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erinMedia Out of Ratings Business

2/21/2007 4:54 AM Eastern

After failing to secure a $25 million cash infusion, start-up TV-ratings firm erinMedia is pulling back and has laid off “a majority of its employees” in an effort to reduce costs while continuing its legal battle against Nielsen Media Research, the company said Tuesday.

In a press release, erinMedia blamed Nielsen Media’s announcement last week that it was starting a separate unit to process viewing data from set-tops with having “chilled” the start-up’s efforts to get financing and find partners. erinMedia’s strategy has also been to collect and process viewing data from set-top boxes.

Earlier this month, it was revealed that Boston-based Spark Capital was seeking to build a consortium that would have provided broad strategic partner support and up to $25 million in capital to erinMedia.

But on Feb. 12, Nielsen Media’s parent, Nielsen Co., announced that it would launch a new division, DigitalPlus, which would focus on generating ratings from digital set-top boxes. Following the announcement, Spark notified erinMedia late last week that the $25 million funding effort, “as proposed, would not be favorably concluded,” according to erinMedia’s press release.

erinMedia founder and owner Frank Maggio couldn’t be reached for comment Wednesday.

Also Wednesday, Nielsen Media spokesman Anne Elliot said her company couldn’t comment on erinMedia’s announcement because of the start-up’s pending lawsuit against Nielsen Media.

But last week, Nielsen Media officials stressed that while their DigitalPlus unit was new, it is merely combining several of the ratings giant’s long-standing initiatives of gathering and using data from set-tops.

After March 1, erinMedia will operate out of St. Petersburg, Fla., moving from its current digs in Bradenton, Fla., and it will primarily focus on the licensing of its six recently secured patents to research companies interested in analyzing digital set-top-box data. The advanced hardware and software required to generate second-by-second demographic overnight ratings will remain operational, the company said in its press release.

erinMedia will also continue pursuing its antitrust suit, filed in June 2005, against Nielsen Media. The suit is still pending in federal court, and an early 2008 trial date has been set.

Among numerous claims, the suit cited Nielsen Media's use of long-term, staggered contracts as a means to ensure that no competitor can secure a foothold in the TV-ratings industry. The case marked the first antitrust action against Nielsen Media since a 1963 consent order by the Federal Trade Commission, which cited A.C. Nielsen for various antitrust violations dating back to the 1950s and early 1960s.

A copy of the 1963 consent order, as well as key pleadings from the antitrust suit, can be found on erinMedia-sponsored Web site WeShouldALLCount.com.

September