Is Measurement Giant Nielsen $16Bn Buyout A Hope For Turnaround?

The 99-year-old TV rating giant, Nielsen announced that it has agreed to be acquired by private equity.

Why we care

This deal enables Nielsen to continue its transition from linear to digital media measurement without the intense scrutiny of the private markets. Nielsen and the consortium began negotiating earlier this month. Nielsen rejected the combined offer of $9 billion, raising the bid to $16 billion to get the deal done.

Details: The PE consortium is headed by Evergreen Coast Capital Corp, an affiliate of activist investor Elliott Investment Management,  and Brookfield Business Partners. It is buying  Nielsen for $28 per share or $16 billion in an all-cash transaction, including the assumption of debt.

• The statement said the company’s Board of Directors voted unanimously to support the acquisition proposal, which is a 10% premium over the Consortium’s previous proposal.
• Even though Nielsen must invest in innovation, it also needs to make money on these acquisitions so that stockholders can receive a 60% premium over Nielsen’s share price before market speculation over the potential transaction.

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The bigger picture

The PE is not acting as a ‘white knight’ to Nielsen by giving it capital. Industry experts suggest the consortium could take a cue from the PE playbook as the goal is to create a more streamlined entity focused on its strong point “panel-based ratings.”

• However, to preserve Nielsen’s dominance, the new owners would require to face the pressure of additional investments or aggressive pricing which may eat the profits, at least for the short term. They could invest in continuing the new platform ‘Nielsen One’ (which is in the midst of the testing phase), which aims to measure audiences as they watch programming in both a linear and digital manner, something that the industry has long desired. Also, possibly try again to obtain Media Rating Council accreditation.
• Yet, time is ticking. Nielsen is under unprecedented pressure to modernize its media measurement capabilities as new firms launch to threaten its market share. Not to mention this year’s upfronts are right around the corner, and many of the largest programmers, including NBCU, and Warner Media have already signed for alternate measurement providers to give marketers the cross-platform currency and transparency they want. 
• Nielsen would need to make a “clear message” about the capabilities of its unified platform ahead of the upfronts in order to maintain its competitive edge – and that’s unlikely to occur soon
• Thus, the reinvention of Nielsen at this stage is a somewhat dubious proposition. Hence, to profit -from this deal, it seems likely that the new owners will ride Nielsen’s “cash cow business” ( panel ratings) and sell off its (if any) technology. Presently, the future of Nielsen seems undetermined but industry experts believe the acquisition will create more competition.

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That’s what they said

Jesse Cohn, a managing partner, and Marc Steinberg, a senior portfolio manager, on behalf of Evergreen and Elliott, said in a statement,

After months of deep market analysis, industry diligence and management reviews, we are firmly convinced that Nielsen will continue to be the gold standard for audience measurement as it executes on the Nielsen ONE roadmap. Having first invested in Nielsen nearly four years ago, we have a unique appreciation for the Company’s ongoing relevance to the global, digital-first media ecosystem. Today’s outcome represents a significant win for Nielsen’s shareholders and for the business itself, as our multibillion-dollar investment will help Nielsen reinforce its transformation at this critical inflection point.

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