‘A Rentrak takeover’: Inside the fallout from Comscore’s executive shakeup

Then what had been a dream that was finally becoming a reality turned into a nightmare. On March 31, 2019, Wiener and Comscore president Sarah Hofstetter — Wiener’s successor at 360i who joined Comscore in September 2018 — announced their resignations from Comscore after the company’s board demanded cuts that the pair argued would compromise their long-term strategy to establish a cross-platform measurement currency.

In their absence, the effort to combine Comscore and Rentrak to rival Nielsen appears to be coming undone, based on conversations with 12 people who have knowledge of the inner workings of Comscore’s business following Wiener’s and Hofstetter’s departure, including former employees and agency executives. Instead of overtaking Nielsen, Comscore has been overtaken by Rentrak, according to former Comscore employees. Agency executives have similarly observed an emphasis on the TV measurement side of Comscore’s overall business in conversations with the company’s leadership, which now primarily consists of former Rentrak executives.

The TV and video advertising industries have been approaching an inflection point that holds the potential for the measurement industry to undergo its own seismic shift. As the two media continue to merge, measurement across TV and digital has emerged as the foundation for adequately accounting for audiences and ad dollars on a like-for-like basis. This inflection point has made an opening for a company like Comscore to challenge, if not usurp, Nielsen’s standing as the preeminent measurement provider. With its legacy digital measurement business and growing advanced TV measurement business, Comscore was considered especially well-positioned to measure media and advertising in an era when all media are delivered over the internet and ads are bought against advanced audience segments instead of traditional age-and-gender categories. However, Comscore’s aims appear to have narrowed to focus on growing the Rentrak side of the business in the short term.

Cuts to Comscore
While still considered by industry executives to be Nielsen’s biggest rival, Comscore has shrunk in multiple respects following Wiener’s and Hofstetter’s resignations. The company’s stock price has sunk from $20.25 on March 29 — two days before Wiener and Hofstetter announced their resignations — to less than $2, as of this writing. Its total revenue declined by 4% year over year to $96.9 million in the second quarter of 2019, while its net loss ballooned from $56.0 million in Q2 2018 to $279.5 million in Q2 2019. Its ambitions have narrowed from competing with Nielsen’s TV measurement business to concentrating on complementing it with Rentrak’s advanced TV measurement capabilities that go beyond traditional age-and-gender-based measurement, according to multiple former employees. And multiple rounds of layoffs this year have diminished the company’s product and sales teams, the former employees said.

On August 20, Comscore announced in a regulatory filing that it is laying off 8% of its workforce. According to former Comscore employees, roughly 150 people are being let go, including evp of brand and agency sales Moritz Loew; evp Anthony Psacharopoulos; and svp of strategic partnerships and business development Sumit Shukla. These three executives reported to chief commercial officer Chris Wilson and were considered by former employees to represent the company’s digital sales leadership. Loew, in particular, was in charge of selling all Comscore services, including Rentrak, to advertisers and agencies, while Psacharopoulos worked with digital publishers and platforms. Shukla’s position is said to have been a hybrid role with an emphasis on working with walled gardens and platforms like Roku. That the trio represented the digital side of Comscore’s business — i.e. its legacy online and mobile measurement business — may have made all the difference.

In the wake of Wiener’s and Hofstetter’s departures, Comscore’s digital business has taken a backseat to Rentrak’s TV measurement business, according to multiple former Comscore employees. Wiener, Hofstetter, Loew, Psacharopoulos and Shukla did not respond to requests for comment.

“The reality is that the marketplace is evolving. Demand for standalone traditional digital services is declining. Comscore is therefore focused on innovating in a multi-platform cross-media world — of which digital is a huge part. It’s inaccurate to say that Comscore has lost its digital leadership. Further, our executive teams are speaking daily with agency and network executives who are helping guide our cross-platform strategy and innovation. We’ll be sharing more details on our new approach in the coming days. Ultimately, we are redefining Comscore’s mission to capitalize on our customers’ needs. We truly believe these changes will result in a more focused and successful company,” said Comscore interim CEO Dale Fuller in an emailed statement.

Comscore’s rollercoaster history
This is not how things were supposed to go for Comscore, though it’s fitting for how things have gone for the company in recent years. Rentrak had been meant to play a major role in Comscore’s future when the two companies merged in 2016. The former’s TV-and-movie measurement business would appear to pair well with Comscore’s online measurement business to finally bridge audience and advertising measurement across TV and digital. However, an accounting scandal that came to light in 2016 set back the company’s intentions until 2018 when Wiener was appointed CEO.’

“The whole genesis for the merger was to do cross-platform [measurement], and we never got it done,” said one former Comscore employee.

