• by Joe Mandese  @mp_joemandese, March 8, 2006

A week before Nielsen Media Research holds its annual client meetings, it looks like the TV ratings giant will be getting a new parent. Current parent VNU this morning accepted an offer to be acquired by a consortium of private equity firms in a deal valued at about $9 billion. The deal, which represents a slight increase over the consortium's last offer, has been expected to lead to the break-up of VNU, the parent of Nielsen, ACNielsen, and publisher of trade magazines such as Adweek, Billboard and The Hollywood Reporter, though the equity firms issued a statement indicating they might opt to keep the assets together, at least for the time being.

"We are investing in the future of a company with an unmatched portfolio of market-leading assets, a highly knowledgeable and dedicated employee base and a sound strategy for the future. We intend to capitalize on these strengths by keeping VNU substantially together as an integrated company and continue to pursue its long-term strategy of improving operational efficiency and investing in product development and innovation," reads the joint statement from AlpInvest Partners N.V., The Blackstone Group L.P., The Carlyle Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Thomas H. Lee Partners, L.P.

Rob van den Bergh, the departing CEO of VNU who was ousted late last year following his efforts to acquire IMS Health, said the deal gives VNU the "added flexibility of private ownership." One of the things that has irked key VNU customers, especially clients of Nielsen Media Research, has been public reporting of its strong operating margins and high profits.

Coincidentally, VNU this morning reported strong year-end 2005 results, especially for its Media Measurement & Information group, which is comprised primarily of Nielsen Media Research. The group's organic revenues soared 11 percent to $1.153 billion. Organic EBITDA jumped 19 percent to $322.8 million. That's a much stronger rate of growth for the rest of VNU and indicates Nielsen is still its cash cow.

VNU's overall organic revenues rose only 5 percent, dragged down by results of its Marketing Information (ACNielsen) group (+4 percent) and Business Information (trade magazines) group (+2 percent). Organic EBITDA for its business magazines, however, soared 8 percent to $129.8 million in 2005, thanks largely to improvements in the U.S. trade publications and events marketplace. VNU's U.S. trade show revenues jumped 10 percent during 2005. "After seeing advertising revenues decline for four consecutive years, the U.S. trade magazine business saw a slight uptick in ad revenue in 2005," the company said. "Growth was led by solid performances from Billboard, Adweek, Brandweek and Mediaweek, as well as strong Internet advertising and growth in e-media platforms." Despite proclamations that the private equity buy-out is a long-term play, some observers believe it is the first step toward the liquidation of VNU's assets, given the number of firms involved, their penchant for turning around returns on their investments, and their track records for managing media-related operations. Most notably, Kohlberg Kravis Roberts & Co., which was a lead investor in publicly traded Primedia and had a strategy of growing it into a dominant media player before selling off its key assets piecemeal.

In fact, several interested suitors already have reached out to VNU and possibly the equity consortium through "back channels" in an effort to form bids to acquire assets, including Nielsen, which holds its annual client meetings in Orlando next week.