People meters struggle through growing pains.

The controversy over Nielsen's Local People Meter (LPM) in the U.S. television rating service, continues to rage on two separate but equally compelling fronts. There is concern over whether Nielsen's select audience accurately reflects the population of the given city. In June, Miami-based Hispanic media company Univision filed a lawsuit claiming the samples Nielsen uses for LPM are "fundamentally flawed" because they undercounted minority viewers, particularly young Hispanic Americans and large Hispanic families, as well as households that primarily speak Spanish.

"As a consequence of these flaws, the LPM ratings will materially understate viewing to Spanish-language stations like Univision, and exaggerate viewing to English-language stations, causing irreparable damage to Univision," the company complained in an official statement. The company's senior vice president of research, Ceril Shagrin added, "The LPM data will not only provide false guidance to advertisers and marketers, it will mask the market's diversity and jeopardize the future availability of news and entertainment programming dedicated to minority audiences." Although, in July, a judge denied Univision's request to stop Nielsen from rolling out the new service in L.A., the court paved the way for Univision to pursue a permanent injunction.

Many in the Hollywood community seem to agree that the real argument is less about concerns over diversity than about money. When LPMs were introduced in New York, Univision-owned WTXV's late-night newscast showed a 30 percent ratings decrease compared to the ratings posted using traditional Nielsen diaries. That decline could translate into the station losing as much as $500 per 30-second-spot in ad revenue. Considering that the news show broadcasts 24 30-second spots per half-hour, that could mean the station loses $12,000 just for that show alone. With margins decreasing for all station groups, that kind of revenue loss could eventually prove catastrophic.

Even opponents of the service admit that, technically speaking, LPMs should be more accurate than the traditional hand-written Nielsen diaries and that relates directly to the second issue surrounding LPM: That "Nielsen families" using the system are finding it difficult to adapt to the new technology.

On the surface, LPM technology seems an improvement over hand-written diaries because it allows individual family members the ability to identify a show they are watching by simply pressing a remote control button. But a Media Research Council audit revealed alarmingly high "fault rates," particularly among Hispanic and African-American families.

Nielsen spokesman Jack Loftus said fault rates typically run higher in African American and Hispanic households because they tend to have bigger families who watch more TV sets. "The more television sets in the home, the more metering equipment, the more opportunity for something to go wrong, and that's just a fact of life," he said.

WB chairman Garth Anicer said such problems put broadcasters who own affiliates in a tough situation. "There's no question the Local People Meter technology is a better technology than filling out a diary because it is more reflective," he said. Adding, "The challenge that Nielsen has is that LPM is an active technology. You don't just turn on a TV set, click Channel 2, and get counted, which you do in a passive-meter situation."

Ancier explained that the LPM system requires participants "to push a button for every single person in the room, every time you change the channel and every half-hour. And you have to do this for years." He explained that "there is a very high default rate, especially among larger families, which, by the way, hurts our network. There's a large default rate among minorities that's been discussed with Congress."

"You know," he ruminated, "if you walked into a room and the TV set recognized that you were watching television and passively recorded it, that would be the perfect way to get ratings." But, "right now we're seeing fault rates in families of five or more people and fault rates in the 25 percent range, which are the highest fault rates of all. They're even higher than the Hispanic and African-American fault rates, which are more in the 18 percent range." That said," he added, "it is more accurate than diaries. So we're moving toward a system that's more accurate but still quite imperfect."

Ancier has had conversations with Nielsen representatives about making the technology more user-friendly. "What you have is a Nielsen box located elsewhere in the room, but hopefully close to the TV, that blinks when you're supposed to push the button. If you don't push the button, you default." That way, "you're getting default rates of about one quarter of the sample. That's pretty high."

He explained, "I'll give you one of the things I posed to Nielsen, which other people have as well. I said, 'well, why don't you put it on screen with a prompt?' We've all seen 'play' on a VCR or whatever. Just have it wired to the TV." He explained that "Nielsen is very concerned that if they make it more intrusive than it is right now less people will participate in the survey, so it's a challenge." He reitirated, "it's better, but still quite imperfect."

Despite the flaws, Madison Avenue has started using the data to adjust their spending. "I think everybody knows that it's fundamentally a more accurate audience measurement service," said Maribeth Papuga, an ad buyer for New York-based MediaVest. "It does change the way you buy the market."

Fox Entertainment president Gail Berman hopes LPMs will make sweeps obsolete. "We are very anxious for Local People Meters to guarantee their accuracy, because it is very, very beneficial to broadcast television to see sweeps atrophy away."