"It really is as simple as Arbitron is in the radio business; we are in the TV world," he told analysts during a Dec. 18 conference call explaining the companies' planned $1.26 billion merger. "So the overlaps -- I mean, frankly, you can barely find any."
However, the companies' merger agreement obligates Nielsen to pay Arbitron a relatively high breakup fee -- 10% of the purchase price -- if the deal fails to win regulatory approval. Antitrust lawyers say a target typically demands a higher termination fee if it believes there are antitrust concerns. A Shearman & Sterling LLP study updated in November found that there were 62 deals with antitrust termination fees due to the seller announced between Jan. 1, 2005, through Nov. 30, 2012. The median fee was 3.9% of the purchase price and the mean was 5.6%. A 10.8% fee, proportionally similar to the fee Arbitron would be entitled to, that was paid to T-Mobile USA Inc. after the Department of Justice blocked the company's $39 billion takeover by AT&T Inc., was the sixth-highest percentage fee in Shearman & Sterling's sample.
Media industry sources said Calhoun's statement regarding the companies' lack of overlap is true when it comes to the companies' core business -- both made failed attempts to enter each other's segments in the U.S. previously. However, when it comes to the sectors of the media business likely to become more important in the future -- mobile, online, and cross-platform measurements -- the two are among several players striving against each other to come up with measurement technology that advertisers will find suitable.
If there is an antitrust issue raised by the merger, it is likely to be for platforms that are quickly removing broadcast media from their long-dominant perches. "It will be interesting to see how regulators look at mobile and digital platforms," said radio industry analyst Tom Taylor, publisher of Tom Taylor Now.
In its annual report filed with the Securities and Exchange Commission in February, Arbitron listed Nielsen subsidiary Telephia among several companies vying to compete with Arbitron Mobile's mobile audience services. Others include Anite plc, Ascom Holding AG, Carrier IQ Inc., comScore Inc., Experian Information Solutions Inc., Lumi Technologies Ltd., M:Metrics Inc., Médiamétrie, Nokia Siemens Networks, Nurago GmbH and Spirent Communications plc.
Taylor said technology for measuring alternative platform audiences remains in the "baby stage" and no company has the edge yet. But if the history of TV and radio ratings provides a guide, one company is likely to be the dominant provider of data to advertisers. "The marketplace wants one service for each medium," he said.
Dominance over traditional broadcast ratings and name recognition would give a joined Nielsen/Arbitron a big leg up over other nascent competitors trying to be that dominant player.
The battle to develop new platform measurement techniques could prompt regulators to examine the deal under the "innovation markets" theory, which holds that mergers can sometimes harm development of new technologies by reducing the number of players and the amount of capital devoted to researching competing approaches. The innovation markets theory isn't universally accepted and regulators might have a difficult time basing a court challenge against the deal solely on those grounds.
But another broadcast source said both Nielsen and Arbitron have sometimes had contentious relations with TV and radio stations over audience measurement standards and broadcasters are likely to push for whatever traction they can get against the deal. Their complaints might cause the antitrust review to last longer than Calhoun implied.
French mergers and acquisitions lawyer Laurent Faugerolas joined Dechert LLP. For other updates launch today's Movers & shakers slideshow.
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