This case involves a nationwide TV ratings company. A customer of the ratings company had used the company’s ratings in operating a local television station in Ohio. The customer claimed that the ratings company’s method for surveying households had cut the TV station’s ratings by 50% immediately after the ratings company began using a proprietary method of surveying households. The customer claimed that the ratings company’s method had understated its actual viewership. The customer brought an antitrust lawsuit against the ratings company claiming that the ratings company had monopolized the market for TV ratings in the local area. The customer claimed that because of the ratings company’s anti-competitive conduct and flawed viewership data, it suffered low ratings and it lost millions of dollars in advertising revenue. The customer also claimed that the ratings company’s anti-competitive conduct made it lose hundreds of millions of dollars in the TV station’s going-concern value.
Question(s) For Expert Witness
- 1. Can a TV ratings company monopolize a local market with its audience ratings systems, and does this type of conduct violate antitrust laws?
Expert Witness Response
Section 2 of the Sherman Antitrust Act prohibits unilateral conduct that results in the acquisition or maintenance of monopoly power. The customer in this case probably would have trouble showing that he or she suffered an antitrust injury. This is because Section 2 does not condemn the mere possession of a monopoly. In fact, Section 2 permits a single firm to acquire or maintain monopoly power by lawfully crafting a preferable good or service and implementing innovative business strategies. The method that the ratings company used in this case was introduced into the TV ratings industry in the late 1990’s. The method allowed ratings companies to continuously monitor and report set-tuning behavior and also allowed them to record demographic information by having viewers log in to the device by pressing specified buttons whenever they were watching television and logging out when they stopped viewing. The customer in this case probably could not prove that he or she suffered an antitrust injury because even though the ratings company may have had a monopoly in the local market, it is likely that customers who used their ratings services were not significantly deterred by this monopoly from purchasing ratings information. Most customers still probably would have purchased ratings information even if the ratings company charged supra-competitive prices and was insulated from competition. Also, even if there were other ratings companies willing to enter the local market, there is probably little evidence that those companies were actually taking steps to enter the business. There was probably little in this case to show that potential competitors in the TV ratings industry in the local market had actually prepared cash flow estimates and financial statements in order to determine the profitability of their entering the market. Also, there was probably not much the customer could do to show that potential competitors in the TV ratings industry actually had the capabilities to serve the market. Because of this, the customer in this case probably could not establish that the TV ratings company violated federal antitrust laws.