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NDTV's reasons for filing the lawsuit against TAM in New York

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MUMBAI: Why New York? This is the question those keenly following the NDTV’s lawsuit against TAM Media Research would want answered.

For the past several years, news broadcaster NDTV (New Delhi Television Ltd) has been making a noise against manipulation of the audience measurement or television viewership ratings in India. It had been drawing the attention of TAM towards corrupt means employed by some of the representatives of TAM and by some broadcasters to engineer television ratings.

TAM is the monopoly television ratings service provider in India, owned by US-based Nielsen group and global communications agency WPP group companies Kantar Media Research and Cavendish Square Holdings.

Every time NDTV escalated the issue of manipulation of TAM TV ratings and demanded corrective steps, TAM would refer the matter to its parent companies Nielsen and Kantar. All the meetings that were held with NDTV during the period were led by Nielsen and Kantar officials on behalf of TAM, going by the narrations in the NDTV’s lawsuit against TAM.

All the assurances of corrective steps to make TV ratings in India fool-proof were given to NDTV by senior officials from Nielsen and Kantar. NDTV says it relied on the direct and unequivocal promises made by senior officers of The Nielsen Company, the Kantar Group and Nielsen and, hence, did not take any further steps to influence necessary remedial measures.

“Those promises have been broken, and NDTV has suffered losses as (a) direct result of those broken promises. Under New York law, each of these Defendants is liable to NDTV whether or not they had control over TAM’s operations,” NDTV states in its lawsuit.

NDTV’s case is that Nielsen and Kantar, despite their explicit promises to address rampant corruption in TV ratings processes in India, have negligently, deliberately and wilfully failed and refused to discontinue publication of corrupted data, failed to increase sample size and failed to increase security measures, all of which they knew they should have done, at the latest, after the January 20 2012 meeting.

The failure constitutes negligence, gross negligence, reckless disregard of duties and the various other causes of action set forth in the lawsuit, it says.

NDTV argued that the negligence includes, but not limited to, negligence per se for violations of the Foreign Corrupt Practices Act (FCPA). TAM‘s largest shareholder, Nielsen primarily operates out of the US and the processes for measuring television ratings are that of Nielsen.

NDTV would have believed that a severe indictment of TAM’s parents is possible under the US legal system that governs corporate functioning. Filing of such a case in India would have been a futile exercise as corporate governance standards are very low and the laws governing them are weak compared to the US.

TAM owners have persistently avoided providing funds to TAM required to increase the sample size for television ratings, so that manipulation becomes that much more difficult.

NDTV is harping on the fact that TAM, though a company registered in India, functions like a department of Nielsen and Kantar. And that Nielsen, which was a few years ago acquired by private equity investors, was on a cost-cutting drive prompted by the investors, now the sponsors (or in Indian parlance promoters) of the company.

NDTV said one method adopted by Nielsen for cutting costs is to refuse to increase sample sizes to adequate levels. Another method is to place the Nielsen process in markets, such as India, the Philippines and Turkey, without making suitable adjustments for local conditions. The need to make such suitable adjustments is recognised, but not followed, by Nielsen.

Indeed, in its 2011 Annual Report, Nielsen acknowledges that there are additional costs for implementing the Nielsen process in emerging markets, such as China, Russia, India and Brazil, but Nielsen has consistently refused to incur such additional costs, including a refusal to increase sample size and adopt adequate security measures in India.

Such cost cutting or cost avoidance measures, motivated by corporate greed, have resulted in violations of Nielsen’s duties to NDTV, violations of the Foreign Corrupt Practices Act, violations of the Dutch Corporate Governance Code (as the other TAM parent is also governed by the Dutch law) and are the direct and proximate cause of NDTV’s damages.

TAM has sold the ratings analyses generated by the Nielsen process by explicitly stating that it is using the process created, developed and implemented by Nielsen to generate ratings analyses, that is owned by Nielsen and Kantar, the leading provider of such services across the globe, that it is backed both financially as well as technologically by Nielsen and Kantar, the international giants in the field, and that, therefore, the data collected must be reliable. Indeed, TAM has presented slides at various presentations to support such assertions.

Following NDTV’s complaint in January 2012, senior officials from Nielsen and Kantar attended several meetings with NDTV in January, February and April of 2012 and have been making decisions as well as providing (now known to be false) assurances to NDTV.

Two critical witnesses in this case are Robert Messemer, Chief Security Officer, The Nielsen Company, and Paul Donato, Executive Vice President and Chief Research Officer, Nielsen, who conducted a full investigation into the manipulation of TAM data, NDTV points out in the lawsuit. Both Robert and Paul are based in the US. Furthermore, the actual evidence regarding the manipulation in TAM data is on the laptops seized by Robert Messemer during the course of his investigations in India and taken to the US for further analysis.

As known to Nielsen, Kantar, TAM, at all relevant times, the corruption in the collection and dissemination of TAM data is rampant in India, is pervasive and is carried out at various levels. It was incumbent on Kantar and Nielsen to ensure at all times that the acts and operations of TAM, as exercised through the Nielsen process, were in accordance with international standards including maintaining such standards by way of adequate systems, training, safeguards and oversight. Nielsen and Kantar failed to follow such standards, as they later admitted in January, February and April 2012.

The facts, as presented by NDTV, probably make a stronger case against Nielsen and Kantar in the US, where the justice system is swift and has no concern for the status of the defendants.

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