The TV rating market will see the entry of a new company, Tri-Media Intelligence LLLC, an official licensee of the international company Kantar Media, to measure television audience. Since 2005 to date, TV audience has been measured by a single company, TVMR Georgia, which is an official licensee of the international company Nielsen. The TVMR Georgia caught public attention in February 2014, when the Revenue Service entered it to conduct a tax inspection. That move was harshly criticized by nongovernmental organizations as they seen in it an attempt to meddle in the advertising market.

According to the data of Georgian National Communications Commission (GNCC), in 2014, the revenues of broadcast media made up 91.9 million GEL, showing an increase of 23% (17.6 million GEL) compared to the corresponding 2013 indicator. The largest share of these revenues accounted for commercials (71.4%) and sponsorship (19.8%). Other revenues (sale of content and broadcast time, contributions, et cetera) comprised 8.8%.

According to the GNCC report, in 2014, the largest share of broadcast revenues, totaling 49.3%, accounted for Rustavi 2. The shares of other TV companies were the following: Imedi TV – 24.2%, Studio Maestro – 11.3%, GDS TV – 2.9%, Georgian Media Network – 2.7%. The total share of other broadcasters made up 9.5%.

However, after the introduction of new regulations on advertising, the data of TVMR Georgia has shown a downward trend in broadcast commercials with 37% decrease seen in April 2015 as compared to April of the previous year.

Clients of television audience measurement companies are TV companies as well as advertising agents and media sellers. TV companies need to know viewer ratings to schedule programs and attract commercials while advertising agents and media sellers need them to place commercials accordingly.

It is difficult to guess at this stage how the new actor will affect the market and which measurement company will be chosen by broadcasters to receive the service. According to our inquiries, only several TV companies have a clear answer to this question. As of now, 34 organizations use the service of TVMR Georgia whilst Tri-Media Intelligence intends to cooperate with 48 organizations though it refrains from naming them. Tri-Media Intelligence offers customers a panel of up to 600 households whereas TVMR plans to increase its current panel of 355 household to 450 households from January 2016.

Tri-Media Intelligence

Tri-Media Intelligence LLC was registered in the LEPL National Agency of Public Registry on 13 October 2014 and in the same month, made an announcement about its entry of the market as a licensee of international company Kantar Media. Owners of the company are Merab Pachulia and Giorgi Tevdorashvili with 50%-50% of its shares. Merab Paculia, for his part, is the owner of 70% of shares in the Georgian Opinion Research Business International, GORBI, a public opinion and market research firm.

The director of Tri-Media Intelligence, Tsotne Mirtskhulava, told the Media Development Foundation (MDF) that the company had already studied 6,600 households in seven cities of Georgia with the population exceeding 45,000 each. The households were interviewed by 43 employees of GORBI using a questionnaire developed by Kantar Media. Out of 6,600 surveyed some 600 households were selected and special measurement devices - people meters – were installed on their TV sets. People meters allow to receive statistical information from the households in the panel.

According to the director of Tri-Media Intelligence, Tsotne Mirtskhulava, the company plans to cooperate with some 48 organizations, including TV companies and advertising agents; however, he refrained to name those companies that agreed to cooperate with Tri-Media Intelligence. As regards funding and financial transparency, the founder of the company Merab Pachulia has said that the company will make a statement on this issue before starting to measure the television audience, i.e. before 1 January 2016. According to the director of Tri-Media Intelligence, the company’s funding comes from the founders and the bank loan. During the presentation held on 15 October 2014, Merab Pachulia said that initial costs of the company would be covered by GORBI, the company in which Pachulia owns 70% of shares.

On 22 July 2015, Merab Pachulia entered into a collateral loan agreement with TBC Bank pledging his 50% of shares in Tri-Media and 70% in GORBI as collateral. On the same day, an identical agreement with TBC Bank was signed by Giorgi Tevdorashvili, another founder of Tri-Media, also securing the loan with his 50% of shares in Tri-Media. None of the agreements specifies a concrete amount of loan, though sets the maximum limit of amount up to which the request must be met. Such a limit in case of Merab Pachulia is 10 million USD (or equivalent in any currency) while in case of Giorgi Tevdorashvili, it stands at 5 million.

TVMR Georgia

TVMR Georgia, an official licensee of Nielsen Television Audience Measurement, was founded in 2004 and has been measuring television audience since 2005. The director of TVMR Georgia is Nino Gogoladze whilst the owner of 100% of shares in the company is the Commandite Society TVMR registered in the United Kingdom of Great Britain and Northern Ireland.

