Industry experts: Nielsen’s $16bn buyout is a signal for others to attack

Nielsen on Tuesday announced it has come to a buyout agreement with a private equity consortium for $16bn, inclusive of debt — just over a week after it turned down a $15bn bid by the same group, citing undervaluation. The private equity group is headed by Brookfield Business Partners and Elliott Management-owned Evergreen Coast Capital Corp. Under the new agreement, shares will go for $28 each, up from $25.40 offered in the previous bid.

Implications of the deal

The consortium that will take control of the TV ratings and media measurement firm plans to support the company as it works toward realizing Nielsen One — a universal, cross-platform currency that the company has been cooking up for more than a year. However, Nielsen has in recent months found itself embroiled in controversy over reporting inaccuracies, a stripped industry accreditation and calls for new cross-platform measurement models — diminishing trust in the organization as a trustworthy and reliable arbiter of TV and connected television (CTV) metrics.

The takeover casts further doubt on Nielsen’s ability to maintain its stronghold on TV and CTV measurement. “This confirms that… there is no clear leader [in CTV measurement] and that it's unlikely Nielsen will be the leader in future,” says John Hamilton, the founder and chief executive at CTV measurement platform TVDataNow. “Their costly and outdated approach is just not necessary to measure streaming advertising. This [buyout] will certainly quicken the pace of adopting other advertising solutions.”

Hamilton goes so far as to estimate that this is the end for the once-mighty ratings giant. “This puts them in a worse place,” he says. “While it may seem like this alleviates quarterly earnings pressure, I do not have faith that this private equity consortium will embrace the sort of investment and approach needed to develop a new currency in streaming. I suspect that there is greater risk that they sell off the technology they can today and leverage their cash cow business for as long as possible.”

Other industry insiders are more generous in their assessments of Nielsen’s future. Although Nielsen has a tough road ahead, the buyout may equip the company with the resources it needs to adapt, argues Ashwin Navin, co-founder and chief executive at omniscreen advertising and analytics company Samba TV. “It is hard to pivot a legacy business model to one that is more future-proofed when you are beholden to quarterly earnings,” he says. “Nielsen has a strong legacy in adopted measurement and this opportunity to go private will likely give them the time and resources necessary to retool for the future.”

A time for new approaches

There is widespread sentiment in the media, television and streaming industries right now: that new approaches to measurement are sorely needed. Navin predicts that this move will mark a major shift toward a more diversified measurement playing field. “The future [of media measurement in streaming] will be based on first-party data and must address omnichannel measurement across every screen, inclusive of over-the-top (OTT), at global scale. Recent movements, including this deal, indicate that we are moving to a multi-currency future that will not be dominated by one provider ever again.”

Others echo the assessment that Nielsen’s slump creates new opportunities for challengers to rise up and help diversify the industry’s measurement options. “Nielsen isn’t the only player anymore; the field is more competitive… it's perfect timing for others, such as iSpot & VideoAmp, to enter the market and be tested by top media companies,” says Sara Adler, head of performance TV at performance branding company Within.

However, Adler also suggests that perhaps the takeover will create a new proving grounds for Nielsen and help it recoup its reputation. “Nielsen needs to be more efficient, effective, transparent and faster to evolve than ever before. Most importantly, they need to regain the trust of top media companies and, in some regards, the industry overall,” she says.

And of course, as it stands, Nielsen remains the biggest player in the field. “Nielsen is the incumbent player in measurement and TV currency, and most media companies and marketers will look to NielsenOne as make or break for their business,” says Matthew Papa, the senior vice-president of global partnerships at search intelligence firm Captify. Plus, he says, “valuing the company at $16bn is a great bellwether for the iSpots, VideoAmps, and Comscores of the world, as it shows the massive upside to an exploding market.”

The new agreement is subject to approval by Nielsen shareholders, regulators and closing conditions. If all goes according to plan, the transaction is expected to be finalized later this year. Nielsen’s new owners plan to keep the existing management team, including chief executive officer David Kenny, onboard after the deal goes through.

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