NEW YORK — In a merger of two old-school media titans, Nielsen, the dominant source of TV ratings, on Tuesday said it had agreed to buy Columbia, Md.-based Arbitron Inc. for about $1.26 billion to expand its reach into radio audience measurement.
Arbitron pays 70,000 people to carry around gadgets that register what stations they're 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, Mr. Calhoun said in an interview.
"You don't find many mediums that allow for that kind of increase," the Nielsen executive said.
Arbitron's operations are mainly in the U.S., while Nielsen operates globally. Mr. Calhoun said another major driver for the deal is that Nielsen wants to spread Arbitron's audience tracking technology to other countries.
Evercore Partners analyst Douglas Arthur said Nielsen doesn't 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 Arbitron's Monday closing price of $38.04. Shares of Arbitron 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.
Arbitron's chief operating officer, Sean Creamer, is set to take over as CEO from William Kerr on Jan. 1. Mr. Calhoun said he hoped Mr. Creamer would remain with Nielsen after the deal closes.
Nielsen said it has a financing commitment for the transaction.
Nielsen was the prime source of audience ratings in the early days of radio, thanks to a device similar to Arbitron's "People Meter." The Audimeter was attached to the radio set. The company's focus shifted to TV measurement in the 1950s.
On Monday, Nielsen announced a deal with Twitter to measure how much American TV watchers tweet about the shows they're watching. The "Nielsen Twitter TV Rating" will debut in the fall.
"Radio reaches more than 92 percent of all American teens and adults because they love to listen to music, talk, news and information while at home, at work and in their cars," Mr. Kerr said in a statement released Tuesday. "By combining Nielsen's global capabilities and scale with Arbitron's unique radio measurement and listening information, advertisers and media clients will have better insights into consumer behavior and the return on marketing investments."
Together, Nielsen and Arbitron generated total revenues of $6 billion and combined adjusted earnings of $1.7 billion based on the 12 months ended Sept. 30, 2012.
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