TVMR Georgia LLC and Gocha Tskitishvili, for their part, own 50%-50% of shares in IPM Monitoring LLC. The director of this company is Nino Gogoladze too. Gocha Tskitishvili owns shares in Media Monitoring LLC as well (100%).

As of today, TVMR Georgia has 34 clients: 13 TV companies, one media seller, 18 advertising agents, the Parliament of Georgia and the GNCC. The TV companies using the service of TVMR include the 1st and 2ndchannels of the Georgian Public Broadcaster, Imedi, Rustavi 2, Maestro, Tabula, GDS, Kavkasia, Music Box, Palitra, TV 11, Comedy Channel and Marao. The panel studied by TVMR Georgia comprises 355 households and the company intends to increase to 450 households from 1 January 2016. Currently, the panel covers Tbilisi and six other cities of Georgia with the population exceeding 45,000 each. Beginning in 2016, TVMR Georgia will study the Internet media too.

The company is regularly audited by an independent international auditor to prove the reliability of the television audience measurement. The performance of TVMR Georgia was already studied and assessed four times by independent international certified auditors, with the most recent one conducted within the framework of USAID-funded IREX G-MEDIA program.

In February 2014, the Revenue Service of the Finance Ministry of Georgia launched the inspection of TVMR Georgia and demanded that the company provide the names of 330 households and the list of addresses where people meters were installed. TVMR Georgia refused to provide the data on the ground of confidentiality of the information the disclosure of which would damage the reliability and reputation of the rating company. After that the Revenue Service started the audit of TVMR Georgia’s assets. On 20 March 2014, TVMR Georgia stopped its operation claiming that the audit was interfering with the operation of the company. The activity of the Revenue Service was criticized by five nongovernmental organizations. In a statement released on 18 March, the NGOs noted that the disclosure of identities of persons having people meters installed on their TV sets might affect ratings and create a threat of manipulation with data as households with people meters might start self-censoring themselves. In this regard, five TV companies and more than 10 advertising agents also released a joint statement emphasizing the threat of harming the TV commercial market of the country. Over the period from 24 February to 3 March, the Revenue Service filed three requests with the court in an attempt to have TVMR Georgia provided the confidential information, but the court did not satisfy any of the requests of the Revenue Service. This fact even made it into the US Department of State's Country Report on Human Rights Practices for 2014.

To a question asked by Tabula TV during the presentation held by Tri-Media Intelligence in October 2014, as to how the company intended to observe confidentiality of information about the locations of people meters, a representative of Kantar Media,Keld Nielsen,replied:

"We are open in any information, each of our step will be transparent. The only thing which you will never get is the identities and addresses of households where people meters are installed. We operate in China, in Russia and other ‘controlled’ countries. There have been attempts to get this information from us, but disclosing it means closing down your business, because this is what makes your reputation. Therefore, it does not matter who asks for this information; this will never happen,” Nielsen declared.

As regards the position of TVMR Georgia on the emergence of a competitor in the market, the director of the company, Nino Gogoladze recalled yet another incident from their 11-year-long operation. According to her, in 2007, the GNCC purchased people meters for 2 million GEL and handed them over to the company BCG to start measuring the audience. In that period, TVMR Georgia lost all TV companies except Music Box and advertising agencies. However, later the cooperation was restored whereas the rival company stopped this particular line of its business.

Which of the two companies will broadcasters opt for?

A tender of Georgian Public Broadcaster to conduct audience research

The Georgian Public Broadcaster (GPB) has been announcing e-tenders for the procurement of service of audience research by people meters since February 2011 and has been cooperating with the TVMR Georgia since then.

The number of people meters requested by the GPB in tenders ranged between 300 and 330 in various years. According to the information published on the webpage of the broadcaster, TVMR Georgia carried out the measurement of its ratings by means of the requested number of people meters (330).

In the tender documentation, announced for the measurement of ratings in the 2016 television season, the GPB increased the minimal number of required people meters. According to this change, people meters must be installed in at least 400 households. Compared to previous year’s data, the increase in the number of people meters caused the increase in an estimated purchase price too. By the time of the announcement of tender by the GPB, TVMR Georgia had not yet publicized its plan that it would start measuring ratings by means of 450 people meters from January 2016; this information is not available on the TVMR webpage either and the company director noted this when speaking to us.

Table 1. GPB tenders for television audience measurement in 2015-2016

The changes in the number of required people meters and estimated price of purchase are not the only changes in the 2015 tender documentation of GPB. While before the GPB always requiredan opinion of international auditorfrom a tender participant, the 2015 document misses such a requirement. Instead, the GPB will have the right to conduct, when need be, audit itself, which means incurring additional costs.

