with major clients acknowledging the delays and promising to do better, but the following Monday, the company again failed to report any ratings at all for the previous day. Nielson was not delivering data to customers as promised.
What’s the big deal? Calhoun and chief of research Susan Whiting know that about $70 billion a year in advertising revenues for the television industry depends on Nielsen ratings. Viewers might think TV networks are in the business of providing entertainment, but management’s primary goal is providing eyeballs for advertisers. When television managers and advertisers don’t get timely, accurate data from Nielsen, they’re shooting in the dark with decisions about how to allocate resources. Daily meetings at some companies are scheduled based on getting the information from Nielsen when promised. “There is so much revenue involved over which we have no quality control,” said Alan Wurtzel, president of research for NBC. “We don’t just use this data for analytical purposes. This is the currency of the business.”
Calhoun and other top managers are analyzing what went wrong at Nielsen. Originated in 1923 to perform surveys of the production of industrial equipment, Nielsen became a household name when it launched its television ratings system in 1950. More than 60 years later, Nielsen still functions as a near-monopoly in the ratings business. Yet the company could be facing a serious threat from cable and satellite companies that are working on a way to get set-top boxes to provide real-time TV viewing data to rival Nielsen’s.
Managers see several factors involved in the problems...