• by David Goetzl  @dgoetzl, March 6, 2013

Debate can cease. It is official. Nielsen is a monopoly.

It says so itself.

Proof from this week’s court decision in a case brought by Sunbeam Television charging Nielsen with violating anti-trust laws: “Neither party disputes that Nielsen exercises monopoly power over the television audience measurement services industry, both nationally, for the United States as a whole, and for all 210 markets.”

That sounds like Standard Oil circa 1911. But the trouble for those frustrated by Nielsen’s dominance is its monopoly standing is legal, according to the 11th circuit appeals court. The body denied Sunbeam’s appeal of a 2011 district court ruling that favored Nielsen.

Nielsen is clean on anti-trust laws because it does not use its muscle to keep competitors out of the market, the appeals court found. Part and parcel, it doesn't ink exclusive deals with clients; they are free to engage with Rentrak or other data providers.

From 1978-1989 as Arbitron went head-to-head with Nielsen in the local TV ratings business, 60% to 80% of clients subscribed to both, the appeals court said. Those days are long gone -- Arbitron pulled out of that arena in 1993 -- much to the dismay of many in the advertising business.

Among Sunbeam’s accusations are Nielsen used its monopoly muscle to extract “supracompetitive” pricing; require clients to subscribe to deficient local people meters (LPMs); and prevent competitors from entering the market. As for the latter, Sunbeam argued that Arbitron, ADcom Information Services and erinMedia were potential competitors that Nielsen blocked from entering the Miami market, where it owns the Fox station.

But the lower court found no evidence that any of the three was “willing and able” to launch a ratings service in Miami, so Sunbeam lacked grounds to pursue anti-trust violations. The appeals court agreed.

The timing of this week's ruling was fortuitous for Nielsen and the company issued a press release touting its victory.

Nielsen, of course, has a deal to acquire Arbitron and the two parties are looking for government approval. Trouble could have come had a decision reversed the lower court decision with a conclusion that Nielsen has engaged in “exclusionary conduct in its willful pursuit of remaining a monopolist.”

The Federal Trade Commission (FTC) no doubt has taken a look at the Sunbeam matter. And there is some material that advertisers and stations might find troubling. For example, the district court suggests that evidence allows for “reasonable inference” that Nielsen staggers contracts as an “exclusionary” practice. The court also said Nielsen viewed cable operators with set-top-box data as potential competitors and there is some evidence, albeit “ambiguous," that Nielsen introduced local people meters (LPMs) to “stave off that threat.”

Here’s an interesting angle: Sunbeam argued that Arbitron had designs on using its portable people meter (PPM) technology to enter the local TV market, but Nielsen’s “reputation for retaliating” deterred it. Yet the court said it was “remarkable” that Sunbeam didn’t produce a single Arbitron witness who could argue the company had the capability and desire to challenge Nielsen, but backed away because of “exclusionary practices.” It found that Sunbeam’s conclusion was “unduly speculative” and unsupported by evidence.

With the FTC evaluating its potential merger with a known monopolist, Arbitron certainly agrees.