Commentary

Nielsen's Purchase Of Arbitron: The Continuing Saga

by Charlene Weisler , Op-Ed Contributor, August 15, 2013

Back in January, I wrote an article about the pending Nielsen purchase of Arbitronand how that might affect the media business should the acquisition take place. I polled several media executives from a range of companies. Only two would go on the record or would agree to be quoted by name in the article. Such is the sensitivity of this issue that continues even today.

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.

nielsen, tv

7 comments about "Nielsen's Purchase Of Arbitron: The Continuing Saga".

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Mike Einstein from the Brothers Einstein, August 15, 2013 at 1:24 p.m.
Two big audience measurement firms or one, they've both been measuring the wrong behavior all along.
Reply

Charlene Weisler from Writer, Media Consultant: WeislerMedia.blogspot.com, August 15, 2013 at 1:46 p.m.

It is the television industry currency.

Mike Einstein from the Brothers Einstein, August 15, 2013 at 2:31 p.m.

Hi Charlene...couldn't agree with you more, and therein lies the problem, because in an on-demand media universe this legacy model and currency manifest in a work product - the ads themselves - that no one outside of the industry wants, let alone demands. Not only that, by any reasonable measure the ratings are so small now that the data can only benefit the new wave of media commodities brokers. The old adage "anyone can be bought around" rings more true today than ever, and when a TV sales rep brags about a 3-rated program that wins its time period, we should question how come 97% of the potential audience had other fish to fry. Worse yet, it places all of the focus on the media supply rather than on the consumer demand, totally impervious to the fact that the entire media supply is subordinate to the billions of consumer choices that comprise it. The fact that TV still commands the big bucks says less about its efficacy and more about the utter failure of digital to fill the void of scalable audience reach at the top of the media food chain. TV remains the reach devil we know and, it's diminishing performance notwithstanding, will only get stronger as the digerati chase their ever longer tails in ever smaller circles. Meanwhile we're debating two vs. one to set the measurement standards for something no one outside the industry wants and which everyone is equipped and inclined to avoid.

John Grono from GAP Research, August 15, 2013 at 6:06 p.m.

Mike, some comments. You lambast a 3-rated programme because the other 97% were off frying fish. Very true. But then you refer to consumer demand and its "billions of consumer choices that comprise it". Let's do some REALLY rough maths here. The US has a population of 316 million. Let's just say that there IS 1 billion consumer choices available at any one time to the average US consumer (I know ... it's actually much higher than that but bear with me). If every person in the US was consuming just one of those choices ... and everyone made a different choice ... then in round numbers one-third of the available choices would have a single consumer, while the other two-thirds had none. Contrast that to a 3-rating which means around 9.48 million consumers versus either one or none. Therein lies the value equation in the opportunity such a vehicle provides c.f. other media (especially in the digital arena where they concentrate on reporting metrics over a month when they are selling real-time when the average available audience is MUCH lower). No argument that the opportunity could be taken better!

Rob Frydlewicz from DentsuAegis, August 15, 2013 at 8:24 p.m.

My prediction is that the FTC will approve of a merger between American Airlines and Arbitron and allow Nielsen to purchase USAirways.

Charlene Weisler from Writer, Media Consultant: WeislerMedia.blogspot.com, August 15, 2013 at 8:28 p.m.

Hi Rob, I could see that happening....

Mike Einstein from the Brothers Einstein, August 15, 2013 at 9:05 p.m.

John, I'm not lambasting the 3-rated program as much as bemoaning a prevailing model that takes demonstrated consumer demand for content and chooses instead to address the supply side of the equation - the ads themselves - for which there is absolutely no consumer demand whatsoever. And you shouldn't include non-adults in your numbers. They don't have any money and they don't watch the commercials the way we used to. The point is, the media supply, however it manifests - a pageview, a watched program, a video snack, a text article, etc. - is created on the fly by the consumer who demands the content, period. It has nothing to do with the ads. Indeed, there is no place in the on-demand equation for the ads, which makes any debate about how to measure their relative effectiveness a fool's errand. Reach is an audience measurement, not a supply side metric, yet everyone, including Nielsen and Arbitron, now misinterprets its original spirit and intent to impart false value to impressions in the media supply that are more often than not nothing more than proverbial trees that fall in the forest when no one is around to hear them.