Nielsen slapped with lawsuit over allegedly cooked ratings data

Thursday, 2 August 2012 00:00 - - {{hitsCtrl.values.hits}}

LOS ANGELES (TheWrap.com) : For all of its number-crunching, the Nielsen Company probably didn’t count on this.

Television ratings analyst Nielsen has been hit with a huge lawsuit by an Indian television company claiming that corrupted and manipulated data has cost it big-time in revenues.

In the lawsuit, filed in New York Supreme Court on Thursday, New Delhi Television Ltd. claims that Television Audience Measurement, a joint venture formed by Nielsen and its former competitor Kantar to measure television viewership in India, has caused major financial damage to the broadcaster. New Delhi says that Nielsen is well aware of the problems but has not done anything about them because of an obsession with cost-cutting.

“This is ... a case of a once noble company, Nielsen, now owned by ‘Sponsors,’ exhibiting unabashed short term greed and reckless disregard of its duties of noble origin,” the suit reads.

New Delhi accuses TAM of employing an inadequate sampling size for the Indian market, and also of using inadequate security measures to protect its data. More seriously, the broadcaster alleges that the lack of security has led to an atmosphere of widespread corruption, with different networks bribing sample households to watch them, and TAM employees taking bribes in exchange for helping to game the numbers.

Since ratings determine how much broadcasters are able to charge for advertising, New Delhi claims significant financial damages from the allegedly corrupted ratings data.

“This loss of hard earned reputation and goodwill along with the damage to the profitability of NDTV as a result of low advertising revenues has in turn severely damaged the brand value of NDTV,” the suit says. According to the company, its stock price dropped from a high of about $55 in January 2008 to a low of about 46 cents in Dec 2011. New Delhi Television claims its loss due to TAM’s unreliable data “is not less than $810 million.”

Nielsen had no comment on the lawsuit for TheWrap.

Despite numerous communications and meetings with Nielsen, as well as assurances from Nielsen that the issues would be taken care of, no substantial changes have been made, New Delhi alleges.

The lawsuit lists 42 counts against Nielsen, Kantar, TAM and various other defendants, ranging from breach of fiduciary duty and gross negligence to tortious and negligent interference with prospective economic advantage.