ComScore to Buy Rentrak in Stock Deal Topping $800 Million

30 Sep 2015 | Author: | No comments yet »

ComScore To Acquire Rentrak In Bid To Conquer Media Measurement.

The deal between Internet researcher comScore and Portland-based Rentrak would combine the two media-monitoring companies to create a more formidable rival to Nielsen. ComScore, an Internet analytics company, said Tuesday it has agreed to acquire film and TV viewership tracker Rentrak Corp., a move to diversify its media tracking business.ComScore and Rentrak have long been companies that were known largely to wonks, the sort of people who love to sort through reams of data about what kind of audience is tuning into a cable network or web site.ComScore Inc. will buy Rentrak Corp. in a stock-for-stock merger that will make Rentrak a wholly-owned subsidiary of comScore, the companies said Tuesday.

ComScore gained in extended trading after the announcement, rising as high as $45, suggesting the deal could be worth as much as $51.75 a share to stockholders of Rentrak, which also advanced. The all-stock deal brings together companies collectively valued at $2.3 billion before the deal, at the forefront of quantifying what people do online – and selling that information to advertisers.

The merger represents a new challenge to Nielsen Holdings Plc, which produces the TV audience ratings that underpin advertising rates and does a range of research for media and consumer-products companies. The combination could give rise to a strong competitor to Nielsen, which has long been the dominant company providing audience measurement to media companies and the advertisers who support them. The share price in each company shot up on word of the transaction, inflating Rentrak’s market value by 13 percent to nearly $750 million. “What we’ve done here is reflective of the American consumer, how they’ve changed their habits,” Bill Livek, Rentrak’s chief executive, told Wall Street analysts on a conference call Tuesday.”The consumer is watching more TV, more ad-supported TV, than ever before. Under terms of the deal, ComScore shareholders would own approximately 66.5% of the combined company, while Rentrak shareholders would own about 33.5%. Rentrak’s sale is the latest in a rapid series of deals for many of Oregon’s best-known companies that began in July, fueled partly by low interest rates and large corporate cash balances.

The deal, expected to be completed by early 2016, will generate “at least $20 million” in savings next year and “at least $35 million” in 2017, ComScore said. The flurry of transactions has included deals for the state’s second-largest company, Precision Castparts, and many other of the best-known names in Oregon business. It’s also complicated the task of determining how many people are watching a TV series or movie, the bedrock numbers that determine how much ads should cost. Media companies are looking for ways to measure their audiences more precisely as consumers increasingly rely on DVRs, online streaming services and smartphones to watch their shows.

The old ways of tracking viewers and listeners are proving inadequate and the audience tracking industry has been scrambling to offer what they say are more effective tools. “With the advent of digital technology, the time has come to offer the cross-platform measurement systems of the future: through which content owners will ultimately be able to quantify their entire audience,” Matta said. “This merger also recognizes the critical importance of combining digital and TV assets for next generation media measurement.” Philippe Dauman, the chief executive of Viacom, which has seen ratings for cable networks like MTV, Nickelodeon and Comedy Central tumble, has made it clear he expects the company to generate significantly more advertising revenue from deals that are not based on Nielsen ratings.

WPP, the world’s biggest advertising company, is the largest stockholder in Rentrak, with almost 20 percent, according to data compiled by Bloomberg. The company held an initial public stock offering in 1986, sold its video stores in 1988 and changed its name to Rentrak in 1988, a year it nearly went bankrupt. Nielsen, the pioneer in TV ratings, says it already addresses changing viewer habits, with data that can measure the total audience of TV programming across all screens. “All of our data is fully representative of the U.S. population, and we deliver truly independent measurement,” Laura Nelson, a Nielsen spokeswoman, said in a statement. “There are myriad analytics options for the media industry, but Nielsen’s focus is on delivering the actual currency ratings data used for trading billions of dollars in advertising.” Media stocks tumbled in early August after Walt Disney Co. cut its forecast for cable TV earnings, citing fewer subscribers at networks such as ESPN, its most profitable business.

The question is what is the best way to do it?” Sorrell said. “What we are going to do is set up this standard — bring the metering and bring the sampling to cover those parts of the media which are not covered or under-covered, and come up with a better mousetrap.” WPP will own up to 19.9% of the new company, according to Maata and Livek, but will remain a passive investor without a board seat. It ultimately evolved to monitor viewership levels for online video. “This is a deal that has made a ton of sense for a long time and investors have asked about it historically,” Bob Peck, an analyst with SunTrust, said on Tuesday’s conference call. It became a videocassette distributor that tracked the popularity of its titles, eventually making that its main business and ultimately adapting its focus to video on demand and online video. Dallas Mavericks owner and “Shark Tank” TV star Mark Cuban once held a 7 percent stake in the Portland company, but he sold his remaining interest in May.

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