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Tuesday, December 18, 2012

Opinion: Nielsen, Arbitron And Hopes & Fears

From Consultant Jaye Albright, Partner Albright & O’Malley

Hopes And Fears
Well, now we know why Arbitron's Project Leapfrog hasn't hopped out of the development stage in 2012 in spite of lots of hype about it in 2011. 
With this morning's news that Nielsen is buying Arbitron the phrase "this changes everything" leaps to mind. 
I've blogged in the past about the precarious position of being a ratings company with revenues and EBITDA increasing faster than the underlying business which supports it. 
The stronger projected growth of television and multi-new-media put the TV ratings giant in a better deal-making position and certainly provides Arbitron stockholders with a very convenient, timely, profitable exit strategy.
Hopes 
It has seemed to me for some time that Nielsen had to do something to recapture market share and move away from expensive surveys toward more automated ways of collecting usage data because of Rentrak. 
FYI:  Rentrak CEO isBill Livek, former head of Birch and his compatriot, Bill Engel, is on the board of the emerging company which takes set top box data from AT&T U-Verse cable and at least one other multichannel provider, also known as return path data, and mix that with other information to create ratings.  
Large samples in some DMAs, next to nothing in others, but estimates everywhere.
Fears
There are some wonderful researchers toiling at Arbitron who have been comparatively transparent, open about their problems delivering reliable estimates amidst a swift-changing media and population landscape.  
Nielsen's huge international size makes the company more bureaucratic and "corporate" in their messaging to their clients. 
TV owners seem to dislike giving their money to Nielsen even more than radio companies do with ARB.  
Nielsen is a company with much greater pressures on their bottom line.  
Are they buying ARB for $1.26 billion to improve the media rating business?  
Or, to simply push their debt farther into the future? 
We're all about to find out.

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