Watchdogs to focus on new media in Nielsen/Arbitron deal: experts

WASHINGTON Thu Apr 25, 2013 1:27pm EDT

WASHINGTON (Reuters) - U.S. antitrust regulators are likely to scrutinize new forms of advertising as they mull the planned purchase by television rating giant Nielsen Holdings NV of Arbitron Inc, which dominates radio ratings, legal experts say.

The Federal Trade Commission, in assessing the $1.26 billion merger to ensure it complies with antitrust law, will likely focus on the emerging frontier - cross-platform data designed to tell advertisers in a holistic way what customers watch on television, listen to on the radio, look at online and see on their mobile devices.

The deal was announced in December. Arbitron shareholders approved the acquisition this month.

An informal Reuters poll of eight antitrust experts found that six believed that the FTC would approve Nielsen's purchase. A seventh thought a challenge was possible and an eighth had no opinion.

Access to reliable ratings is critical for companies formulating their advertising strategies, to the tune of some $140 billion in 2012 according to data from Kantar Media. The higher the rating and the more attractive the demographic, the more advertisers will be asked to pay for the spot.

One concern with the proposed transaction is that Nielsen, which also measures some online spending, would expand into radio. "It's putting a lot of eggs in one basket. That's the biggest concern," said Brad Adgate, vice president for research at Horizon Media, Inc.

Nielsen declined to discuss the deal in an interview but said it was working with regulators and hoped to announce the completion of the acquisition "as soon possible."

OLD MEDIA MONOPOLIES STILL MATTER

Nielsen and Arbitron now operate primarily in different markets, which at first glance would make the deal uncontroversial. There are signs, however, they could move into each other's areas of dominance.

For example, Nielsen measures radio listening in 11 countries but not in the United States, according to its web site, a sign that it could also do so in this country.

And Arbitron has made forays back into television ratings, a business it abandoned in 1993. It entered again in a small way recently through deals with ESPN and others.

By acquiring Arbitron, Nielsen also gains access to data on what is known in industry parlance as "out-of-home," essentially billboards and other forms of outdoor advertising.

Both Nielsen and Arbitron use devices - with Nielsen the "people meter" and with Arbitron the "portable people meter," (PPM) a pager-like device which measures what radio station people listen to - which measure consumer demographics, according to Bill Duggan of the Association of National Advertisers, a trade group.

Both also have an online presence, although the big dog in Internet ratings remains comScore Inc. Nielsen, for example, provides various data services including the measurement of traffic to websites. It also provides information about what consumers buy at retail stores.

Once it acquires Arbitron, Nielsen has said it plans to expand its "Watch" measurement that keeps tabs on consumer viewing and listening habits as consumers move from television to computers and mobile devices. Arbitron also measures streaming music over the Web.

THE BUZZ ABOUT MEASURING BUZZ

It is comparatively easy for the FTC to assess the likely effect of the merger on television and radio metrics. Measuring the impact on Internet and mobile space may be tricky.

"The feeling is that Nielsen is buying Arbitron to get a better grip on measuring mobile," said Adgate. "Nielsen doesn't have anything similar. Not for mobile they don't. ... This will not be rubber-stamped (by the FTC)."

Arbitron uses its own on-device meters to measure how consumers use mobile phones and tablets.

And, what about the newest frontier of all: combining all four media so that advertisers can see how to get the absolute best bang for their buck, and respond accordingly.

"My area of concern would be foreclosure of potential (cross-platform) competition to Nielsen in particular," said Ankur Kapoor, an antitrust lawyer with Constantine Cannon LLP. "If you think about where and how people consume media, it's literally everywhere. To get a meaningful measurement, you have to be cross-platform."

No other ratings company has the reach of Nielsen, experts said. ComScore is strong in Internet ratings while others - Invidi, Precision Demand, Rentrak, Simulmedia and TRA - could potentially grow into competitors. But for now, advertisers currently cannot avoid using Nielsen, said Adgate.

Jacqueline Grise, a partner with Cooley LLP, was one of several antitrust attorneys who believed the transaction would be approved, but perhaps with conditions such as Arbitron being forced to sell its PPM technology.

"I'd be cautiously optimistic that they can get it through without a fix but even if they don't I think that they've got that fix," she said.

One unknown that could tip the FTC investigation is what Nielsen or Arbitron customers have told regulators.

A poll of Association of National Advertisers members found that half had "no concerns" about the deal while half had "some" or "serious" concerns, ANA's Duggan said in a blog post.

(Reporting by Diane Bartz; editing by Ros Krasny and Andrew Hay)

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