LONDON, UK / ACCESSWIRE / December 21, 2016 / Active Wall St. blog coverage looks at the headline from Nielsen Holdings PLC (NYSE: NLSN) ("Nielsen") as the Company announced on December 20, 2016, that has entered into an agreement to buy Gracenote, the industry's premier provider of media and entertainment metadata, from Tribune Media Co. (NYSE: TRCO). The all-cash deal is valued at $560 million and is expected to close in the first quarter of 2017. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
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The deal
Nielsen will pay Tribune Media $560 million in cash for Gracenote. Nielsen plans to finance the acquisition using a mix of cash in hand and debt. Once the deal is completed Gracenote will become a part of Nielsen's Watch division which keeps track and measures what consumers are watching. Gracenote will maintain its current headquarters in Emeryville, California post the merger.
Nielsen expects the acquisition to be neutral to 2017 GAAP earnings and slightly accretive in 2018. Nielsen plans to share the details of the impact when it announced the fourth quarter earnings results for 2016.
Commenting on the acquisition, Karthik Rao, President of Expanded Verticals at Nielsen said:
"Gracenote's metadata and content recognition technology fuels the interfaces of the major video, music, and in-car infotainment systems that consumers engage with every day. This acquisition provides Nielsen with a significant asset in our mission of measuring and understanding consumer behavior."
John Batter, Chief Executive Officer of Gracenote added:
"We are excited for the opportunity to take the next step with Nielsen and expand our global reach by continuing to deliver innovative, insights-based solutions to clients."
Advantages for Nielsen
With this acquisition, Nielsen will acquire the data and data business operation of Gracenote including video, music, and sports. Gracenote's comprehensive database and reach across multiple platforms including multichannel video programming distributors (MVPDs), smart televisions, streaming music services, connected devices, media players, and in-car infotainment systems, will help Nielsen to expand its offerings to its clients. Nielsen will get access to Gracenote's automatic content recognition (ACR) technology. With this technology, Nielsen will be able to offer in-depth consumer behaviour analysis which in turn help clients to identify target customers in real time. It would also help Nielsen's clients to offer content which is targeted at specific audiences.
About Gracenote
Gracenote is a leading entertainment data tech company with companies like Apple, Hathway, Eurosport, and Tesla as its clients. It provides music, video, and sports content and technologies that allow TV users to choose programs when using digital guides when viewing TV at home. It also provides data to mobile devices so that they can identify which movies, TV shows or music are being played. In short, Gracenote helps people connect with digital entertainment by using its technology to link music services, consumer electronics companies, automakers, media companies, and cable and satellite TV operators.
Gracenote started out as a CD metadata provider 20 years back and its services include audio and video content recommendations, TV guide data, and sports data. Gracenote has built a comprehensive data bank covering Music, TV, Movies, and Sports, and provides reference information for more than 12 million movie and television listings and 200 million music tracks.
In 2014, Tribune Media had acquired Gracenote from Sony Corp. for $170 million.
Why Tribune Media decided to sell Gracenote?
In February 2016, Tribune Media had initiated the process to explore strategic and financial alternatives to enhance shareholder value. The company explored various options including sale of part of its business, strategic partnerships, programming alliances and capital investments. Tribune Media took on the services of financial advisors Moelis & Co. and Guggenheim Securities for this purpose.
Tribune Media's decision to sell the data and data business operation of Gracenote is a result of this process. However, it plans to retain the ownership of the business-to-consumer websites, Covers.com and ProSportsDaily.com. The sale will help it streamline and focus on the television and entertainment business.
Tribune Media plans to use the funds realized from this deal to pay off its debt and reinvest the balance into the business.
Stock Performance
At the close of trading session on December 20, 2016, Nielsen's stock price ended the day flat at $43.29. A total volume of 1.95 million shares were exchanged during the session. The company's shares are trading at a PE ratio of 26.56 and have a dividend yield of 2.86%. The stock currently has a market cap of $15.46 billion.
Tribune Media's share price finished yesterday's trading session at $35.45, rising 2.93%. A total volume of 1.73 million shares exchanged hands, which was higher than the 3 months average volume of 724.35 thousand shares. The stock has advanced 7.64% since the start of the year. The stock has a dividend yield of 2.82% and currently has a market cap of $3.19 billion.
In a parallel announcement to the Gracenote's sales, Tribune Media declared the payment of a special dividend of approximately $500 million to its stockholders and warrant holders in Q12017. The dividend will be paid from its existing cash reserves.
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