Radio ratings: Nielsen acquires Arbitron for $1.26 billion

Nielsen Holdings, the company specialised in providing informations and data on everything from music sales to consumer confidence in countries around the world, announced an agreement to acquire Arbitron Inc. for $1.26 billion; according to reports, Nielsen will pay $48 per share for all of Arbitron's outstanding common stock.

Arbitron is the media measurement company best known for its radio station ratings; this acquisition will allow Nielsen to improve widely its current radio measurement service (Nielsen BDS) and boost the range of services offered to its clients.
Nielsen Chief Executive Officer David Calhoun commented: "Arbitron will help Nielsen better solve for unmeasured areas of media consumption, including streaming audio and out-of-home. The high level of engagement with radio and TV among rapidly growing multicultural audiences makes this central to Nielsen's priorities".

Arbitron is a solid company which registered increasing profits and a steadily profitable business over the years.During the last year it has has generated revenue of $445 million and net profit of $43.6 million; and even when the economy sank in the fourth quarter of 2008 and Arbitron's share price fell to $9.90 from $43.98 just months earlier, Arbitron still turned a profit of $37.8 million in 2008 and $42.2 million in 2009.
Nielsen, this way, is acquiring a solid company setting the highest standard for radio ratings, but it is also getting a unique business model, in which competitors have a hard time trying to have a piece of the cake. Arbitron makes money two ways: charging stations a fee to include their data and selling ratings - as well as custom researches - to advertisers, marketers and other types of clients. Moreover Arbitron has built up a great deal of brand trust and familiarity over the decades, so it's perceived as a trusted source by a large portion of the market and the consumers.

On the other hand some radio executives, according to a Billboard research, fear the combination of Nielsen and Arbitron will create a huge entity, virtually able to crush every competitor on the market. Others fear the acquisition may lead to less competition, less innovation and higher rates. "It's healthier for the radio industry and media when there's more competition for ratings," one former radio executive said to Billboard. "After Nielsen acquires Arbitron, other companies will be less likely to enter the marketplace and compete against them".