POV: Nielsen Acquisition

Background

Nielsen Holdings, the data and measurement business, is being acquired by a consortium of private-equity companies led by Elliot Management & Brookfield Asset Management in a deal that values Nielsen at $16 billion (including debt) - a 60% premium on Nielsen’s current share price.

Details & Implications

It was widely reported that Nielsen was in talks with several firms to go private, but the size of that proposed deal – which won’t close until the second half of the year - caught many by surprise.

Announcing the deal, Brookfield Asset Management outlined four reasons for the acquisition: Nielsen’s market-leading position as a global leader in measurement; the fact it is an essential service provider as the established measurement standard; Nielsen’s resilient performance; and value creation potential through Nielsen One - Nielsen’s new offering designed to provide reach and frequency metrics across linear programming, streaming, connected TV (CTV), and digital channels.

Nielsen is best known for its US TV ratings service but has been under pressure in the last few years over the quality of that service and also from competitors providing cross-media measurement services. The Media Rating Council suspended its accreditation for national TV rankings last September and earlier this year, media owners including NBCUniversal and WarnerMedia struck deals with iSpot.TV to measure unduplicated audiences across their media properties.

Nielsen also recently became the subject of a law-suit by Byron Allen-owned Weather Group, Entertainment Studio Networks, and CF Entertainment, over alleged fraudulent misrepresentation of ratings. And last week The Video Advertising Bureau accused the company of inconsistencies in data used in Nielsen One, which is built on data of tens of millions of set-top boxes and smart TVs alongside the panel of 41,000 homes used for its current TV ratings.

So there are significant reputational hurdles to jump – none of which were solved by the company’s new brand identity launched last October, which Nielsen described at the time as a: “transformation of its culture and a redefined strategy focused solely on the global future of media’.

Summary

One of the keys to the deal is that it will take Nielsen back into private ownership, which means that its new owners will be able to execute their strategy more effectively and more efficiently, without the same level of scrutiny facing a publicly traded company. This may be crucial to the new owners being able to realize what they feel is the true potential of their investment through the development of Nielsen One, which they outlined as the key to value creation potential in the deal.

Exactly what that strategy is, and whether it will involve other investments being brought together with Nielsen, remains to be seen.

Further Reading Ad Age | Forbes | NYT | Brookfield Statement