A longtime agency veteran, Wiener recognized Rentrak’s importance to the company’s future and set about integrating its TV measurement capabilities with Comscore’s online measurement capabilities to create Comscore Campaign Ratings. Former employees said that, while Wiener did not bring a measurement background to the role, he was a quick study and drew the right conclusions about what the company’s priorities should be amid a shifting media-and-advertising market. Wiener had taken what former Comscore employees described as a slow and methodical approach to building up Comscore’s cross-platform measurement business. He intended to grow Comscore’s business in the short term — projecting modest growth in revenue and gross margins for 2019 — but not at the expense of setting up Comscore for the long-term opportunity to challenge Nielsen.

Comscore’s board had other ideas and pressed Wiener and Hofstetter to make cuts. That led to Wiener’s and Hofstetter’s resignations, which almost immediately dropped the company’s stock price from $20.25 on March 29 — two days before Wiener and Hofstetter announced their resignations — to $14.24 on the day after the news broke.

Comscore’s stock price has sunk even further in the months following Wiener’s and Hofstetter’s resignations. On August 26, shares in Comscore were trading for under $2. That devaluation has made Comscore an attractive acquisition target, and in recent weeks at least one company has inquired about acquiring Comscore, though Comscore’s board is said to not have engaged in any acquisition talks.

The company’s reticence to sell may have to do with the prevalence of former Rentrak execs among the company’s board and leadership. Rentrak merged with Comscore in an all-stock deal. Considering that Comscore stock was trading at $41.15 on the day that the merger was finalized, Rentrak execs stand to make significantly less money if they are unable to turn around the company’s stock price, if not the company.

The cross-platform promise
By combining TV and digital measurement capabilities, the merger of Comscore and Rentrak was supposed to strengthen the combined measurement firm to contest Nielsen’s dominance over the measurement market. What has come to pass instead is instability inside of Comscore. After Comscore’s board pressed Wiener and Hofstetter to make cuts in order to generate short-term profits, the pair resigned. Rentrak executives have filled that leadership vacuum and prioritized the company’s small-but-growing TV business in the near term, potentially at a cost to the company’s long-term prospects.

Agency execs are concerned that Comscore may be missing its window. When Wiener and Hofstetter were at the helm, agency execs were able to have big-picture conversations with the pair about how to get cross-platform measurement off the ground. In their absence, those conversations are absent. Conversations with Wilson are more “nuts and bolts, day-to-day things,” said one agency exec. Meanwhile, interim CEO Fuller, who has a history of leading and serving on the boards of enterprise software firms, is considered “very smart, but he doesn’t live the business because it’s not his day job.” On Comscore’s most recent earnings call, Fuller was asked about Comscore’s plans to hire a permanent CEO — the search is a high priority for the company’s board, he said — and said, “I look forward to getting back to retirement.” A former Comscore employee said the comment was characteristic of Fuller’s habit of making jokes that sometimes fall flat.

While agency execs acknowledged that any new measurement product would face a long road to becoming a currency on which media is bought and sold, the rollout of Comscore Campaign Ratings, which remains in beta, has been slower than the agency execs had anticipated. That slower-than-expected rollout has been aggravated by a feeling among agency execs that Comscore lacks the leadership that agency execs can turn to after encountering the kinds of hiccups natural to any developing product.

“I don’t know, if Bryan or Sarah were still there, whether it would be any faster, but at least I would have somebody to whine to,” said one agency exec. This exec said that it has been more difficult to receive answers when technical glitches are found, and they’ve gotten the sense that the company is spread thin across its ranks.

The slow pace of Comscore’s product development would make sense considering how decimated the company’s product leadership team has become. In June, the company’s chief product officer Dan Hess left the company, as did svp Naresh Rekhi. Since then svp of TV and cross-platform products Kendall McMahon has also left the company. However, while multiple former employees used the word “gutted” to describe Comscore’s product team, they and the agency execs do not believe that explains the slow rollout of Comscore Campaign Ratings, which remains in testing. Instead, they believe it is an issue of Comscore not being able to get enough advertisers, agencies and media companies to adopt the product at a time when Nielsen is aggressively pushing its cross-platform measurement products. “I don’t know if they’re going to get left behind. But they’re definitely not going fast enough to lead the market because Nielsen is picking up the pace,” said an agency exec.

Enter Rentrak
Multiple former Comscore employees used the words “a Rentrak takeover” to describe the shift inside the company following Wiener’s and Hofstetter’s departures. They pointed to Rentrak executives dominating the company’s leadership ranks and its shift in emphasis of TV measurement over digital measurement, which has also become apparent to agency execs.

These agency execs, who were interviewed before Comscore’s more recent layoffs, feel that Comscore’s sales team is strong across digital and TV and that the sales organization is unified between the two sides. However, as they talk to people higher up in the company, the focus of the conversation shifts to the linear TV side, though that could have as much to do with those execs today commonly being former Rentrak execs as with a shift in the company’s strategy.

