New York -- VNU -- the Dutch publisher that owns Billboard,
Mediaweek, The Hollywood Reporter and other trade titles -- said last week
that it has agreed to buy ratings compiler Nielsen Media Research for about $2.7 billion.
Netherlands-based VNU said it would pay about $2.5 billion
in cash (or $37.75 per share) for Nielsen, as well as assuming some $200 million in debt,
and it expects to close the deal this fall.
VNU's agreement represented a 15 percent premium to
Nielsen's closing stock price Aug. 13 ($32.81), and it was more than double the $18
per share that Nielsen traded at Feb. 17 -- its low point for this year.
On Aug. 17, after the merger announcement, Nielsen shares
closed at $37.31, up $4.50, but they then dipped to $37.18 at last Tuesday's close,
and they were unchanged at last Wednesday's close.
The purchase price is about 18 times Nielsen's $137
million cash flow for the 12 months ended June 30.
Nielsen has spent the past couple of years adapting its
ratings-gathering technology to cope with measurement in the multichannel digital
environment. It has also moved into Internet-audience measurement via its 14 percent
interest in Nielsen/NetRatings, which began in March and which now measures 20,000 people.
Two days after their merger announcement, Nielsen and
NetRatings Inc. said they would provide daily updates on top-line Internet-audience usage
data to Bloomberg L.P.'s business-news service, such as page-view counts for the 50
most-visited Web sites.
Nielsen's status in the TV- and cable-ratings field
got a major boost in May when Statistical Research Inc. said it would not proceed with its
proposed Systems for Measuring and Reporting Television national rollout.
SRI had long planned SMART as a major ratings alternative
to Nielsen, but it couldn't secure sufficient funding to go national.
While it's "early to tell until VNU shows their
hand," USA Networks Inc. senior vice president of research Tim Brooks said he hoped
the new owner would maintain the improvements Nielsen has made in its national ratings
service in recent years.
"[Nielsen] beat off competition by fixing their
problems," Brooks said. "I hope those lessons have been learned. If they let the
service degrade, they're going to get more competition."
In a memo to Nielsen's customers last week, president
John Dimling stressed that the researcher will "continue to make the investments in
technology, software and services on which you depend for media buying, planning and
evaluation." Dimling also said he will remain president, and "our management
team stays in place."
VNU has 13,300 employees, and it reported revenue of $2.5
billion last year, while 3,300-employee Nielsen had $402 million in revenue. VNU said it
"will continue its strategy of expanding its presence in the business- and
marketing-information industry."
Merger talks began in July, Dimling said. Merrill Lynch
& Co. advised VNU, and Morgan Stanley Dean Witter & Co. advised Nielsen.
When Dun & Bradstreet Corp. split into three companies
in 1996, D&B became a smaller company, while Nielsen was put under the Cognizant Corp.
umbrella.
AC Nielsen Corp. became a separate entity involved in
product and market research, as well as tracking movie box-office results. AC Nielsen also
does media research outside of the United States and Canada.
Cognizant spun off Nielsen last year.
