What happened
Shares of Nielsen Holdings (NLSN) were sharply lower on Monday, tumbling as much as 16.4%. As of 2:36 p.m. ET, the stock was still down 7.4%.
The catalyst that sent the television ratings and data analytics platform lower was its decision to reject a buyout offer from a syndicate of well-heeled suitors.
So what
Reports emerged last week that a consortium of private-equity companies had offered to buy Nielsen for roughly $15 billion including debt, according to a report in The Wall Street Journal. In a press release on Sunday, Nielsen rejected the proposal on the grounds the offer "significantly undervalues the company and does not adequately compensate shareholders for Nielsen's growth prospects."
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There were other factors at play. Investment firm WindAcre Partnership, which holds a roughly 10% stake in Nielsen, as well as more than 14% interest related to swaps, reportedly told management it would vote to block the deal if Nielsen had accepted.
In a press release today, WindAcre said it "fully supports" the decision by Nielsen to reject the deal, which "significantly undervalues" the company at $25.40 per share. It went on to argue that Nielsen's unique strategic position in the TV ratings space and its cache of proprietary data and collection capabilities made the stock worth "well in excess of $40 per share."
Now what
Nielsen has long been the standard for calculating audience estimates that were used as the foundation for traditional television ad rates. However, the emergence of streaming video and the acceleration of cord-cutting has shifted existing market dynamics and diminished the relevance of Nielsen's viewer measuring services. As a result, it stock price has steadily declined since reaching a high of $55 in mid-2016, trading below $23 today.
Additionally, the company has failed to demonstrate that it has evolved in an increasingly fragmented television viewing marketplace. Media Rating Council, a nonprofit industry association, raised questions about the accuracy of Nielsen's estimates and temporarily suspended its accreditation of the company.
Until Nielsen can prove its methods are adequate to address the changing television landscape, the company will likely remain a symbol of a bygone era.
