Transaction has been approved, but with strings attached; agency is now looking to define those strings
As many readers probably realize, in a move that would shrink the competitive field of media measurement companies, the nice folks at Nielsen are planning to acquire the nice folks at Arbitron. As often happens when one competitor proposes to absorb another, the Federal Trade Commission (FTC) has involved itself in the proposed take-over. While the FTC has green-lighted the deal, it is insisting that the parties enter into a consent agreement.
The FTC’s concern arises from the proposed acquisition’s potential for the complete elimination of competition in the cross-platform media measurement service market. (A cross-platform media measurement service can measure the audience of a “television” program regardless of whether or not it was watched on a traditional television set, or through online or mobile devices.) In order to offer cross-platform audience measurements on a national scale, a firm must have access to television audience data along with individual demographic data. Establishing the infrastructure to recruit and maintain a representative sample of the population and developing technology capable of collecting the underlying data would be extremely expensive.
Nielsen and Arbitron are currently the only two companies with the potential to provide these services, and their combination could lead to a lack of innovation and higher prices for customers. Additionally, advertisers have come to trust Nielsen and Arbitron as the only reputable and reliable services. Any competitor would likely face pushback from the buyers of advertising time.
The FTC has concluded that the acquisition is likely to cause significant competitive harms in the market for national cross-platform audience measurement services.
In the consent decree, the FTC imposes several requirements on Nielsen designed to remedy those anticompetitive effects. The FTC is now seeking comments on those proposed remedies. Among the terms the FTC is proposing are:
- a requirement that Arbitron divest assets related to its audience measurement business to an as-yet-unidentifed “Acquirer” within three months;
- a requirement that Nielsen provide that Acquirer with a perpetual, royalty-free license to data and technology related to Arbitron’s cross-platform audience measurement business;
- nullification of certain non-compete clauses in employment contracts that would otherwise deter certain Arbitron employees from accepting employment with the Acquirer; and
- a requirement that Nielsen provide the Acquirer with technical assistance “to facilitate the Acquirer’s ability to replicate Aribtron’s position in the cross-platform audience measurement market.”
The FTC has appointed an agent to monitor and oversee Nielsen’s compliance with these requirements.
FTC Commissioner Joshua D. Wright dissented, mainly because he doesn’t believe that there’s enough evidence that the proposed deal will in fact substantially lessen competition. In his view, the cross-platform measurement service is a “future market” and, because Nielsen and Arbitron do not currently compete in cross-platform audience measurement, any alleged anticompetitive effects are merely theoretical at this point.
Since the FTC has technically approved the transaction (albeit subject to the terms of the consent agreement), the deal will likely close, possibly in very short order. However, any comments submitted to the FTC will be taken into consideration in determining the final nature and extent of the remedies the FTC will impose on the parties and how vigorously the FTC will enforce those remedies. Anyone interested in offering the FTC their views on the proposed consent agreement (the terms of which are set out in here) may file comments with the FTC through October 21, 2013.