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March 4, 2013

TV Station Operator Lacked Standing to Pursue Monopoly Claims Against Ratings Company Nielsen

By Jeffrey May, J.D.

The U.S. Court of Appeals in Atlanta has upheld dismissal of monopoly claims against Nielsen Media Research, Inc. for allegedly excluding potential competitors from the Miami-Fort Lauderdale television ratings market. A complaining Nielsen customer lacked antitrust standing to pursue its lawsuit because it failed to establish that it was an "efficient enforcer" of the antitrust laws. Summary judgment in favor of Nielsen was affirmed (Sunbeam Television Corp. v. Nielsen Media Research, Inc., March 4, 2013, Hill, J.).

Sunbeam Television Corporation operates WSVN, the FOX-affiliated broadcast television channel in Miami. Sunbeam has purchased audience measurement services from Nielsen for over 30 years.

Sunbeam's antitrust claims principally arose from Nielsen's alleged improper and defective implementation of a new ratings technology, known as the Local People Meter (LPM) Method. The LPM Method included the use of meters to automatically record the channels to which a selected viewer's television set was tuned. It also required the viewer to press unique identifying buttons on a handheld remote control provided with the meter to determine which family member was viewing a particular television program at a particular time.

Sunbeam alleged that the use of this "inferior" method for measuring ratings underestimated its actual viewership audience and caused injury. Nielsen's switch to LPMs in audience measurement equipment caused an approximate 50% drop in Sunbeam's broadcast television station's (WSVN) ratings, it was alleged. In monetary terms, WSVN purportedly lost approximately $1 million per month in advertising revenue. Its going-concern value dropped by over $100 million.

The appellate court explained that, in the Eleventh Circuit, a plaintiff must satisfy a two-prong test for antitrust standing: (1) the plaintiff must establish that it has suffered an antitrust injury; and (2) the plaintiff must be an "efficient enforcer" of the antitrust laws. The appellate court focused on the second prong.

According to the appellate court, in order to meet the second prong, the plaintiff had to prove the existence of a competitor willing and able to enter the relevant market, but for the exclusionary conduct of the incumbent monopolist. The court rejected Sunbeam's contention that such proof should only be required of competitor plaintiffs, not customer plaintiffs. It did not matter whether the plaintiff was a customer or a competitor, in the court's view.

Sunbeam identified three potential competitors that were allegedly excluded from the market by Nielsen's anticompetitive behavior: Arbitron, Inc., ADcom Information Services Company, and erinMedia, LLC. However, the appellate court agreed with the lower court's determination that Sunbeam failed to raise an issue of material fact as to whether any of these three potential competitors was willing and able to provide a local television ratings service that could have substituted for Nielsen's service in Miami.

The case is No. 11-10901.

Attorneys: Michael T. Gass (Choate Hall & Stewart, LLP) for Sunbeam Television Corp. Aidan Synnott (Paul Weiss Rifkind Wharton & Garrison, LLP) for Nielsen Media Research, Inc.

Companies: Nielsen Media Research, Inc.; Sunbeam Television Corp.

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