Nielsen Appeals Cumulus Ratings Order To Second Circuit.

Nielsen is headed back to the Second Circuit after a federal judge escalated its ratings fight with Cumulus Media, ordering the company to make a new standalone Nationwide offer on court-specified terms and backing the directive with daily penalties for noncompliance.

Nielsen has filed notice that it is appealing U.S. District Judge Jeannette Vargas’ Sept. 9 order enforcing the preliminary injunction she issued last December. Nielsen says the new ruling improperly modifies that injunction by imposing obligations that were not part of the original order.

The underlying opinion is sealed, so the public record does not reveal the exact price, contract terms, deadline or amount of the daily penalties Vargas imposed. But Nielsen’s notice makes clear that the judge went beyond simply finding fault with its latest proposal. The company says Vargas required it to offer its Nationwide report Cumulus “on specified terms by a specified date” and imposed “daily penalties for noncompliance.”

That marks a sharp escalation in a dispute that has increasingly centered on what Cumulus-owned Westwood One should pay for standalone access to Nielsen’s national radio ratings. Cumulus has argued for weeks that Nielsen’s offers don’t comply with Vargas’ preliminary injunction, which bars Nielsen from charging a commercially unreasonable rate for Nationwide as a standalone product. The Second Circuit affirmed that injunction in July.

In its latest filing, Cumulus says Nielsen’s most recent proposal still falls well outside real-world Nationwide pricing despite being reduced after a Sept. 1 evidentiary hearing. Cumulus says Nielsen revised its offer last week and described it as its “best and final” proposal. But Cumulus argues the revised price remains multiples higher than what other customers pay for Nationwide and is based on an economic model that doesn’t adequately reflect actual Nationwide transactions.

Cumulus has made its own counteroffer, which it says was significantly higher than any previous Nationwide price and above the safe-harbor benchmark established in the court injunction. But Nielsen rejected it. The specific dollar amounts are redacted from the filing.

Cumulus Attacks Pricing

Much of Cumulus’ post-hearing filing attacks how Nielsen calculated its standalone Nationwide price. Nielsen retained economist Mark Zmijewski to estimate what an economically reasonable price would be for Westwood One. His analysis compared Nielsen customers’ overall spending with their broadcast revenue rather than focusing solely on what customers pay for Nationwide.

Cumulus says that approach is fundamentally flawed because it includes spending on local ratings and other products while excluding actual standalone Nationwide prices.

Nielsen executive Rich Tunkel testified that the company had never previously used that formula to determine a customer’s price. “We never had this situation come up before,” Tunkel testified. “This is a completely unique and novel approach.”

Cumulus also points to testimony showing Zmijewski’s model assumes that different Nielsen products provide equivalent value to a broadcaster.

Vargas questioned that assumption during the hearing, asking whether local ratings purchased as part of a bundle could have little or no value to a customer that primarily wanted Nationwide. Zmijewski acknowledged his analysis didn't separate the value of the different products.

Cumulus also argues that Zmijewski excluded actual standalone Nationwide buyers from his analysis and removed several broadcasters whose inclusion would have lowered the recommended price range.

Sanctions Fight

Before Vargas issued her ruling this week, Cumulus was already asking the judge to impose sanctions if Nielsen failed to make a compliant offer. Cumulus said it was not asking Vargas to set a price herself. Instead, it wanted her to find Nielsen’s existing proposals noncompliant, require a new offer tied to actual Nationwide pricing and impose a financial penalty until Nielsen complied.

Nielsen’s appeal indicates Vargas granted at least part of that requested relief. The ratings company contends the judge crossed the line from enforcing the original preliminary injunction to changing it. Nielsen says the order added new requirements by dictating terms and deadlines for an offer and threatening daily penalties.

Nielsen’s appeal sends the dispute back to the same federal appeals court that handed Nielsen a major loss in July when it upheld Vargas’ original injunction. That leaves the litigation on two tracks with Vargas is pressing Nielsen toward a standalone Nationwide deal in district court, while Nielsen is asking the Second Circuit to determine whether the judge went too far in enforcing the injunction.