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The Multiplatform video age is coming and, according to the Federal Trade Commission, it needs to be marked by “robust competition” for ratings. Never mind that the market hasn’t yet been established; the FTC wants to ensure that when it is, it isn’t dominated instantly by a combined Nielsen and Arbitron.
The commission agreed to let Nielsen buy Arbitron for approximately $1.26 billion, but not without conditions requiring the combined company to cultivate its own competition in the cross-platform ratings space. The FTC concluded that without the divestiture of that intellectual property, everyone in the video food chain—from advertisers to agencies to programmers— would be forced to pay more for cross-platform audience measurement.
“Effective merger enforcement requires that we look carefully at likely competitive effects that may be just around the corner,” said FTC chairwoman Edith Ramirez in announcing the settlement. “In this matter, the evidence provided us with a strong reason to believe that, absent a remedy, the deal was likely to harm emerging competition in the area of crossplatform audience measurement.”
The FTC defines the ratings market as “audience measurement services (that) report the overall unduplicated audience size (i.e., reach) and frequency of exposure for programming content and advertisements across multiple media platforms.”
The FTC decision came over the objection of the lone Republican on the commission who could vote— the other was recused.
A Big Proviso
To secure FTC approval, Nielsen had to agree to license the Arbitron technology for cross-platform measurement for up to eight years to a third party, most likely comScore, said analyst Brian Wieser of Pivotal Research Group. But it goes beyond just technology. Arbitron and comScore are currently developing “Project Blueprint,” a cross-platform measurement tool for ESPN.
The FTC says it wants the third party to get “everything it needs to replicate Arbitron’s participation in a national syndicated cross-platform audience measurement service.” The commission wants the new buyer to become a legitimate competitor in cross-platform ratings, and Nielsen has to make sure that happens. It must provide technical assistance, and ongoing TV and radio ratings data, and cannot prevent the third party from hiring “key” Arbitron employees.
The FTC concluded that the combination of Nielsen and Arbitron, the two most familiar names in media ratings, would have reduced competition in the new world of video ratings—including online and mobile screens—without the agreed-upon divestiture.
The combined company must divest Arbitron’s Link Meter technology (for Project Blueprint), but will get to share it on a royalty-free basis with that third party. For eight years, Nielsen/Arbitron will also need to license, royalty- free, the encoding and PPM technology to develop cross-platform measurement services.
Nielsen/Arbtiron must also open its books on “key” Arbitron employees for possible poaching by the third party. It must provide information on current salary and bonuses and even make those employees available for interviews. And it is not permitted to counter any offer made to woo the employee.
Jumping the Gun?
But the commission was not unanimous in its decision to prevent the cornering of a market not yet in existence. The vote was 2-1, with Republican Joshua Wright voting against. (Republican commissioner Maureen Ohlhausen recused.)
Commissioner Wright said the decision was wrong due to insufficient evidence that the combined company would indeed reduce competition for TV/online ratings. His issue was with the commission conditioning the deal on predictions about the future market, rather than on existing harms.
“There is no commercially available, national, syndicated cross-platform audience measurement service today,” he said. “The commission thus challenges the proposed transaction based upon what must be acknowledged as a novel theory—that is, that the merger will substantially lessen competition in a market that does not today exist.”
Wieser agreed: “In some ways it is remarkable that the FTC acted to prevent a potential monopoly of a market which does not yet exist.”
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