Nielsen to acquire Arbitron

Radio ratings agency bought for $1.26 bil

The giants of broadcast ratings will now be under one roof as Nielsen said Tuesday that it’s agreed to acquire Arbitron, the key agency that measures radio listening, for $1.26 billion in cash. Radio in its various incarnations has been in the headlines more often of late with players like Clear Channel, Sirius XM and Pandora changing the equation for an industry that’s long had to fight an image as TV’s poor relation. The Nielson deal brings it front and center.

The price works out to $48 a share, a 26% premium on Arbitron’s Monday close. Nielsen said it has a financing commitment for the transaction, which has been approved by the boards of both companies.

“U.S. consumers spend almost two hours a day with radio. It is and will continue to be a vibrant and important advertising medium,” said Nielsen CEO David Calhoun. “Arbitron will help Nielsen better solve for unmeasured areas of media consumption, including streaming audio and out-of-home. The high level of engagement with radio and TV among rapidly growing multicultural audiences makes this central to Nielsen’s priorities.”

Nielsen, which has a large international business, will likely expand Arbitron’s largely domestic business overseas. 

Shares of both companies jumped. Arbitron surged nearly 24% to $47.03, a new 52-week high by a mile. Nielsen Holdings closed up 4.39% at $30.92.

John Hogan, chairman-CEO of Clear Channel Media and Entertainment, said, “It’s a step in the right direction that Nielsen realizes that radio, TV and digital are the top three media to marketers and that this combination has the potential to offer broader insights and better measurement across multiple platforms.”

With Arbitron assets, Nielsen intends to further expand its “watch” segment’s audience measurement across screens and forms of listening. “These integrated, innovative capabilities will enable broader measurement of consumer media behavior in more markets around the world,” said Steve Hasker, Nielsen’s prexy of Global Media Products. “We will also bring local clients greater visibility to empower more precise advertising placement and campaign effectiveness.”

Arbitron CEO William Kerr said radio reaches more than 92% of all American teens and adults “because they love to listen to music, talk, news and information while at home, at work and in their cars.”

The two companies generated total revenues of $6 billion and combined cash flow of $1.7 billion for the 12 months ended Sept. 30. They expect costs savings of $20 million through integrating technology. Nielsen predicted the deal would be accretive to earnings per share by 13¢ in 12 months and 19¢ 24 months out.