Wall Street reacted positively to Nielsen’s agreement to be acquired by a group of private equity investors in a $16 billion deal, but broadcast row and Madison Avenue still have questions about the measurement company’s future.
Nielsen shares closed Tuesday up 20.3%, closing at $26.72 a share, their highest finish since last June, even with an earlier run-up on speculation about a sale.
A group of private equity investors led by Elliott Investment Management and Brookfield Business Partners agreed to pay $28 a share in cash to Nielsen shareholders and assume the company’s debt.
Elliott, a shareholder and critic of Nielsen in the past, and Brookfield said they were betting that Nielsen’s new Nielsen One system for measuring traditional TV and streaming would roll out on time and continue to dominate the industry.
But the deal did little to quiet Nielsen critics and competitors, although it did make companies in the measurement business more valuable. In the past year, data and other ad tech companies have been going publish or merging, indicating investor interest.
Sean Cunningham, CEO of the Video Advertising Bureau, which represents the TV networks and distributors which are among Nielsen biggest clients and has been sharply critical of Nielsen for the past year, said that buyout or no buyout Nielsen needed to make changes.
“For any version of Nielsen, current as-is or next after-sale, the ad industry needs are identical: deep disclosures and real transparency, commitment to the modernization that sharply increased competition demands, and increased collaboration rather than collision with their clients and customers,” Cunningham said, concluding “we are rooting hard for these overdue outcomes from any version of Nielsen.”
The VAB was the first to publicly claim that Nielsen was undercounting viewership during the pandemic. Its claims were confirmed and Nielsen lost the Media Rating Council’s accreditation for its national TV ratings service.
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Ashwin Navin, CEO and co-founder of measurement company Samba TV, said "the Nielsen acquisition is evidence of the demand that we and others are seeing from the capital markets to fund the next generation of measurement.”
Navin said “the ad industry is moving to a multi-currency future, where omni-channel measurement systems built on first-party data need to capture everything that viewers see on a global scale. Nielsen's legacy in measurement is quite strong, and going private should give the company the time and resources needed to retool and develop future-proof solutions that play in this multi-currency world.”
Todd Krizelman, CEO and co-founder of MediaRadar, noted the big price tag the deal put on Nielsen and what that might mean for Nielsen’s future.
"Nielsen's acquisition reinforces the high multiples being paid for data SaaS companies in the media research space. It is remarkable however that this is a 60% premium to Nielsen's recent stock price,” Krizelman said. “This implies the future buyer has some very specific path to improve performance, or perhaps to breakup the company further to unlock value."
Billy Huang, founder of Luna Market, was blunt about what the equity firms were buying.
"Nielsen is a dinosaur. They're not equipped to measure today's media -- whether that be streaming or, most critically, web3 and the metaverse. This deal will hopefully help them invest in and build solutions that actually work for modern marketers,” Huang said.
Mike Woosley, COO of data company Lotame, noted that Nielsen’s stock had been going down for good reason.
“Operationally Nielsen has consistently failed to execute, drafting on its long legacy of market dominance in the face of a U,S, media industry too disorganized to switch horses. It lost its MRC accreditation last year after serious missteps and questions about its ability to accurately measure TV viewership,” Woosley said.
“On the digital side, Facebook cancelled its partnership with Nielsen around digital ad ratings early last year. Since the cancellation -- for over a year -- Nielsen hasn’t been able to explain to Lotame how its product worked," he said. “For Lotame, there is a wide perception that the product is now less accurate than the system we use it to benchmark, creating chaos with marketers, customers, and other partners.”
Major marketers “are also fed up,” Woosley said. “While Nielsen has been the company that its customers loved to hate for decades, and there have been numerous failed attempts to move away, this time could be for real.” Woolsey pointed to NBCUniversal’s announcement that it would use data from iSpot.tv for some transactions.
“The market can be assured that Nielsen – which already has a weak balance sheet – will be further dissected and plumped by PE investors in order to go public with a balance sheet weaker yet. The current crop of investors will look to play with house money only on an asset well past its prime time,” Woolsey said. ■