Moreover, a new requirement has appeared in the GPB tender documentation – the capacity to "measure and monitor TV channels both during live viewing and time-shifted (rewind) viewing.” From 2016, this service can only be offered by one of the two operating companies – Tri-Media Intelligence. Therefore, TVMR Georgia’s director Nino Gogoladze considers the tender documentation discriminatory.

Regional broadcasters

Regional broadcasters have never been among the customers of TVMR Georgia LLC. This has been viewed as a shortcoming of the panel by the Georgian Association of Regional Broadcasters (GARB). As regional broadcasters sais, Tri-Media Intelligence LLC offers them the measurement of ratings both on a local scale and countrywide. According to several companies, at the initial stage the service will be provided for free while lower tariffs will be considered for several regions.

As the director of GARB, Natia Kuprashvili, said, it has not been decided how many member broadcasters of GARB will use the service of audience measurement company. Each regional broadcaster will take an independent decision on whether to cooperate with Tri-Media Intelligence or not, she said.

"Many regions are not covered at all and I think this does not provide a good result. This is my remark and the majority of members have similar remarks. As they say, measuring one or two regional broadcasters alone will further damage the market,” Kuprashvili noted adding that the data on regional cities will not be broken down in such a detailed way as it is in case of Tbilisi data.

According to the director of TV Channel 25, Giorgi Surmanidze, at the initial stage (from three to six months) the information about ratings will be provided for free. As he said, during the meeting representatives of Tri-Media Intelligence made an announcement about installing 80 people meters in Batumi, which will allow to measure ratings of the channel on a local level.

"Everything depends on the amount of money. If the amount is too large to afford we will limit ourselves to the measurement of Batumi alone. If the amount for measurement across Georgia is acceptable, we will look at our budget and take a decision accordingly,”said the director of TV Channel 25. He does not rule out the cooperation with GARB on the purchase of television audience measurement service.

Rioni TV, a member of GARB, intends to have its ratings measured. According to the broadcaster’s director, Tri-Media Intelligence is going to install 100 people meters in Kutaisi. Rioni will receive the service with the help of GARB.

Gurjaani TV company will not use the rating measurement service. The reason for that, according to the executive director Leval Aleksishvili, is that none of two companies existing on the market processes data of the Kakheti region separately.

Aleksishvili is involved in the advertising business as well. His company, Regionmediamarket LLC, places commercials in regional broadcasters. He believes that if he starts to cooperate with Tri-Media Intelligence, he might receive the service for free at the initial stage.

"We will observe the situation in the first month; in general, there have been no negotiations on, say, how it will be rated. I will take a concrete step after that. If this proves to be a smoothly running system reflecting reality, we may cooperate,” Aleksishvili says.

The offer of Tri-Media Intelligence is acceptable for Trialeti TV company. According to Badri Nanitashvili, one of the owners of the channel, the ratings in Gori are measured by 36 people meters. "The price has not been decided yet. They, at least, say that regional televisions will have a separate, low tariff,” Nanitashvili said.

Representatives of Trialeti conducted negotiations with TVMR Georgia too. However, they failed to reach agreement because the company did not offer them the rating by regions.

According to TVMR Georgia, when a TV company broadcast in Gori alone, generalizing its data on other regions would be incorrect. But the switchover to digital broadcasting enabled other cities to watch regional broadcasters too. Consequently, regional TV channels have developed an interest in receiving information from the audience measurement company. However, the regional broadcasters lack sufficient funds to purchase the service from the measuring company. At the same time, TVMR Georgia declares that the advertising market in 2015 decreased by 20% compared to 2014, which means the decrease in revenues to broadcasters too.

Nationwide and Tbilisi broadcasters

According to director of TVMR Georgia, Nino Gogoladze, contracts of three TV companies (Imedi, Maestro and the GPB) with the TVMR will expireon 1 January 2016.

As noted above, the GPB has changed its requirements in the tender announced for the purchase of the audience measurement service for 2016 TV season. The director of TV company Maestro, despite our repeated attempts for several days to communicate with him, declined to comment. The director of Imedi TV company, Giorgi Bakhtadze, plans to start the cooperation with Tri-Media Intelligence LLC, if it meets the requirements of the broadcaster. The new audience measurement company has already familiarized the broadcaster with its offers.

"If this measurement company meets the requirements existing on the market in a professional manner, we will choose one measurement company,” said the director of Imedi.

