NEW YORK – Nielsen, the dominant source of TV ratings, on Tuesday said it had agreed to buy Arbitron for about $1.26 billion to expand into radio measurement.
Arbitron pays 70,000 people to carry around gadgets that register what stations theyre listening to. Since Nielsen also collects cash register data, CEO David Calhoun said buying Arbitron will let Nielsen be a one-stop shop for advertisers who want to know how the radio advertising they buy affects product sales.
The acquisition will let Nielsen expand the amount of media consumption it tracks by about 2 hours per person per day to 7 hours, Calhoun said in an interview.
You dont find many mediums that allow for that kind of increase, Calhoun said.
Arbitrons operations are mainly in the U.S., while Nielsen operates globally.
Calhoun said another major driver for the deal is that Nielsen wants to spread Arbitrons tracking technology to other countries.
Evercore Partners analyst Douglas Arthur said Nielsen doesnt need traditional radio measurement to grow, but Arbitron seemed like a willing seller, and it will be a nice complementary but not must have platform.
Nielsen Holdings N.V. said it will pay $48 per share, which is a 26 percent premium to Arbitrons Monday closing price of $38.04.
Shares of Arbitron, which is based in Columbia, Md., jumped $8.99, or 23.6 percent, to close at $47.03.
Nielsen, which went public in January 2011, has headquarters in the Netherlands and New York. Its stock added $1.30, or 4.4 percent, to close at $30.92.
Nielsen said it expects the deal to add about 13 cents per share to its adjusted earnings a year after closing and about 19 cents per share to adjusted earnings two years after closing.
Abitrons chief operating officer, Sean Creamer, is set to take over as CEO from William Kerr on Jan. 1. Calhoun said he hoped Creamer would remain with Nielsen after the deal closes.