Nielsen Agrees to Buy Arbitron for $1.26 Billion

Nielsen, a supplier of television rating has agreed to buy Arbitron Inc., a company which tracks listenership of the radio industry for $1.26 Billion.

The CEO of Nielsen, David Calhoun said that acquiring Arbitron is a big strategic step for Nielsen. The acquisition will let Nielsen be a one-stop shop for advertisers who want to know the details of returns after they spend their money on radio advertising. With the help of Arbitron, Nielsen will be able to track the amount of media consumption per person per day for up to seven hours compared to the current two hours.

"This deal is a great deal for the Nielsen company. There will be $20 million in synergy savings from the acquisition," Calhoun said on a conference call Tuesday with analysts and media. "It gives us a whole new medium to measure. You don't find many mediums that allow for that kind of increase," Calhoun added.

The acquisition of Arbitron by New York based Nielsen puts measurement of two of the biggest media platforms in the hands of one company. The companies were fierce competitors. Nielsen and Columbia, and Arbitron have long stopped competing head to head in the measurement business, but the deal still would still require an antitrust review.

"There is very little if any overlap," said Steve Hasker, Nielsen's president of global media products. "There are real benefits to both radio and TV clients as well as advertisers and agencies."

According to the legal experts there would not be any problem in the merger. To stop the deal there has to be a proof that one of the two merging companies was positioned better and was likely to enter the core market of the other company. For the antitrust authorities, it would fall under the category of potential competition.

The operations of Arbitron's operations are mainly in the U.S., while Nielsen has its operations spread across the globe. According to Calhoun a major driver for the deal is Arbitron's tracking technology. Nielsen wants to spread Arbitron's tracking technology to other countries.

Arbitron’s CEO Sean Creamer would be taking over as the CEO from William Kerr on January 1, 2013. Calhoun said that he hoped Creamer would remain with Nielsen after the closure of the deal.

Nielsen Holdings N.V. will pay $48 per share, a 26 percent premium to Arbitron's Monday closing price of $38.04. Shares of Arbitron saw a sharp rise of $8.99, about 23.6 percent to close at $47.03.