Nielsen Takes Cumulus Ratings Fight To Supreme Court.

Nielsen is taking its antitrust fight with Cumulus Media to the U.S. Supreme Court, even as it wins a reprieve in the parallel battle over what Westwood One should pay for its Nationwide ratings. The Second Circuit has put a judge’s enforcement order — and the threat of $50,000-a-day penalties — on hold while Nielsen pursues a separate appeal.

The increasingly complex web of legal maneuvers has seen Nielsen file a petition asking the Supreme Court to review the Second Circuit case in which it lost its appeal of the preliminary injunction blocking its radio ratings policy. The move follows a series of losses for Nielsen in that original appeal. The Second Circuit upheld a preliminary injunction in July, Nielsen sought a rehearing by the full appeals court, and that request was then denied.

The Supreme Court filing doesn’t mean the justices have agreed to hear the case. Nielsen is asking them to take it up. Cumulus has until mid-October to respond, meaning no decision is imminent.

The new filing also comes as Nielsen and Cumulus remain locked in a separate fight in federal appeals court over how Vargas is enforcing the injunction.

Two Appeals Tracks

The Supreme Court petition grows out of the original antitrust fight over Nielsen’s Network Policy, which conditioned access to its complete Nationwide ratings product on broadcasters also purchasing Nielsen local ratings in markets where they operated stations. Cumulus last December challenged the policy after deciding it wanted to continue buying Nielsen’s national ratings for Westwood One while using rival Eastlan for local ratings in some markets.

Vargas issued a preliminary injunction blocking the policy and prohibiting Nielsen from charging a commercially unreasonable rate for Nationwide as a complete standalone product. The Second Circuit affirmed that injunction in July.

Once the original appeal ended, the legal fight turned to whether Nielsen was complying with the injunction, including a prohibition on the ratings company from charging a “commercially unreasonable rate” for Nationwide ratings as a complete standalone product.

The companies exchanged offers after a Sept. 1 evidentiary hearing but failed to reach a deal. Nielsen reduced its proposed price and characterized it as its “best and final” offer. Cumulus countered, but Nielsen rejected its proposal.

Vargas ultimately found Nielsen’s standalone Nationwide offer was “commercially unreasonable and thus in violation of the Court’s order.” Her now-public opinion shows she wasn’t persuaded by the methodology Nielsen used to develop its offer.

Judge Questions Pricing Model

Nielsen retained an economist to estimate an economically reasonable price for Westwood One. His analysis compared customers’ total spending on Nielsen products with their broadcast revenue. That included spending on local ratings, Nationwide ratings and ancillary services. Of the 75 companies in his sample, only 12 purchased Nationwide, while 63 did not.

Vargas found problems with several assumptions underlying the analysis. She said the model assumed customers value Nationwide and local ratings identically, that Nielsen’s costs for different services were appropriately calculated and that Nielsen’s past anticompetitive conduct had not affected the data used to establish the price. She described the assumptions as “dubious.”

Vargas did give Nielsen some flexibility on price, however. She rejected Cumulus’ argument that a reasonable offer had to fall within the court’s benchmark. But Nielsen’s actual offer still went too far. Vargas said it was “many multiples above” the level the court had previously said would be considered reasonable.

Price wasn’t Vargas’ only concern. She also found Nielsen’s proposed contract term commercially unreasonable, concluding Nielsen had not adequately explained why it departed from the contract duration it typically uses with radio groups. Vargas ultimately ordered Nielsen to make a compliant offer, imposing a $50,000-per-day sanction if it failed to do so.

Nielsen immediately appealed, arguing Vargas had gone beyond enforcing the December injunction and instead modified it by imposing new obligations. The Second Circuit has stayed Vargas’ order while that appeal proceeds. It has put the case on an expedited schedule as it aims to reach a decision this fall.

The result is now a two-track appellate fight. Nielsen is asking the Supreme Court to review the original Second Circuit case that upheld Cumulus’ preliminary injunction, while simultaneously asking the Second Circuit to overturn Vargas’ subsequent order enforcing it.