It won’t be long before the media industry gets a sense of where the government stands on the proposed Nielsen-Arbitron merger that promises to have a resounding impact on media measurement. The Federal Trade Commission (FTC) is expected to signal the direction it’s leaning by the end of August, Nielsen CEO David Calhoun made clear Tuesday.
Speaking on a call with investors, Calhoun indicated Nielsen is now in compliance with a request for information from the FTC, placing the ball in the agency’s court. “It is on them to come back to us,” he said.
The FTC can decide to let the $1.26 billion deal go through or move to block it. Another option – which could be most likely – would have the FTC and Nielsen entering into a consent decree, where Nielsen would agree to a divestiture or some sort of behavioral modification in order to allow the deal to clear.
If the FTC is intent on denying the merger, the two parties could find themselves in court. Nielsen does have a $131 million break-up fee if the deal is thwarted, so it might be emboldened to fight the FTC. A prolonged court battle, though, could have Nielsen engaged in all kinds of testimony about past behavior with acquisitions and other business practices.
Understandably, so as not to alienate the FTC, Calhoun gave no indication on Tuesday how Nielsen would move ahead if the FTC expressed strong opposition. Not surprisingly, he also didn’t waver from his stance that Nielsen remains confident the deal will be cleared.
“The process has been very workmanlike and nothing has surfaced over the course of that process that is either surprising or different than anything we thought about going into it,” he said.
“I think the dialogue has actually been pretty healthy for everybody,” he added.
Under the deal, Nielsen has agreed to pay Arbitron stockholders $48 a share. Arbitron closed at under $46 a share on Tuesday.
It’s difficult to understate the impact a Nielsen-Arbitron merger would have on the media business. The dominant measurement operations in TV and radio would be under one roof. Nielsen would gain access to Arbitron’s portable people meter (PPM) technology, which can be used to track TV viewing inside and outside the home. And, with control over radio data, Nielsen could gain an advantage in offering more robust cross-platform metrics.
Finding ways to deliver sturdy cross-platform measurement may be the biggest challenge in media measurement over the next decade. The FTC no doubt has spent considerable time evaluating how the merger would affect the burgeoning field in terms of whether a combined Nielsen-Arbitron would stifle both competition and innovation.
A Nielsen representative offered no specifics on the company’s interaction with the FTC. Arbitron declined comment.
It’s hard to envision the FTC looking to thwart the merger entirely. The most intriguing issue would seem to be what type of consent decree Nielsen would accept.
An obvious one might be agreeing to license the PPM technology to other measurement entities. Arbitron has used the PPM to offer out-of-home TV measurement and drive cross-platform measurement (a joint initiative with comScore for ESPN offers a tangible example).
Since the PPM has potential in TV, it could be used for a company --- however unlikely -- to develop a TV measurement product that could compete at some level with Nielsen.
Based on past behavior, Nielsen may be OK, though, with agreeing to make the PPM technology available to others under an FTC consent decree. In 2006, it declined an option to gain control of it.
All these years later, it’s on the brink of doing just that, maybe providing it’s willing to share.