Rustavi 2 TV company does not plan to cooperate with the new television audience measurement company. The position of the company was communicated by the executive director of Inter-Media LLC, Zurab Gumbaridze. He said, they have agreed their positions regarding the rating measurement company. Gumbaridze noted that they have not discussed the cooperation with Tri-Media Intelligence LLC, because the entry of the company into the market was ambiguous for them.

"It is comfortable to receive separate regional data, but whether the methodology is correct and the number of people meters installed per region appropriate is another issue. This requires a separate survey; are those data which Tri-Media receives sufficient to make the survey representative? There are still questions in this regard,” Gumbaridze explained.

Gumbaridze noted that the cooperation of the company with TVMR Georgia relied on the opinions drawn up by competent international auditing companies which had not discovered any significant violations.

The director of GDS, Jaba Melkadze, is content with the cooperation with TVMR Georgia. However, the channel plans to start in parallel the cooperation with Tri-Media Intelligence. According to Melkadze, the new audience measurement company offers them a more detailed information about its audience.

"At the end of the day, two companies will not be able to exist simultaneously. Our approach is to cooperate with one company during the transitional period and meanwhile observe the activity of another. In the end, we will take a decision in favor of one of them,” GDS director said.

The director of Kavkasia TV company, Nino Jangirashvili, refused to discuss which measurement company the broadcaster intends to cooperate with in 2016. According to her, she does not trust TV audience measurement companies.

"The old company, TVMR, has been biased, unqualified and problematic for years. This new company, as I understand, belongs to Bidzina [Ivanishvili, the ex-prime minister of Georgia]. Therefore, I do not trust their measurements. Both companies entered the market incorrectly; none of them was invited by industrial committee – be it TVMR in the past or Kantar Media now. They ‘invested money themselves’ and began to measure the television audience," the director of Kavkasia TV company noted, who believes that TVMR Georgia was not politically independent.

Alike the Kavkasia TV director, the director of Tabula TV, Tamar Chergoleishvili, also raised questions about the connections of one of owners of Tri-Media Intelligence, Giorgi Tevdorashvili, with Kviris Palitra and the conflict of interests. However, Chergoleishvili noted that Tabula will cooperate with that measurement company which advertisers trust.

"I think that unless the government coerces businesses to cooperate with the company of Pachulia and Tevdorashvili, the businesses will not do that by themselves,” Chergoleishvili added.

Palitra news TV company (Palitra TV) has not decided yet whether to cooperate with Tri-Media Intelligence or not. 100% of shares of this company is owned by Kviris Palitra LLC and according to directors of Tabula and Kavkasia, Tevdorashvili has connections with Kviris Palitra LLC (see infographics). The director of Palitra news TV, Inga Dadiani, considers that the strengths of Tri-Media Intelligence are the number of people meters and technologies.

"We consider meeting them once again and discuss everything, because the number of people meters also means a higher accuracy in measurement,” the director of Palitra news TV said.

Link between Palitra TV and Tri-Media Intelligence

Conflict of interests, which representatives of several companies speak about, is connected to the fact that one of founders of Tri-Media Intelligence, Giorgi Tevdorashvili, owns shares in companies falling within the Palitra Holding. For his part, Giorgi Tevdorashvili declares that he is an editor of a newspaper alone and does not have any shares in digital technologies. [1]

Palitra news TV company (Palitra TV LLC) is one of media outlets of Palitra Media Holding (Palitra Media LLC). Apart from Palitra news TV company, Palitra Media includes four newspapers, 15 magazines, 17 Internet portals, one radio, a network of bookstores, a publishing house and a press and book distribution agency. Companies falling under the Palitra Media Holding are related to each other by ownership (see infographics).

75% of the shares in Palitra Media LLC belongs to Irakli Tevdorashvili while the remaining 25% is owned by Zaza Buadze. Shares of Kviris Palitra LLC (Kviris Palitra newspaper) are also distributed similarly. Kviris Palitra LLC owns 100% of shares in Palitra TV LLC (Palitra news TV company) and Radio Center Plus LLC (radio Palitra – 103,9 FM). Moreover, Kviris Palitra LLC and Giorgi Tevdorashvili (owner of 50% of shares in Tri-Media Intelligence), who is the brother of an owner of Kviris Palitra LLC Irakli Tevdorashvili, owns shares in the press and books distribution agency (Elvaservice LLC), the network of bookstores (Biblus LLC) and the news agency InterpressNews (Akhali Ambebi LLC).

Link to infographics:http://bit.ly/1RlAVMh

The blog was prepared within the project supported by the NED.