June 11, 2016

NEW YORK (AP) A line snaked out the door Wednesday night at Finnerty's, a Manhattan bar that bills itself as the ''Home for Bay Area Sports.'' A man in an Andre Iguodala jersey waited to get in to watch Game 3 of the NBA Finals and join the fellow Golden State Warriors fans packed shoulder to shoulder, who gazed up at TVs and groaned in unison at an unfavorable call.

Nearly 16.5 million Americans watched the Cleveland Cavaliers win that night, according to the official number released by Nielsen. Or more precisely, almost 16.5 million watched from a home. For now, those bar patrons aren't counted in the total for the NBA Finals or any of this month's other major events that draw a lot of out-of-home viewing, from hockey's Stanley Cup Final to soccer's European Championship and Copa America.

Also not counted is the fitness buff who follows the action on the TV attached to a treadmill at the gym, headphones plugged in. Or those diehards at the outdoor viewing parties the networks love to cut to after a big play.

That could change soon - a step that can't come quickly enough for sports broadcasters. Last month, ESPN used the spotlight of its annual presentation to advertisers to announce it would utilize Nielsen's service to measure out-of-home viewers. The message was clear: The company wanted marketers to know it believes Nielsen's current numbers vastly underestimate much of its viewership. And more viewers, of course, would mean higher rates.

For ESPN in particular, the possibility of greater ad revenue can help offset the loss of subscribers. But for every network invested heavily in live sports rights - not to mention other programs that attract a lot of out-of-home viewers - this additional measurement is greatly anticipated.

''It's always been one of those things that is so high on the list and so frustrating,'' said Katie Larkin, executive vice president of advertising sales research and strategy at NBCUniversal.

Networks are especially keen to measure out-of-home viewers because of their demographics. NBC's Larkin used the M-word, millennials - those elusive younger consumers everyone is chasing. Ed Erhardt, ESPN's president for global sales and marketing, said his network's research has shown that out-of-home viewers tend to be more male, more affluent, more educated and younger than the in-home audience.

Fox commissioned Nielsen to measure the U.S. team's Copa America group stage matches and found that out-of-home viewers lifted the audience for the opener against Colombia by 30 percent last Friday night. Impressive enough, but among ages 18-34, the lift was a whopping 62 percent.

For now, measurement of out-of-home viewing is piecemeal and delayed. ESPN receives monthly reports - it likely won't know the stats for the NBA Finals until early August at the soonest. But it is already starting to use past data in negotiations with advertisers.

The expectation is that Nielsen will eventually include out-of-home viewing in its regular audience estimates, though the company has yet to publicly announce a timetable. For live sports and other sorts of programming, advertisers will start to see very different numbers from what is currently reported. But they'll still need to decide how to interpret them.

The main concern: Just because someone is in the same room as a TV, does it mean he or she is paying attention? Nielsen addresses that by having people carry portable measurement tools, which can pick up the audio of a program. They count as a viewer only if they can hear it.

So a fan who is closely watching a game on mute doesn't qualify. At the same time, that metric includes someone who is completely ignoring the sound - and that's what leaves advertisers skeptical.

''While, yes, they're exposed - the TV's on - it doesn't necessarily mean they're engaged in the content, much less listening to the advertising,'' said Eric Blankfein, chief of Horizon Media's WHERE Group, which analyzes the best way to reach consumers.

Network executives counter that if a fan puts in the effort to meet friends at a bar to watch a game, they're highly engaged.

''It has to be a more heightened emotional state,'' said Michael Mulvihill, senior vice president of programming and research at Fox Sports.

Bars, though, are just one segment of out-of-home viewing, which includes everything from screens at the gate in an airport to TVs in offices to sets in the clubhouse at a golf course. And these differing interpretations are an inevitable development in, as ESPN's Erhardt put it, the ''spirited discussions'' that will take place between networks, who naturally want to charge more, and advertisers, who naturally don't want to pay more.

''No one's thrown me out of their office yet,'' Erhardt said drily.

But ultimately for sports broadcasters, the hope is that once out-of-home viewers are included in Nielsen's regular numbers, advertisers can't ignore them, especially in comparison to other kinds of programming.

''I think over time they will understand that those eyeballs count just as much as the others,'' ESPN President John Skipper said. ''As you know, it will be an outstanding discussion, probably over a couple of years.''

The business' awareness of out-of-home viewing is hardly new, and there have been previous attempts to measure it widely that haven't stuck. While advertisers might take the presence of out-of-home viewing into account in their decisions, Horizon Media's Blankfein said, they haven't been formally paying for it. CNBC, meanwhile, has commissioned independent research to try to count all those TVs tuned to business news each day in executive suites at corporations across the country.

Televisions are becoming ubiquitous in more and more places, and viewers are expecting more and more they can watch events anytime, anywhere. All of that makes networks more and more eager to measure out-of-home viewing. Mobile streaming may be the hot new technology, but at the moment, it's still dwarfed by the number of people watching live sports on television sets outside their homes. For last summer's Women's World Cup, Fox's Mulvihill said, there were 25 times as many out-of-home TV viewers as those on digital platforms.

The absence of out-of-home viewing in the current ratings came up recently during the NHL's Eastern Conference finals, when the league reminded the Tampa Bay Lightning about restrictions on the number of official viewing parties that clubs can host each round. For now, every fan at those gatherings is a potential viewer not counted in the ratings. In the not-so-distant future, those fans get counted whether they're sitting on their couch or jumping up and down outside the arena.

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