Rentrak chief sees Nielsen as ‘frenemy’ as measurement business grows

Nielsen is the archetypal “frenemy”, says Livek: “In some markets we can co-operate, like in box office data, while in other markets we will compete, like in linear television.”

Recently Rentrak bought Nielsen’s EDI business for $15m, but Nielsen will still have access to elements of EDI’s box office sales information thanks to a long-term licencing agreement between the two companies.

Meanwhile, Rentrak is clearly gunning to win business away from Nielsen in the area of TV audience measurement. Following a deal yesterday with Dish Network to integrate the satellite broadcaster’s set-top box viewing data with data Rentrak already holds on telco TV and cable viewing, Livek boasts that Rentrak is “the only company that can measure second-by-second television viewing in all 210 DMAs [local TV markets] across the United States.”

Announcing the company’s fiscal third quarter results late yesterday, Livek said Rentrak had made headway in moving its revenue and profit mix more towards its Advanced Media Information (AMI) division, away from its Pay-Per-Transaction (PPT) system, its main business line, which enables revenue sharing between video rental outlets and movie distributors.

AMI revenue for the three months ended 31 December was up 34% to $4.3m – representing 19% of consolidated group revenue of $23m, compared to 14% a year ago. PPT revenue was down 4.8% to $18.8m.

As a higher margin business, Rentrak has shown it is willing to make short-term investments in growing AMI in exchange for the promise of long-term gains. Gross margin for the business as a whole was down 8% to $6.6m in Q3 as Rentrak spent $900,000 on data integration services.

Livek said: “We will make strategic investments to solidify our position and increase our value to the entertainment and advertising industries. Although these investments may impact our short-term results from time to time, we believe they are necessary to help our industry evolve by providing the most granular, robust viewership data available.”

Rentrak reported an operating loss of $1.3m for the three-month period versus $475,000 income a year ago, with the loss attributed to the aforementioned data integration costs, EDI acquisition costs and non-cash stock compensation expenses. Excluding these items, operating income would have been $800,000.