When TV viewers or entertainment professionals in the United States mention "ratings" they are generally referring to Nielsen Ratings, a system developed by the New York City-based firm Nielsen Media Research to determine which shows television viewers watch at what times. Other ratings systems include those developed by Arbitron for radio programming and the Q Score for general markets.
Nielsen's ratings calculation, also called Cume Rating (or "Reach"), measures the number of unique viewers, listeners or more generally households, of a tv or radio program in a particular time period during a week. The Cume itself is calculated by dividing the number of unique viewers or households by the total number of estimated available households/viewers/listeners possible. This gives a percentage Cume rating. 
The system as it exists today was developed in the early 1960s by Arthur Nielsen, and has since been the primary source of audience measurement information in the television industry. Since television as a business makes money by selling audiences to advertisers, the Nielsen Television Ratings are the single most important element in determining advertising rates, schedules, and program content.
The company is owned by Dutch conglomerate VNU and recently relocated its production operations from its longtime home on Patricia Ave. in Dunedin, Florida to its newer Brooker Creek Global Technology and Information Center in Oldsmar, Florida.
Nielsen Television Ratings statistics are gathered in two ways: one is by extensive use of surveys, where viewers in various demographics are asked to keep a written record (called a diary) of what shows they watch at what times. The other is by the use of a limited number of Nielsen Boxes, which are small computers hooked up to a television in a home, which electronically records its activities and transmits them nightly to Nielsen. These Nielsen Boxes allow market researchers to study television viewing habits on a minute to minute basis, seeing at exactly what moment a viewer changed channels or turned off their TV. Additional use of direct reporting devices (called people meters) allow the company to gather overnight statistics in specific geographic areas.
Nielsen Television Ratings are reported by ranking the percentage for each show of all viewers watching television at a given time. As of 2004, there are an estimated 109.6 million television households in the USA. A single national ratings point represents 1%, or 1,096,000 households for the 2004-05 season. Share is the percentage of television sets in use tuned to a specific program. These numbers are usually reported as (ratings points/share). For example, Nielsen may report a show as receiving a 9.2/15 during its broadcast, meaning 9.2%, or 10,083,200 households on average were tuned in at any given moment. Additionally, 15% of all televisions in use at the time were tuned into this program. Nielsen re-estimates the number of households each August for the upcoming television season.
The Nielsen Television Ratings, Inc. company also provides statistics on estimated total number of viewers, and on specific demographics. Advertising rates are less influenced by total number of viewers than they are by appealing to particular demographics, such as age, sex, economic class, and area. Younger viewers are considered more attractive for many products, where as in some cases older and wealthier audiences are desired, or female audiences are desired over males. Television ratings are not an exact science, but they are a powerful force in determining the programming in an industry where millions of dollars are at stake every day.
Because ratings are based on samples, it is possible for shows to get 0.0 rating, despite having an audience; CNBC talk show McEnroe was one notable example.
Much of the ratings system, however, still consists of the completion by viewers of ratings diaries, in which a viewer records his or her viewing habits, generally for a week, in exchange for being advanced a nominal fee. These diaries play an especially important role during the four annual sweeps periods conducted in November, February, May, and July in an attempt to measure the entire national audience rather than just that in the largest people-metered markets. (Other, smaller sweeps are conducted through the year in the markets large enough to be measured by non-demographic meters, but not large enough to be measured by the demographic meters (people meters).)
Television networks and other programmers make unusual efforts to attract additional viewers during these periods, including airing mostly first-run programming as opposed to repeats, airing more special broadcasts, and including special content in programming such as guest stars, controversial and unexpected plots or topics, extended episodes, finales, and increased competition in advertising. Even news programs are often involved, airing especially controversial or titillating investigative reports and promotions. For this reason, the "sweeps" system of national ratings has been criticized as not representative of typical programming, and encouraging an increase in content of concern such as violence and explicit sexuality.
Criticism of Ratings Systems
There is some public critique regarding accuracy and potential bias within Nielsen's rating system.
Since viewers are aware of being part of the Nielsen sample, it can lead to bias in recording and viewing habits. Statistics gathered by electronic reporting are often dramatically different from those gathered by viewer self-reporting or surveys. Opponents of government funding for the Corporation for Public Broadcasting argue that viewers intentionally over-report the viewing of PBS.
In 2004, the Nielsen introduced a new system to measure local ratings in the largest market areas using its People Meters instead of the traditional paper diaries, which was criticized by News Corporation and other cultural advocates as resulting in a bias toward misreporting minority viewing. Many argue that commercial television under-represents minorities, which can lead to a de-facto discrimination in employment against minority actors and writers.
Another criticism of the Nielsen ratings system is its failure to have a realistic system for measurement of television audience in environments outside the home, such as college dormitories, transport terminals, bars, and other public places where television is frequently viewed, often by large numbers of people in a common setting. Also, the rise of "time-shifting" through the use of VCRs, Digital Video Recorders (DVR), and downloading episodes from the Internet have also not, critics claim, been sufficiently addressed by the system. (Although downloading episodes is presently considered improper, if not illegal, it is nonetheless a widespread practice.) and Nielsen reached an agreement to provide information on DVR usage to the television industry. TiVo ratings reporting began in January, 2005, with other DVR providers expected to join soon.
Annual top-rated shows
Each year, one program (or, in some cases, a tie) earns the highest average Nielsen rating for the corresponding television season. Here are past record-holders:
- 1950-1951–Texaco Star Theater
- 1951-1952–Arthur Godfrey's Talent Scouts
- 1952-1955, 1956-1958–I Love Lucy
- 1955-1956–The $64,000 Question
- 1961-1962–Wagon Train
- 1962-1964–The Beverly Hillbillies
- 1967-1968–The Andy Griffith Show
- 1968-1970–Rowan and Martin's Laugh-In
- 1970-1971–Marcus Welby, M.D.
- 1971-1976–All in the Family
- 1976-1977–Happy Days
- 1977-1979–Laverne and Shirley
- 1979-1980, 1982-1983, 1991-1993–60 Minutes
- 1980-1982, 1983-1984–Dallas
- 1985-1989–The Cosby Show
- 1993-1994–Home Improvement
- 1994-1995, 1997-1998–Seinfeld
- 1995-1997, 1998-1999–ER
- 1999-2000–Who Wants To Be A Millionaire
- 2000-2001–Survivor: The Australian Outback
- 2002-2004–CSI: Crime Scene Investigation
- 2004-2005–American Idol
- Nielsen Media Research website
- Nielsen Global Technology and Information Center website
- Nielsen Media Research: Everyone Counts
- Nielsen Ratings for this week
- Anthony Bianco and Ronald Grover. "How Nielsen Stood Up to Murdoch" BusinessWeek. September 20, 2004.