Industry responses to the acquisition continue to span the spectrum. “Barriers to entry have left it (Nielsen) unchallenged, and as a result, it displays the behaviors of a monopoly,” noted one commenter. “I feel uncomfortable having one company have so much control over media measurement. It makes it more difficult for new companies to compete, and eventually drives up costs,” said another. A third had a different take: “A Nielsen / Arbitron merger will help grow long-term competition in the space. If this merger isn't approved, the broader ad industry will lose, and the largest media companies will gain.”
Back in January, the general consensus was that without vocal opposition by clients, the acquisition would clear the antitrust review. The expectation was that approval would arrive by March or April. It is now August, and according to yesterday’s report in the New York Post, the Federal Trade Commission has sent out a new round of requests for information. I am not an expert in antitrust law, but it seems to be taking much longer than anyone expected. Nielsen is still very confident that the deal will go through. Industry experts believe that it might require givebacks or division sales.
According to one expert, the recent news is significant. “My opinion is that you have a normal antitrust process where they evaluate the market and after a time you have an idea of where the issues are. Then the parties reach an agreement and the deal plays out. In this case, the initial filing was on January 4, 2013, and has now been in process for 222 days and counting. That is unusual.”
Another expert surmised, “The FTC obviously wants to know more (about the Nielsen acquisition) which on its face is rather monopolistic. On the other hand, audience measurement is by its nature a monopoly in most countries. The important thing is that innovation by third parties not be discouraged, and that competitors be allowed and encouraged to build businesses in ancillary fields -- and perhaps one day be able to challenge Nielsen itself.”
The initial opinion of certain analysts was that Arbitron does not directly compete with Nielsen. Where it does compete, the overlap is small and Nielsen can accommodate market concerns in those instances.
Some believe that the acquisition will be a potential squeeze on competitors like comScore, with Nielsen controling so many parts of the measurement business in the market that it will be difficult for current competitors to survive and future competitors to enter the market. So while this is “not a traditional antitrust case” according to an analyst, “the FTC may want to use the Nielsen / Arbitron acquisition to test a novel theory in this area of law.” Questions to be asked might be:
-- What is the evolution in the market?
-- What is the future benefit of this acquisition to customers?
-- Looking back on prior internal Nielsen discussions on the issue, was Arbitron described as a potential threat?
-- Nielsen staggers contracts. Does that, along with its command of huge percentages of client budgets, keep other companies out of the measurement market?
-- How and under what circumstances has Nielsen innovated in the past?
So where does that leave us? Currently there are four FTC commissioners (plus one vacant seat): two Democrats and two Republicans. In order to block a transaction, a majority of commissioners must vote in favor. So Nielsen is motivated to push the FTC to reach a decision now, before the vacant seat is filled (with a third Democrat).
In agreeing to any possible conditions for the acquisition approval, Nielsen would have to consider the impact against its long-term business interests and underlying business model. Is it ultimately worth it for Nielsen? I, however, would like to know is if it is worth it to media clients and industry at large.