Nielsen, the embattled ratings currency company, has entered an agreement to be acquired by a private equity consortium for the perhaps-shocking price of $16 billion, including debt. At this writing, Nielsen’s market cap wasn’t even $10 billion, so that’s a pretty hefty premium — 60 percent above its unaffected March 11 stock price, to be exact.
What do Evergreen Coast Capital Corporation, Brookfield Business Partners L.P., and their institutional partners (which will take the publicly traded company private) see that others do not? Evidently, a chance to fix what is essentially a measurement monopoly — albeit a very broken one that’s no longer accredited by the Media Ratings Council following an admission of undercounting TV viewers in recent years.
With a few assists from folks in the television industry, we attempted to lay out how to accomplish that lofty goal. Full disclosure: Our mission didn’t get off to a very good start.
“It doesn’t matter who owns Nielsen,” said one broadcast network insider, who spoke to IndieWire on the condition of anonymity. “Nielsen has no real motivation to change so long as they don’t have any real competition.”
“What is there to turn around?” the person rhetorically asked. “They’re the currency. This is not a compliment: Nielsen is the Kleenex of ratings systems. It’s the brand name. It’s a function of having a multi-decade lead in being able to get into homes.”
That multi-decade lead translates to the Nielsen Consumer Panel, its pride and joy. Practically speaking, it means set-top boxes in 41,000 homes that track the viewing habits of a cross-section of “well over” 100,000 people, a spokesperson for the company told IndieWire. The first-mover advantage, the panel’s scale, and its relatively wide coverage is what keeps Nielsen relevant.
Our next phone call, for which we also promised anonymity in exchange for participation, suggested at least one concrete step Nielsen can take toward TV-measurement relevancy in 2022.
This second person, who comes from a second broadcast network, told IndieWire that their group is looking more for “big data” from Nielsen. They still want to know how many people are watching their shows, but they also want to know exactly how people watch their shows. Nielsen currently provides breakdowns by demographic; just as much, this individual’s network also wants accurate breakdowns between set-top boxes, smart TVs, cell phones, etc.
Many Nielsen clients have long complained that they feel like they don’t get what they pay for; lately, they’re also not getting paid for what they’ve delivered to advertisers. A January study by the Video Advertising Bureau found that Nielsen’s undercounting of viewers during the COVID-19 pandemic cost TV networks a collective $700 million.
VAB president and CEO Sean Cunningham, Nielsen’s most vocal opposition, wants to see receipts. Even more, he wants to see improvement, he said in a March 29 media statement responding to the sale.
“For any version of Nielsen, current as-is or next after-sale, the ad industry needs are identical: deep disclosures and real transparency, commitment to the modernization that sharply increased competition demands, and increased collaboration rather than collision with their clients and customers,” he said. “We are rooting hard for these overdue outcomes from any version of Nielsen.”
At this point you may wonder why networks need Nielsen at all. Even Netflix, which does not currently have ads but seems unopposed to the option in the future, now shares its Top 10 most-streamed (by millions of hours watched) programs each week. Ironically, the historically secretive Netflix made this previously private information public to combat what it felt were misleading statistics from Nielsen’s attempts to measure streaming shows.
Of course, Netflix’s data is very limited — i.e., it covers only the relative handful of shows and movies worth bragging about. It also does not break down those cherry-picked numbers by demographics, or even into a viewer total. (Who’s watching, a family of four or just one person?) Plus, without Nielsen or another third-party company to serve as a system of checks and balances, a streaming service could theoretically just straight-up lie about its viewership. It’s no way to do business.
“The problem is, like anything, you need a shared currency. You need something that everyone can agree on,” Preston Beckman, a legendary TV executive who led NBC’s scheduling during its “Must-See TV” days and Fox’s during the “American Idol” craze, told IndieWire. “And nothing has come along to alter their position in that.”
Beckman, who now consults in addition to serving on the Major League Wrestling board of managers, has decades of gripes to draw upon. “There’s always been issues with Nielsen,” Beckman said. “They’re very good at surviving. I don’t know how good they are at reporting ratings.”
Since he left Fox — and that life — seven years ago, as Beckman said, “The world’s only gotten more complicated.”
That’s why you need an “athletic” measurement system, as Cunningham put it in a conversation with IndieWire. Nielsen’s ratings for SVOD programming comes out roughly one month after the week it’s measuring. Others can do better.
“The third-party measurement of streaming is part of what’s pushing this entire ecosystem forward,” Cunningham told us. “Right now there are competitors in the marketplace who, within hours of campaign on multiple streaming services, can give you sophisticated metrics on exactly what the performance was with those ads on those services with respect to those audiences.”
In the years to come, Cunningham predicts “a lot of Darwinism” in the measurement ecosystem. This kind of private-equity money means Nielsen can survive by becoming the fittest through investment in its own technology — or, by acquiring companies that can more nimbly measure the things they can’t.
People we spoke with for this story had thoughts on the valuation, a 10 percent premium above the consortium’s previous proposal that Nielsen rejected just nine days ago. Reports at the time had that offer at nearly $9 billion, but most omitted the debt portion that would have brought that proposal to a bit under $15 billion, a person with knowledge of the offer told us.
Even still, the new valuation doesn’t make any sense to our first broadcast-network source. “They’ve made some investments in their infrastructure, but I don’t see the value because I don’t see Nielsen making the effort to improve,” the person said.
As for Cunningham, he didn’t offer his opinion on the $16 billion figure itself. “That’s for the market to determine… to me, it’s about the result,” he said. However, he did offer a theory. “I think the high valuation is driven by the fact that… the number-one conversation in advertising and marketing right now is the need to modernize measurement and to bring it to such a higher standard quickly,” he said.
Nielsen’s new owners promise they’ll meet that high standard and that they’ve made a wise investment. Key is the ongoing development of a new platform, Nielsen One, which the company promises will provide reach and frequency metrics across linear programming, streaming, connected TV, and digital channels.
“After months of deep market analysis, industry diligence and management reviews, we are firmly convinced that Nielsen will continue to be the gold standard for audience measurement as it executes on the Nielsen One roadmap,” Jesse Cohn and Marc Steinberg, from Evergreen and its parent company Elliott Investment Management, respectively, said in a statement accompanying Tuesday’s news. “Having first invested in Nielsen nearly four years ago, we have a unique appreciation for the company’s ongoing relevance to the global, digital-first media ecosystem. Today’s outcome represents a significant win for Nielsen’s shareholders and for the business itself, as our multibillion-dollar investment will help Nielsen reinforce its transformation at this critical inflection point.”
“As a private company, Nielsen will be even better positioned to deliver the best measures of consumers’ rapidly changing behaviors across all channels and platforms,” added Dave Gregory of Brookfield Business Partners, the other group that makes up the consortium. “We are pleased to invest in this iconic company and help lead the industry into the next generation of audience measurement.”
And if this whole reporting-ratings thing doesn’t work out, Nielsen can look on the bright side: As a private company, it will no longer have to report earnings.