Former Rentrak CEO Bill Livek serves as the vice-chairman of the company’s board, and people inside and outside Comscore, including one agency exec, believe that he had been angling for the CEO position before, during and after Wiener held the role. Former Rentrak board member Brent Rosenthal serves as the board’s non-executive chairman. Chief product officer David Algranati hails from Rentrak, as does chief commercial officer Chris Wilson, who had been fired for poor performance in the fourth quarter of 2018 before being brought back after Wiener and Hofstetter stepped down.

“It is not accurate to say that Chris Wilson was let go for performance-based reasons. Chris and the company agreed to part amicably. The current leadership team under interim CEO Dale Fuller brought Chris back to Comscore because they fully believe he is the best person to drive success in the marketplace,” said Sara Dunn, svp of human resources at Comscore, in an emailed statement.

Livek, Algranati, Wilson and evp of national sales Carol Hinnant are considered by former employees to be the four most important people at the company today and they are all Rentrak alumni. Furthermore, while Loew, Psacharopoulos and Shukla were let go, three other execs who report to Wilson and joined Comscore from Rentrak remain: Hinnant, evp of local TV Steve Walsh and svp of strategic partnerships Scott Worthem.

Comscore’s shift in emphasis from its legacy digital business to Rentrak’s TV business is not unfounded. The company’s syndicated digital measurement products represent the bulk of its biggest revenue segment, accounting for 50% of the $68.9 million that Comscore’s “ratings and planning” segment generated in the second quarter of 2019. However, that business is in decline, having accounted for 55% of the company’s $70.5 million in “ratings and planning” revenue in Q3 2018. Revenue from Comscore’s TV and cross-platform measurement products, meanwhile, increased year over year in the period, though Comscore does not break out those two categories to show how much of the increase was driven by TV versus the cross-platform measurement products.

Additionally, the Rentrak execs likely have their reasons for emphasizing the company’s growing TV business in order to buoy its sinking stock price. Comscore’s stock price had already had been a source of frustration among Rentrak execs in connection to the all-stock terms of the merger. Roughly a month after the merger closed, Comscore disclosed the accounting issues, which immediately dropped its stock price by 30%, was later confirmed by an internal audit and led the company’s stock to be delisted on Nasdaq in February 2017 (it regained its listing in June 2018).

That scandal set the wrong foundation for the merger. Rentrak executives looked at the Comscore employees, who were now their colleagues, as crooks even if they weren’t involved in the scandal and contributed to a massive divide between Rentrak employees and legacy Comscore employees that were never fully addressed head-on, said a former Comscore employee. “Could you imagine being one of them and now here you are [with Comscore shares trading] at $2? I’d be pissed off and unhappy too. For that topic only, I don’t blame them,” said this former employee.

“Just trying to live to fight another day”
Particularly troubling for several former employees is the sense that Comscore is not concerned about competing with Nielsen. Inside the company there is the sentiment that Comscore does not need to compete with Nielsen, that this is not a winner-take-all scenario. While Nielsen dominates traditional TV measurement, Comscore executives are said by former employees to believe that they can leave that side of the market to Nielsen and that Comscore can focus on advanced TV measurement, where it notched a recent win a deal to be the measurement provider and currency for AT&T-owned Xandr’s addressable TV advertising business.

However, it’s not only that Comscore appears comfortable being a complement to Nielsen instead of a competitor. What’s making former employees and agency execs uncomfortable is the feeling that the company has narrowed its focus to the near term. “The sales efforts to get stuff in our hands is still as strong as ever, but the ‘what’s the next thing to build?’ Effort is quieter than it used to be,” said one agency exec.

Cross-platform and digital measurement remain part of Comscore’s long-term strategy, but they have become less of the focus in the short term. The short-term focus centers on linear and addressable TV measurement. “They’re just trying to live to fight another day,” said one former employee.

Comscore’s prospects are such that on August 14, the same day the Xandr deal was announced, Comscore announced that Paul Reilly — one of the board members who is said to have been among those clamoring for cuts — was resigning his seat. Comscore executives have internally tried to downplay Reilly’s resignation by telling employees that board members often resign for personal reasons. But Reilly left no room for that kind of interpretation in the resignation letter he sent to the company on August 12.

“I do not believe the Company’s go-forward operating strategy, in general, is progressing fast enough and specifically in innovation and product development,” Reilly wrote.

This article has been updated to include a statement from Comscore regarding the firing of Chris Wilson in the fourth quarter of 2018. It has also been updated to reflect that Comscore’s revenue declined and net loss increased in the second quarter of 2019. A previous version of the article incorrectly attributed the figures to the third quarter of 2019.