Nielsen buying Arbitron: but why?


NielsenNielsen announced a definitive agreement to acquire Arbitron for $48 per share in cash, representing a premium of 26% to Arbitron’s closing price on 12/17. Nielsen CEO David Calhoun said the buy will help Nielsen better solve for unmeasured areas of media consumption, including streaming audio and out-of-home. “The high level of engagement with radio and TV among rapidly growing multicultural audiences makes this central to Nielsen’s priorities.”

The goal is to expand its “Watch” segment’s (TV, streaming video) audience measurement across screens and forms of listening. “These integrated, innovative capabilities will enable broader measurement of consumer media behavior in more markets around the world,” said Steve Hasker, Nielsen President of Global Media Products and Advertiser Solutions. “We will also bring local clients greater visibility to empower more precise advertising placement and campaign effectiveness.”

Said Arbitron CEO Bill Kerr on the conference call: “Obviously this does well for our shareholders, but it also helps to bring radio more into the center part of the advertising mix. I think between us, we’ll be able to provide greater insights to our immediate customers and marketers in general. I think for Arbitron, it provides our employees an opportunity to be part of a broader organization.”

Added Calhoun: “With a new medium to measure, this allows us to now analyze and understand consumers for another two full hours a day—which is a very big deal. We have opportunities between our two companies to measure unmeasured things—things that we know are important to both radio and/or Nielsen’s respective clients. Streaming audio, out of home measurements for television consumption [are also a part]…This just gives us one more opportunity to provide advertisers with real ROI metrics on the effectiveness of the medium that they advertise on.”

Some questions we have include the fact that Nielsen has tried to partner with Arbitron before on a couple of different things. Nielsen has also been in the spot monitoring biz for radio. On each attempt, Nielsen backed away and abandoned the efforts for radio. Perhaps the company realizes that in radio and streaming measurement, if you can’t beat ‘em, buy ‘em.

Nielsen also bought Radio and Records magazine for some $18.5 million. It was a loser for the company and was shuttered.

These are the two largest ratings companies in the US combining. What we will have now is a bit of a monopolistic venture. We wonder if DOJ will want to take a look.

We asked Media Rating Council Chairman George Ivie if he is concerned about a monopoly here and if this is good or bad for the ratings industry and clients: “We have productive relationships with both Nielsen and Arbitron and we are expecting this will continue.  We also believe it highlights the importance of the MRC and the role we serve in the Industry.”

We asked Nielsen:

What does Nielsen see as the upside in measuring the radio business?
This creates a broader set of measurement services to solve for unmeasured areas of growth: streaming audio, out of home media and multicultural audiences; it also allows us to provide our clients with better understanding of consumer behavior, across watch and buy – we have world’s largest dataset on consumer purchases and in media; put that together and it becomes an important piece of the puzzle.  When we look at consumers, they spend up to 2 hours a day with radio.  It’s an important part of the overall ad/media mix.

How important is PPM technology in this deal? How will Nielsen use it?
We are excited to announce our intent to acquire Arbitron today.  Once the transaction has closed we will begin the integration process and will be in a position to provide more information about specific products and technologies. We do see potential applications in our Local TV and Out of Home TV businesses.

How about Arbitron’s streaming measurement-where is the value there for your overall offering to clients?
The acquisition of Arbitron provides the opportunity to capture unmeasured areas of growth including streaming measurement as well as out of home media consumption and enhanced measurement of multicultural audiences in the U.S.

It looks like Nielsen wants to be able to provide advertisers, agencies and media sellers the most comprehensive measurement of consumers’ media consumption throughout the day. Is this the main reason for the purchase?
This acquisition allows Nielsen to expand measurement of media consumption by adding radio, a highly complementary medium. We are excited about the opportunity to capture unmeasured areas of growth and believe the acquisition presents an attractive long-term opportunity for us to expand measurement of listening audiences in non-U.S. markets.

Do you have any concerns about DOJ claiming a monopoly here with this acquisition?
The transaction is subject to customary regulatory review.

What changes, if any will be made to Arbitron?
Today we are excited to announce our intent to acquire Arbitron.  Once the transaction has closed we will have more information to share on how the two companies plan to operate as one.

David Honig, President, MMTC, was thumbs up on the news: “Nielsen’s acquisition of Arbitron is welcome news for multicultural entrepreneurs, programmers and audiences.  Nielsen has unparalleled expertise in accurately measuring multicultural viewership, demographics, and consumer trends such as audience engagement.  As audio, video and print content transitions to IP, it’s reassuring that the leading audience measurement company has such an outstanding record of accurately and thoroughly measuring multicultural populations across several technologies.”

RBR-TVBR observation: Most of the things Nielsen has invested in of late are cutting-edge measurement technology companies. Why radio measurement then? It is just about acquiring PPM technology? It looks like Nielsen wants to be able to provide advertisers, agencies and media sellers the most comprehensive measurement of consumers’ media consumption throughout the day. Nielsen wants to be able to provide relevant, timely information of how a radio or TV ad, for example, may have affected online purchasing in a given day for a client. By purchasing Arbitron, Nielsen is getting that much closer to 360-degree measurement.