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Would-Be Ratings Startup Offers Ops Profit Split

6/23/2006 8:02 PM Eastern

A start-up ratings service, planning to use audience data gathered from set-top boxes, is ramping up its effort to convince cable operators to join the venture.

Florida real-estate developer and erinMedia owner Frank Maggio announced his plans last week during a presentation at an Advertising Research Foundation conference in New York City.

Maggio said that “in order to get the ball rolling” for erinMedia to launch as a ratings service, he’s committed to offer cable operators a 50% share of its profits in exchange for data from their set-tops.

'PROFIT INCENTIVE’

“It would not be a controlling interest, it would just be a profit incentive,” said Maggio, who has an antitrust lawsuit pending against dominant TV rating service Nielsen Media Research.

Maggio’s erinMedia faces a formidable task trying to challenge Nielsen’s dominant position in the TV measurement business. His company has already done trials with some cable operators, though.

Maggio described his strategy with erinMedia as trying “to subvert the dominant paradigm.”

The company’s timing, in terms of entering the market, is somewhat inopportune. Nielsen, which declined to comment last week, recently unveiled a comprehensive plan to offer state-of-the-art electronic TV measurement across all platforms that content appears on, from iPods to cell phones, as well as traditional TV sets.

Nonetheless, Maggio is forging ahead and building a management team. He has already hired Len Finelli, a veteran of rival Nielsen’s parent. Finelli is the former chief financial officer for VNU Business Information services and former executive vice president of business development for VNU USA.

Maggio said he is also interviewing job candidates with cable-industry backgrounds that could make his pitch to cable operators.

“Someone who’s got good relationships at the right levels because this is a big decision for cable [operators],” he said.

He wants to establish a new holding company, Maggio Media Research, as well as build a $50 million “war chest.” ErinMedia could be folded into MMR, which could eventually also have units that measure satellite or cell-phone usage, or partner with other companies.

Maggio’s other goal is to take his venture public within two years, putting it in the hands of shareholders. That way there would be no conflict of interest in terms of him owning a ratings service as he tries to become a programmer, by launching an interactive game-show network called ReacTV.

BREATH OF FRESH AIR

Maggio’s plans drew some criticism last week from a “reaction” panel after his presentation. Ad-agency and ad-research officials argued — among other things — that collecting TV viewership from set-tops only represents a portion of total U.S. TV homes and that other measurement services, including Nielsen, have already dabbled in getting such data from set-tops.

Panelist Gale Metzger — former president of Statistical Research Inc., whose “SMART” initiative tried to create a rival to Nielsen a number of years ago — told Maggio, “Philosophically, you’re a breath of fresh air.”

But Metzger was critical about the kind of TV-viewing information that can by tracked via set-tops. He called such data “dirty,” saying the boxes are designed to carry TV signals, not measure viewing.

Maggio has ambitious plans to launch up to 10 networks, with the first being ReacTV, which is slated to debut this summer. He said at least one cable operator has agreed to carry it, but he declined to name the company.

ReacTV combines interactive TV with a simulcast on the Internet. It incorporates a remote control with a Wi-Fi connection, and viewers can win money by answering questions about the ads they see. The network uses second-by-second ratings to charge sponsors for only who is watching their ads.

 

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